First-time homebuyers today are different — and it pays to understand those differences. Half of today’s homebuyers are under the age of 36, according to Zillow Group’s Consumer Housing Report.
Although millennial and Generation Z homeownership rates lag behind those of previous generations, there is a huge pool of potential buyers for real estate agents who can serve this demographic effectively.
To be successful with millennials and Gen Z buyers, agents must become familiar with the younger generations’ comfort zones, priorities and challenges. Here are seven tips for agents who want to tap this potentially lucrative pool of buyers.
1. Focus on their preferred platforms
This generation of first-time homebuyers prefers to take charge early in the process, according to Zillow Group. They’re far more likely than previous generations to do independent research on home prices and neighborhoods before contacting real estate agents.
Today’s first-time buyers also live on Instagram, Pinterest and YouTube. They prefer to text when they communicate and spend more time on their phones and tablets than computers.
Smart agents don’t waste time and money on emails, calls, postcards and billboards to reach this group. Instead, they opt for winning social media campaigns featuring gallery-worthy photos of homes.
Don’t annoy young potential buyers by making them slog through tons of gushy prose on your posts or your site. Instead, put the facts — bedrooms, baths, square footage, asking price and neighborhood — front and center, right on the photos.
2. Think rental potential
Rent potential might sound a little crazy for a first-time home purchase. But millennial buyers are much more likely than older generations to consider a property’s rental potential even though they will be owner-occupiers.
Forty percent of millennials and 48 percent of Gen Z buyers told Zillow Group that future rental potential was “highly important,” while just 29 percent of Gen X and 8 percent of baby boomers feel that way.
This might be because they have less faith in the job market and might have to move for their careers. Or they might want to eventually upgrade their home and plan to rent out their current home instead of selling it. You can get a jump on the competition, then, by providing a rental income analysis on a property when you approach these first-time buyers.
3. Generate online reviews
Today’s first-time buyers pay close attention to reviews and place high importance on the experience and opinions of their peers — much more than previous generations.
Ask for reviews from clients after every closing. You can build a base of recommendations by sending a survey to all of your previous clients. Ask for testimonials, and include photos and client names whenever you can get their permission. Younger buyers respond to positive reviews from clients their own age, so try to feature at least a few on your website and in your social media campaigns.
4. Show some respect
Today’s first-time homebuyers are more likely than baby boomers or Gen X buyers to do much of the initial legwork themselves online. They’ll likely approach you having already familiarized themselves with market conditions and mortgage options. They know what they want, and they’re hiring you to make it happen.
Millennials appreciate an agent who takes care of offline tasks they can’t or don’t want to do — such as ordering inspections, handling title issues or negotiating closing costs, which usually amount to 3 percent to 5 percent of the home’s sale price.
They gravitate toward agents who communicate with them in their preferred style and don’t waste their time. If millennials text you a request for information, don’t reply with an email they have to open or a voicemail they have to listen to. They simply want a text back.
5. Understand their challenges
Today’s first-time homebuyers face some pretty steep obstacles to homeownership. Student debt has caused 61 percent of millennials to delay a first home purchase, according to a survey by SoFi. The aftermath of the Great Recession and now the coronavirus has financially hindered more millennials than older generations; millennials currently carry about $33,000 more in debt than baby boomers.
Not only are first-time homebuyers still paying off student loans, but student debt is only getting worse. Forty-eight percent of college students are taking out more student loans as a result of COVID-19, and 33 percent have taken out at least $10,000 more in student loans than 2019. To appeal to first-time homebuyers, you must understand their finances and debt.
These younger buyers are less likely to have a large down payment saved. So, this generation is likely to appreciate reliable expertise concerning low- to no-down-payment loans, down payment assistance (DPA) and other homebuyer assistance programs. Become the go-to source of this information or establish a relationship with lenders that specialize in these transactions.
6. Focus on the features they want
When creating those compelling Instagram stories, Facebook posts and Pinterest boards, highlight the home features millennials and Gen Z buyers want most. And after sheltering-in-place for months, these desires have changed markedly.
According to Builder Developer Magazine, millennials want more space — indoors and out. Many adopted dogs during their confinement; 80 percent of millennials own dogs and a desire for room for their pets to play outside. Multi-family communities with dog runs and grooming stations are booming. Yards top the must-have list for many millennials.
Other popular options are light, bright functional kitchens with plenty of storage. Cooking at home is essential these days, and minimizing the number of shopping trips is important.
Layouts that offer privacy are more popular than open-floor plans that make it impossible to work from home while kids play. Sliding doors and partitions solve this problem nicely. What’s more, integrated power, connectivity, smart appliances and remote controls are crucial.
7. Stay on their radar
Millennials are the most brand-loyal generation. This means they are likely to remain loyal to agents if they’re happy with their service. They will use their agent for the next transaction and recommend him or her to others. That’s a bonus because these recommendations carry enormous weight with their peers.
Staying in contact with these happy buyers is very likely to provide a continuing income stream. Establishing yourself as a trusted source of information can pay huge dividends down the road. Here are a few ways you can do this:
- Show that you care about them as people. The pandemic has been really stressful, even for those who kept their jobs and can afford to buy homes. It’s more important than ever that agents stay away from pushy sales-oriented behavior during the COVID crisis.
- Keep communication safe. Provide all the information while acknowledging the need for safety. Respect everyone’s comfort zones.
- Develop expertise your buyers can share with their friends. A NextGen survey found that 20 percent of millennial buyers were not confident buyers. Sharing content that makes them more confident boosts your credibility.
After closing, touch base in a friendly way. Post content about DIY improvements, recipes, decorating and design tips and information for parents and pet owners as well as home-related content.
Host fun client appreciation events (when it becomes safe to do so). Be funny if that’s your style — if your first attempt at baking bread created door stops for every entrance in your home, post pictures of the offending loaves on Instagram.
Today’s world is starved for connection, and there’s no reason you can’t build relationships at the same time you make money.