How Millennials Are Transforming Home Buying
By Teresa Mears
For decades, the telephone has been the real estate agent's tool of the trade. But a new wave of younger home buyers is changing the way agents use those phones. Millennials, born between 1980 and the late '90s, don't want to talk. They want texts.
"We're on our phones all the time, and this generation does not like to pick up the phone," says Player Murray, managing broker at Berkshire Hathaway HomeServices York Simpson Underwood Realty in Raleigh, North Carolina. "They don't want to bother with a conversation if it can be texted."
As the millennial generation, also known as Generation Y, takes a greater role in the housing market, young people's preferences are starting to shape the way real estate business is done. The real estate portal Zillow predicts that millennials will overtake baby boomers as the generation purchasing the largest number of homes this year, making their preferences even more important.
"Because of their [age group's] size, whatever they decide to do will have an impact on the housing market," says Nela Richardson, chief economist for the real estate company Redfin.
It goes without saying that this group relies on technology. More than 50 percent of millennials search for homes on their phones and, among those, 26 percent end up buying a home they found that way, according to data from the National Association of Realtors.
"Mobile traffic to our app has outpaced traffic to our desktop site dramatically," says Paul Reid, a Redfin agent in Southern California's Inland Empire region. "Folks first go to their iPhones and their iPads."
Dealing with these tech-savvy buyers has posed a challenge for the nation's real estate agents, who tend to be considerably older than the home buying population they serve. A NAR survey of its members in 2012 found that only 3 percent of agents were under 30 and 81 percent were older than 45, with 25 percent over 65.
Murray, the North Carolina broker, is a member of Berkshire Hathaway HomeServices' REthink Council, a group of 15 young agents nationwide formed in 2013 to help the company meet the needs of younger customers and recruit young agents.
"We're seeing a population on the consumer side that is not being served by its own age group," says Murray. "It's causing a lot of change in the way experienced agents are having to communicate."
One example of a company that has changed some of the traditional ways real estate is bought and sold is Redfin, with technology taking a key role. Redfin agents are paid based partly on customer satisfaction ratings. Customers can ask for home tours online or via the company's app, as well as sign up for alerts about new listings and use their phones to search for open houses near them. The Redfin Deal Room lets customers keep tabs on the process of their transactions 24/7.
"We find that our buyers, and particularly millennials, like having that information at their fingertips," Reid says.
Yet Redfin has found that customers still value face-to-face contact with an agent, and predictions that technology would make agents obsolete are proving unfounded.
"Agents are needed because they are that trusted resource when it comes to signing a contract," Reid says. "If you were on your own, it can be overwhelming. It would be a second job."
Here are 10 ways millennials are changing real estate:
Don't call us, and we won't call you. Many millennials prefer to communicate by text, but some prefer email. It's important for agents and customers to clarify upfront how they will communicate and how often, as well as how quickly they can expect a response.
We've done our homework. Millennials rarely need agents to find homes for them to see. They usually have their own list, and they've already researched comparable sales and chosen a neighborhood. "With millennials, we do not control information," Murray says. "What they need is for us to interpret the information." At times, that can mean demonstrating that the information is not accurate, but this generation may not simply take the agent's word without proof and visuals.
We don't like surprises. Younger buyers want to know what to expect and when. "I see them wanting to understand what's going on at any time in the process more than any other generation," Reid says. They like timelines, checklists and charts. "If they don't know what's coming around the corner, it could cause paralysis when they get there," Murray says.
We want customer service, and we want it now. Millennials expect to be partners in the home search, and they want quick answers to questions. "They want information, and they want valid information, and they want it right now," Reid says. "They're the generation of Google at your fingertips."
Is there an app for that? Younger buyers live on their smartphones and use them as a key tool in their home searches. Apps are often their preferred method to check listings and collect other information.
What did your other clients think? Many millennial homebuyers get recommendations on agents from their parents, but they also do some research online before they ever call an agent. They want to see testimonials on an agent's website, as well as read online reviews.
You call that social media? As far as millennials are concerned, a Facebook page with listings is something their grandmother would do. They expect agents to engage them on social media. "They need to feel like they're a part of your business," Murray says. "Just reposting an article that's been posted 1,000 times across the country isn't enough."
Tell us what data you want, and we'll text it right over. Unlike older buyers, young people are not bothered by being asked for bank statements, employment verifications or other personal data required for mortgage approvals. "The younger people are used to having to supply everything about who they are," says Don Frommeyer, chief executive of the National Association of Mortgage Professionals and a mortgage broker in Indianapolis. "They'll give you everything."
No stainless steel appliances? Reject. Younger buyers sometimes have trouble seeing the bones of a home and often don't know which features can be changed easily at minimal cost. That's an area where they value guidance from agents that can help keep them from making a mistake. If they're buying a home that needs work, they also value referrals to contractors and vendors. "You've got to be able to provide resources to them," Murray says.
Yes, we can afford that. Finding a home they can afford in the location they want is a challenge for many younger buyers, especially in cities, Richardson says. Some are embracing the sharing culture by seeking homes with rental units or rooms that can be rented out on Airbnb or other services. "I think we're going to see millennials solve that problem in a different way," Richardson says.