The majority of first time buyers will check to see if they can obtain financing as the first step they make, even before looking at potential listings, according to a new survey of 1,000 buyers by loanDepot and mellohome.
The survey found that an overwhelming majority of almost 74 percent sought financing first. For first time buyers they figure jumped to 85 percent.
“This is definitely a shift from 10 years ago,” says Chris Heller, CEO of mellohome. “It emphasizes how customers are changing their approach to home buying. In the past, they relied on a real estate agent to drive the entire process. Now the customer is taking charge and doing a lot of the groundwork before they even get an agent involved.”
According to Heller buyers are realizing that it’s better to ensure they’re able to obtain the financing they need first of all, as it gives them the confidence to shop for the home they want, and “puts them in a more advantageous, competitive position, especially in tight markets.”
It also helps to have a pre-approval letter for financing when it comes to actually making an offer, Heller said.
The survey comes at a time when buyers are reporting more anxiety in the housing market, amid a limited supply of housing inventories. For example, 67 percent of respondents said that finding the right home is not easy, while others pointed to the stress of coordinating paperwork with loan applications. Most buyers said the entire process was “time consuming” and “challenging”, adding that the time it takes to secure financing is a major cause of stress as well.
Also, buyers expressed concerns that their real estate agent and loan consultant weren’t communicating with one another. But that may stem from miscommunication, researchers note.
“On 100 percent of transactions, agents and lenders are talking with one another,” says Heller. “The fact that customers aren’t aware of that tells us that more transparency and thorough communication by the real estate professional is warranted. We all need to do a better job.”