First Time Homebuyers. Without any apology, I fully admit that this and the last few blog entries have been lifted from previous entries. You might think this is the result of a recent streak of laziness, but I can assure you that I’ve always had a certain degree of . . . well, I wouldn’t call it laziness, but it’s certainly a penchant for finding the least complicated way of accomplishing something. Most importantly, though, don’t fault me for dispensing timeless but relevant wisdom.
Speaking of wisdom, someone much wiser than I – which, let’s be honest, is a fairly large group of First Time Homebuyers that might have trouble finding a meeting space big enough to get together – once shared this little nugget with me: “Seek first to understand, then to be understood.” As mortgage and real estate professionals, we’re required to take a gazillion hours of classes and then take a crazy confusing test JUST to get our licenses, so it’s natural to THINK we know a lot right out of the gate and that the world is just waiting for us to share it with them – and that feeling of being omniscient only grows over time. (I’ll pause here if that last sentence made you laugh and caused you to shoot milk or another beverage through your nose and onto your keyboard.)
The cold hard truth, really, is that someone with absolutely no experience in our industry could run circles around a 20-year veteran if she follows my friend’s advice, and the veteran relies solely on his expertise. Paperwork, forms, negotiation, the art of the deal: all of these things can be learned along the way (and fine-tuned and improved, of course, over time), but understanding the client, her needs, her goals, and her viewpoint HAS TO take place BEFORE anything gets accomplished. Failing to do so or expecting to learn it along the way will only lengthen the process far more than necessary and waste a lot of time.
With that said, I have to make a confession: until I read a recent article from NerdWallet, an online financial consulting company, I thought Millennials (as a home-buying group) were just a bunch of whiners living in their parents’ basement waiting for an inheritance. Obviously, I didn’t seek to understand; I just thought everyone understood and shared my viewpoint.
For the sake of reference, Millennials are those folks who were born between 1981 and 1997: 22-38-year-olds. Here are some of the items the smart ones over at NerdWallet shared in their article that caused me to look at this group of 66 million people a little differently:
- The median age for first time homebuyers in 2015 was 31 years old as compared to 30.6 in 1970-74
- Two-thirds of these folks haven’t even reached that homebuying age of 31, and 22% are under 25
- Millennials are renting for a median of six years before buying as compared to five years in 1980
- Millennials are expected to form 20 million new households by 2025
Also, to add further to my understanding, Fannie Mae conducted a survey among Millennials and found that more than a majority had a positive outlook about purchasing a home; two-thirds of the respondents felt it was a good time to buy even after the housing market collapse. Looks like these young folks DO want to purchase a home!
Lastly, Fannie Mae’s survey found that one of the biggest factors keeping Millennials from buying a home is perception, not reality. When the surveyors dug into the answers like “renting is a more affordable option” and “cannot obtain a mortgage”, they found that these answers were largely based on the belief that a 20% down payment is required and a 750+ credit score is the low bar. (Some of you may be shooting milk through your nose again. I’ll wait.) Reality is more like 3-5% and a credit score of 600+, generally speaking.
There’s a giant wave of Millennials coming, and they obviously need to be educated. Are you ready? If you want to make yourself even more invaluable to this huge bloc of future homebuyers, offer to teach them how to drive a car with a clutch.