If you’re starting to sell to the “Millennial” generation, you know that this ever-growing portion of the population, considered anyone under the age of 34, is starting to move the market. Millennials are generally first-time buyers, heading out of the city and into the suburbs to find their dream homes. Those who have been able to buckle down and save enough for a down payment and get financing are well-equipped for a home purchase, but many thirty-somethings are still wary of making the leap into homeownership, and are overwhelmed at the concept. If you’re a broker helping this demographic purchase a property, there are some tips to consider that may streamline the process.
Know your audience. According to recent Pew Research on “The Boomerang Generation,” nearly eight out of 10 25-34 year olds (78 percent) say they don’t have enough money to live the kind of life they want to. Unlike the Baby Boomers, who wanted to strike out on their own, Millennials aren’t as eager to cut the apron strings or give up some of their indulgences. They often spend thousands of dollars on exotic vacations. That’s a significant amount of money that could be put into savings for a home purchase. Educate them on ways to cut back if they want to make the sacrifice.
Provide real, concrete numbers. Many Millennials don’t know how much they can actually afford, and are often surprised at what they’re able to buy within their price range. Help them do their homework and research all available options, and connect them with a bank or financial institution you trust to explain the implications of each choice. Urge them to get their credit score before applying for a loan so that they can fix any deficiencies before someone else points them out. Be sure to walk them through this entire process before showing them the first listing.
Give them a step-by-step plan. Many prospective buyers in this age group have never made such a big life choice, and find the whole process overwhelming. Consider putting a presentation together specifically for the Millennial first-time buyer. Walk them through the process of locating a real estate attorney, mortgage broker, inspector and any number of other industry professionals they’ll need. They will need every bit of your expert advice and should know they’ve come to the right place.
Lay out different housing options. Often, homes or condos that need work turn out to be smarter and less expensive purchases. Educate your Millennial buyers about holding off on expensive renovations – and why it’s smart to live with what they can and make improvements in their own time. This may be a tall order, given the fact that few want to sacrifice their personal luxury for an investment in their future – but the smart ones will do just that. Working on their home when they can afford to will help build equity, which will be helpful when they eventually decide to sell. Consider having them look at alternate cities and towns from the one they have their heart set on; it may be a cost-effective option and is a good way to build equity. They should also consider purchasing a multifamily home – they can generate rent income to help offset costs.
Look for a motivated buying pool.Millennials could have a leg up on the competition if they consider purchasing a home during the holiday season or in late summer. This is generally a slower time in real estate and sellers are more motivated to make a deal. Home sales are becoming less seasonal, but there are still advantages to not buying when everyone else is. Also, have them look at inventory that has been sitting a while – those sellers are a bit more motivated to sell than those with homes just hitting the market.
The bottom line is, young, first-time homebuyers are starting to really make an impact on the real estate market, and more and more of these “Millennials” are dictating trends. Many developers are now paying attention to their lifestyles and building to suit their needs. While it may require more work on the front end to walk them through the process, the end result will be an educated buyer who not only purchases his or her first home with your help, but becomes a repeat client far into the future. Explain to them that their first home is more of a stepping stone to homeownership, and trading up in five to 10 years is always an option. Settling for less than what their dream home will be, and setting goals to achieve that dream home in the future, is good, solid advice. The short-term investment in time and resources will pay dividends in the long run for both of you.
