By Neil Collins
Many Bay Area renters and tenants believe homeownership is out of their reach, but is that just a common misconception?
“According to a survey conducted last year by the California Association of Realtors, first-time home buyers accounted for 49.4% of the transactions in Santa Clara County for 2020,” says Oscar Wei, deputy chief economist of the association.
Despite this encouraging statistic, we know the red-hot housing market poses many challenges for first-time home buyers.
I reached out to local Santa Clara County Realtors to learn how they prepare their clients for the home buying process.
Ben Frieden is a real estate agent with Keller Williams Bay Area Estates. He started selling real estate at the age of 21—right out of college—and has been in the business for just over five years. Ben has had a lot of success with first-time home buyers. He explains that coaching his buyers upfront is the key to managing expectations.
“This market requires patience. Every ‘no’ is one step closer to yes,” he said. It typically takes him three to four offers before he gets a first-time home buyer into contract. The first offer is usually more of a learning experience for his buyers, one where they gain a true understanding of the market. Every subsequent offer is made with a purpose.
To understand the journey of homeownership from the perspective of a first-time home buyer, Ben introduced me to Amanda and Mark. Amanda is an actor/director and Mark is a test engineer. After several years of contemplating whether or not they could actually afford to purchase a home, they decided in Fall 2020 to seriously begin their search.
They set up a personalized search on Zillow and found a listing during Thanksgiving they felt would work. They hired Ben to represent them, and after he made an assessment to determine the couple’s needs, he recommended they skip making an offer on that particular house since it did not match their needs and wants.
According to Amanda and Mark, that immediately built up trust and they followed Ben’s advice to the letter. By January 2021, they were handed the keys to their new home as first-time homeowners.
Mark shares, “Stick with your budget. It’s easy to get caught up in the market. There is going to be something out there that checks all your boxes.” Amanda added, “Don’t be afraid to take things at face value, be willing to do what it takes to make the house your own.”
Alma Castro of Coldwell Banker Residential Brokerage has also had some great success with first-time home buyers.
“We all know it is a tough market for our buyers right now,” she said. “But it is our duty as Realtors to find out ways to put our buyers into contract.”
For Alma, the process begins with qualifying her clients for the loan so they are ready to compete in the market. Much like Ben, Alma also spends a considerable amount of time preparing her buyers and properly setting expectations. She stays engaged with the listing agent, even after her client’s offer was not accepted, just in case the buyer with the winning bid falls through. In that scenario, her client is lined up in second position and poised to close in a timely fashion.
Alma introduced me to her clients Adrián Felix and Claudia González. Both are educators, one a high school counselor and the other a university professor. They happily shared their “life-altering” experience as they became homeowners for the first time.
“Navigating the housing market in the midst of a global pandemic was nerve-wracking and, at times, stress-inducing,” Adrián said.
In their hearts, they both felt that this was the right time to make that lifelong investment. They really emphasized to me the importance of working with the right Realtor.
“As first-generation children of immigrants, I cannot emphasize enough how important it was to have a Realtor who is bilingual, socially aware and culturally competent,” Claudia said. “Too often, communities of color navigate the real estate market with steep information asymmetries and face discriminatory or predatory practices in the industry. Having a Realtor who you can trust is of the utmost importance.”
In both examples, working with a Realtor that truly understands a buyer’s needs and one that is also able to appropriately prepare a buyer with reasonable expectations in this market is absolutely critical.
An additional key factor in preparation for homeownership is getting the financing in order. It is premature to begin making offers until buyers are pre-approved and have set a budget.
Also, too often, potential buyers sit on the sidelines because they assume they need 20% as a down payment to purchase a home. That is not necessarily true.
There are several programs established in the Bay Area to help buyers overcome that obstacle. First-time home buyers can work with Bank of the West as a preferred lender of the Housing Trust Silicon Valley Empower Down Payment Assistance Program to purchase a property up to $1.1 million.
Wells Fargo participates in the NeighborhoodLIFT program to provide up to $25,000 in down payment assistance. To qualify, income limits apply and the property must be located in Santa Clara County and the surrounding counties.
Bank of America also recently launched the Bank of America Community Homeownership Commitment that allows buyers to apply for up to a $10,000 down payment grant and an additional $7,500 that can be used toward closing costs. Potential buyers should check with their employers about first-time home buyer assistance as well.
That was exactly what Adrián and Claudia did and they were awarded with the keys to their dream house this past January.
San José Spotlight columnist Neil Collins is CEO of the Santa Clara County Association of Realtors, a trade association representing more than 6,000 real estate professionals in Santa Clara County and surrounding areas. His column appears every fourth Thursday of the month. Contact Neil at email@example.com or follow @neilvcollins on Twitter.
This article was originally published by The San José Spotlight.