Is it Better to Sell to a First Time Buyer?

first time buyers buying first house

Selling a property can be a painful process, especially if you get into a property chain that collapses. First time buyers will not add to your chain as they have no property of their own to sell, meaning your chances of successfully completing on a property sale are much higher.

Attracting first time buyers can be difficult and they are rare in the current economy. There are however aspects of first-time buyers you should be aware of and if you want a bit more security when selling your home, these will help you attract them.

Let’s explore first time buyers in detail and how to attract them.

Who is Classed as a First Time Buyer?

A first-time buyer is someone who has never owned a property in their life. This includes overseas home ownership as the government will not class someone who has owned a foreign property as a first-time buyer.

Typically, first time buyers are younger people who are looking to get onto the property ladder in a cost-effective way or purchase a house to start a family in. Because of this, first time buyers are normally very money conscious and will be careful with the offers they make on a property and be focused on keeping costs down.

Most first-time buyers will be concerned about obtaining a mortgage as this presents many challenges to young people who have never had a mortgage before.

What Help Do First Time Buyers Get from the Government?

Historically, the government has provided a lot of help to first-time buyers. However, this support has been cut back in recent years. For example, the Help to Buy Scheme in which the government offered Equity Loans to first time buyers was removed from new applications on 31/10/2022. With that said, there are still a few government schemes available to first-time buyers to help them afford their first property.

The government schemes in place for first time buyers currently are:

These schemes will not be of much use to you as a seller as they target specific property types like new build housing or properties that are already enrolled in the scheme.

Do not be alarmed though as most of these schemes have significant drawbacks such as financial penalties or restrictions that put off most first-time buyers. In fact, most first-time buyers will opt to purchase their first property without making use of a government scheme – which is fantastic news for you as a seller.

Aside from government schemes, first-time buyers also benefit from a significant Stamp Duty (tax) reduction when buying a property. This means in some cases; first time buyers will target properties at a slightly higher value to make the most of the Stamp Duty benefit that is only available to them once in their lifetime.

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Benefits of Selling to a First Time Buyer

First-time buyers present many benefits for sellers. The most appealing prospect is the lack of a property chain. The only way a chain is created with a first-time buyer is if you need to buy a property and add to the chain your end.

If you do not need to make an onwards purchase the total chain with a first time-buyer will be exactly two links, you as the seller and them as the buyer. This makes it much easier to negotiate any differences without having to rely on third parties further along in the chain throwing a spanner in the works.

First-time buyers are also keen to purchase properties that are close to their financial means as they benefit from the abovementioned Stamp Duty exemption. Because of this your property might not appeal to an existing homeowner because the Stamp Duty is a significant cost for the purchaser whereas a first-time buyer will have much less tax to pay.

How to Attract First Time Buyers

It can be tempting to believe you can market your property at a high value and still attract first time buyers, however this is unlikely to be the case.

Despite the lower Stamp Duty liability, first-time buyers are financially sophisticated and want to get a good deal on their first property. This is not least because of mortgage anxiety which plays on the minds of first-time buyers. As they have not obtained a mortgage before, their key consideration will be to meet the lender’s criterion.

In this respect, the best way to attract first-time buyers is to do the following:

  • Market your property slightly under market value
  • Ensure your property is up to a mortgage lender’s standards
  • Be prepared to answer all questions a first-time buyer has

You may think marketing your property at a lower value is a bad choice. However, the cost of getting into a property chain that collapses can be many thousands of pounds. With property chains falling through on a regular basis, some sellers find it takes multiple attempts to sell a property and by the end of the process are out of pocket by £10,000+.

Marketing your property at £5000 below the market value is a quick way of enticing a first-time buyer and limiting your risk of unnecessary costs in the future.

Most sellers are not aware of property issues when selling their homes and this can cause a lot of frustration with the process, especially if remedial work or insurance policies need to be taken to facilitate the sale. It is a good idea to complete a close inspection of your property to ensure it is up to standard – remember, a mortgage lender will be unscrupulous in their assessment of your house.

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Whether buying or selling a property, it is always a great idea to find out the options available to you by discussing your situation with a mortgage broker.

Mortgage brokers will be able to highlight any aspects you have overlooked and help you acquire your next property in a stress free and cost-effective way.

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Brokerage. Boon Brokers provides fee free mortgage advice.

Book your free, no obligation mortgage consultation with Boon Brokers today.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.