Ready to increase your market share? If so, pay attention to a soon-to-be-released study from Zillow Group that shows 53 percent of all buyer sales in 2016 were to first-time buyers.
Amy Bohutinsky, the COO at Zillow Group, recently shared the results of a 160-question survey Zillow conducted with 13,000 homebuyers and sellers who closed transactions in 2016. The results demonstrate that the notion the market is too expensive for first-time buyers is simply a myth and here’s why.
Due to low-interest rates, homes are more affordable today than they have been in decades. Zillow’s findings show that today’s borrowers are spending an average of 15 percent of their income on their mortgage versus the 30 percent that they spent during the 1980s.
To illustrate this point, a $400,000 30-year fixed rate mortgage at the 1986 prevailing rate of 12 percent interest had monthly payments of $4,220. The same loan today at 3.75 percent would have payments of $1,771.
The 1986 $4,220 payment would amortize a 30-year fixed rate loan of approximately $1.1 million today — almost three times the amount that it would have amortized 30 years ago.
Millennials want to buy as much as boomers do
The average buyer in the Zillow study was 36 years old with half the buyers being millennials.
Another surprising finding was the percentage of millennials who want to own a home is very similar to the percent found among boomers.
Their motivations for purchasing were also similar. According to the most recent National Association or Realtors Profile of Home Buyers and Sellers, the primary motivations driving millennials to purchase include their desire to own a home, a job-related relocation or move, the desire for a larger home or a change in their family situation.
Where do first-time buyers find their agents?
Zillow’s research shows that 32 percent of the buyers found their agent through a personal referral while 28 percent found their agent online.
Regardless of how buyers find their agents, however, they are researching potential agents online. Because of this, Bohutinsky recommends that you make your online profile, reviews and testimonials as detailed as possible — your profile will be among the first places that the buyers search.
Seasonality of real estate search
Real estate sales tend to peak in the spring and the summer, but the shopping process begins long before buyers pick up a phone and call an agent.
In fact, Zillow’s research shows that the biggest week of the year for consumers to download its apps is the week between Christmas Day and New Year’s Day.
The explanation is simple — all the tablets and phones that people received as holiday gifts. This peak lasts until about January 16th and then picks up again from February 16 through May 16.
Capitalize on the first-time buyer trend
Target marketing first-time buyers today is easier and less expensive than ever before. If you are going to employ traditional print marketing, you can use REI Source (available through most title companies) to obtain a list of high probability renters who might soon become homeowners.
REI Source charges 5-10 cents per name, and you can request very specific parameters including age, income, profession, number of children or just about any other requirement that you might like to use.
To illustrate how this works, you could order a list of renters in your geographic location who have recently subscribed to magazines such as BabyTalk, Parenting or American Baby and that earn a specific income. Chances are they will be considering becoming a homeowner very soon.
You can use a similar approach on the social media as well targeting using Facebook ads. Facebook has the data, and it’s probably a better ad spend than doing SEO or paying for online ads that people can block with an ad blocker.
As Brad Inman observed, his daughter found out she was pregnant based upon the types of ads that Facebook was serving up on her timeline.
Where they will buy
Unlike Boomers who are willing to live within a 20-30 mile radius of friends and family, millennials prefer to be within a 10-mile radius. Almost two-thirds cite being near friends and family as being important in their decision about where to purchase.
Leverage your buyer’s introductions
Because friends and family are so important to younger first-time buyers, don’t be surprised when their parents, stepparents and two or three carloads of their friends show up to see the property.
When this happens, you have another opportunity to receive a personal introduction not only to their first-time buyer friends but also to their boomer or Gen X parents who might have a property to sell as well.
When your buyer introduces you to someone who is viewing the property with them, visit that person’s profile on Facebook, Instagram and Snapchat.
If your buyer clients are active on any of these sites, offer to take pictures of them and their friends so they can post on their respective sites. Follow up by extending a friend request as well as tagging any photos that you took also.
When the property closes, offer to have a host closing party once your buyers have settled into their new place. This is another opportunity to meet their friends and family. If your buyers are thrilled with their new place, chances are you’ll generate even more business.
First-time buyers — a refuge in the next downturn?
If Gary Keller’s prediction that a market slowdown is on the way, keep in mind that the one part of the market that generally continues to be strong in a downturn is the first-time market.
In a buyer’s market where your listings aren’t selling, betting on first-time buyers might be one of the smartest moves that you can make.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/
