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July 23, 2007

What Happens When First-Time Buyers Become First-Time Sellers?

When we categorize groups of clients, we talk about First-Time Buyers, Move-Up Buyers, Investors, Retirees, Second Home Buyers and so on. But I’ve never seen a list including “First Time Sellers."

First-Time Sellers have unique needs that are overlooked by most agents. Since they own a home, we tend to see them as having experience in real estate, and so do these sellers. But buying and selling are distinct activities.  First-Time Sellers have as many questions and insecurities and misconceptions as they did when they were First-Time Buyers.

“What about showings?”

Sellers have anxieties about showings. After all, they were on the other side of this when they were buyers. They wonder if people will just show up and how much warning they will have. They have an expectation of lots of showings from the agents in the listing office as well as the listing agent. They are especially anxious if there are only a few showings, but their definition of “a few” and the agent’s definition may vary widely.

Give them some idea of what to expect.  What might be an average number of showings in this price range and niche? If there are no showings in the first two weeks, then something is probably wrong. How fast is this market?

“How many offers have there been?” 

First-Time Sellers often think that the listing agent is fielding offers on their behalf and will bring them the final negotiated offer. They saw the offer process as buyers from one side of a wall. They have no idea how the offer is delivered and or presented to the seller and how many people are involved. 

It’s a great relief to First-Time Sellers to learn that they will be informed of each and every offer that is made. The listing agent has a legal duty to present each offer. The seller is in the driver’s seat when it comes to responding to the offer, whether it’s a counter, acceptance or rejection, with advice and counsel from the listing agent, of course.

“When do I get the earnest money?”

Even though they went through the process as buyers, First-Time Sellers seem to glaze over the fact that the earnest money resides in the trust account until closing. They want to see it in their hands.

Perhaps most importantly, if the circumstances in the market have changed a lot since they purchased, it is critical to explain these changes to the First-Time Sellers. If they purchased in the multiple offer environment of a few years ago, they may be expecting the same thrill ride this time. If they believe the national media coverage, they may have an expectation that is not justified by the local market.

There’s an enormous difference between their lives when they first bought and now that they want to sell. Usually, there were parents or other advisors involved when “the kids” buy their first home. Now that they are ready to move up, though, these kids have kids of their own and feel like adults and really don’t necessarily want Mom and Dad holding their hands.

The listing agent is as invaluable to these sellers as that first agent was when they bought. These sellers are looking for help and advice in a very personal experience—exposing their home to strangers. Even though this home no longer meets their needs, it’s full of their hopes and dreams, struggles and accomplishments.

Putting your first home on the market can feel like personally being exposed to the public. The fear and insecurity is palpable and a good, empathetic listing agent will put that in perspective by helping the First Time Sellers understand how their home is positioned on the market rather than looking at it personally.

Use their experience as recent buyers to help them see their homes through buyers’ eyes. They will wonder what changes they should make to their home. The practice of real estate morphs with quickening intensity month by month. With all the legal, judicial, technological, and style changes in the last ten years, any seller who’s owned a home for longer than that qualifies as a First Time Seller. The experience this time will be much different than it was the last time they sold.

Here are some of the events that have radically altered the real estate process:

1. The Advent of Buyer Agency. If the sellers have owned their home for ten years or more, it’s entirely possible that they purchased with the help of a subagent and have never encountered buyer agency. This affects confidentiality and the sellers have to understand what they can and cannot say to buyer’s agents.

2. Seller Property Disclosure Forms. In many states, these forms have become required by law.

3. Lead Paint Disclosure. The implications of failing to provide this form to the buyer in a timely manner must be communicated clearly to the seller. This should be the first form completed in the listing process.

4. Technology changes. From virtual tours to web sites to email and texting, the revolutionary impact of technology has catapulted our industry. So sellers may receive reports and communications from us in a variety of methods. Marketing is vastly different and sellers should expect to see a menu of marketing methods.

5 Dual Agency and Transaction Agency. Most sellers want their listing agent, whom they trust and respect, to be the one to sell their home. Many a seller has said to me at closing, “I just wish you had gotten this sale.” They have no idea of the impact on them if the listing agent becomes a dual agent or transaction agent. Regardless of which is applicable by state law, the bottom line is that the services the seller receives are limited in this situation. The agent cannot negotiate for both sides, devising strategies that might give one side or the other an advantage.

First-Time Sellers require as much care and empathy as they did when they were First-Time Buyers. This sale closes the loop and completes their education in Real Estate 101.

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