First-time home buyers make up 37% of all buyers, according to the Zillow Group Consumer Housing Trends Report 2021. But who are these consumers and what steps do they take before they become a lead in your pipeline? By understanding what exactly drives their decisions, you can better prepare yourself to become a trusted advisor for these valuable consumers who are looking to finance their first home purchase. With the potential for a lifetime of transactions, if you provide great service they’ll be more confident to use you again for future refinances, second home purchases, and more.

Characteristics of today’s first-time home buyer:¹

Age: 33 years old
Income: $75,000
Work status: employed
Market size: 2.3 million consumers
67% make at least two offers during their home buying process²

Who are they?¹

First-time home buyers have been renting for years and have thought about buying often. They look at houses online, and on weekends go and see anything that looks promising. Purchasing a home is seen as equally about personal and financial growth and since this is a first for them, the process can seem overwhelming. They worry about making a rash, long-lasting financial decision, and due to a lack of clarity around steps in the financial process, heavily rely on friends and family for this information. They are interested in getting pre-approved (46%²) prior to speaking with an agent so they know how much they can afford since they are less experienced when it comes to home buying. However, they’re nervous about contacting a lender because they fear being judged, pressured into purchasing, or hurting their credit by getting pre-approved too early.

Steps taken before contacting a lender

Before contacting a lender for home financing information, first-time home buyers oftentimes begin their home shopping online to find the cost of a home that meets their needs and use mortgage calculators to convert this into a monthly payment. Without past knowledge, these borrowers struggle to understand the true monthly costs of owning a home and what they can actually afford as a down payment.

These first-timer home buyers also constantly check their credit score because they know this impacts their ability to get approved, they just don’t know what is actually a good credit score or how to improve it.

Most first-time home buyers also will spend this time before contacting a lender beginning to build their savings for a down payment. Without knowing down payment requirements and total cash needed to transact, these potential borrowers oftentimes under save which can cause additional stress as the purchase nears.

As you communicate with these leads early on in their decision process, consider providing additional information on these points to provide resources so they feel more informed before purchasing a home, and also will look to you as a trusted advisor who will help them with these nitty-gritty details that they may not be aware of.

Lender selection journey

Once a first-time home buyer feels confident in a home that they are looking to get pre-approved on they begin one of their biggest pain points in the mortgage journey, contacting a lender. This is flagged as a stressful step in the process because first-time home buyers have specific boxes that they are looking for a prospective loan officer to check since they see purchasing a home as equally about personal and financial growth – so a huge investment and risk.

This lead type wants to be able to (1) see loan officer mortgage rates so they can easily compare to find the lowest rates and fees and (2) receive representative responsiveness and service from their loan officer. First-time home buyers greatly value their connection with their loan officer as they tie this to whether a lender will “get them the best deal” as well as what type of experience they might have during closing.

If you are able to provide these leads with the items listed above as well as help them understand what it takes to financially purchase a home and build confidence in them that you are here to help, you will be able to successfully close the initial deal and hopefully have the opportunity to help them finance future second homes, investment properties, refinances, etc.

Lifetime value

With almost half² of first-time home buyers getting pre-approved before selecting an agent, engaging with this lead type gives you the invaluable opportunity to be the first industry professional to reach out to them in the home buying journey. By providing these consumers with personalized tools for their specific scenario, a simplified understanding of the process, and human guidance, you can act as their trusted advisor and educator throughout their entire journey.

Summary

Over 70%¹ of the leads that come in through our mortgage lead tool, Zillow Group Connect, fall into this buyer segment and the majority also have not yet spoken to a real estate agent. By providing great service, these leads can provide you with the opportunity for additional returns beyond the initial transaction through future deals and referrals. If you are interested in learning more about our platform or have questions about first-time home buyers – contact our team at mortgageteam@zillowgroup.com.

Sources

¹Zillow Group Internal
²Zillow Group Consumer Housing Trends Report 2021