“No one cares how much you know, until they know how much you care.”—Theodore Roosevelt
It may be the most gratifying event of any mortgage lender’s life–helping the first-time homebuyer purchase that first house. The excitement of successfully navigating the biggest purchase in life is palpable. Relief all rolled up into joy and exhilaration. When the American dream of homeownership is fulfilled, it comes with a rainbow of breathtaking emotions.
If serving more first-time borrowers is one of your goals for 2016, please keep reading. I have what I think will prove to be some helpful information and advice for you.
As you’ve likely heard, the generation of would-be first-time homebuyers—the Millennials, aka those born in early 1980s to the early 2000s—are not buying homes at the same rate as generations before them. In fact, the total share of first-time homebuyers declined for the third-straight year in 2015. And just 30 percent of homebuyers in March were first-time buyers, well below the historical average.
Of course, lenders need to understand why this is. You not only have to understand the problem to solve it, you also need to know the mindset of first-time homebuyers so you can meet them on their terms.
I’m sure old Teddy Roosevelt would agree, demonstrating that you understand where they are coming from is the perfect way to show you care. As it stands today, many analysts say first-time homebuyers are delaying homeownership for these reasons:
1. The rise in home prices due to a shortage in supply.
2. The inability to afford a downpayment due to relatively high rental-costs educational debts.
3. Poor credit. Many young people haven’t been able to build their credit. In a new study from Experian, a third of future first-time homebuyers say their credit score might hurt their ability to buy a home. And, 45 percent said they have delayed a home purchase to improve their credit score first.
4. A general desire to become more stable before buying. A new survey from NeighborWorks America says 43 percent of first-time homebuyers want marriage and kids before a home.
So where does this leave lenders who need buyers? The good news is 2016 is looking more favorable for first-time homebuyers.
►The National Association of Realtors (NAR) says continued strong job growth and interest from potential young homebuyers will likely improve the number of first-time buyers this year.
►Interest rates remain low with average fixed-rates well below four percent.
►First-time buyer programs, featuring low or no downpayments, are up and running.
►Nearly three-quarters of Millennials surveyed in the Experian study said they are working to improve their credit, paying down debt, making sure bills are paid on time.
So, with all of this in mind, my tips for reaching first-timer borrowers as you move into the rest of 2016 are these:
1. Stay focused on renters … relentlessly. Studies show that upwards of 70 percent of first-time buyers have rented before buying a home. And keep at it: It generally takes up to 12 mailings to get results. And increase response by offering something of value—free reports on saving money, free pre-qualifications, or downpayment assistance.
2. Hold seminars. New borrowers do attend seminars—even those who are still squarely on the fence. And set regular presentation dates. Think of these seminars like you do mailers—it takes many to get conversions.
3. Team up. Sure, a real estate agents is the obvious partner, but consider home inspectors, attorneys, insurance reps, financial planners, etc.
4. Stay passionate. As I mentioned in the beginning of this article, helping people get into their first home is incredibly gratifying. Show your enthusiasm at every turn and with everyone you meet.
Bubba Mills is CEO of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit CorcoranCoaching.com.
This article originally appeared in the June 2016 print edition of National Mortgage Professional Magazine.
