Top 5 Ways to Convert Millennial Renters Into Home Buyers
For first-time millennial home buyers, student debt, unemployment and rising home prices continue to pose formidable challenges, but, fortunately, we have agent-curated strategies — 2020-tested and approved in several hot markets — that can help turn renters into buyers for you.
1. Help Renters Think in Future Tense
Coaching clients to downsize their rent as a means of saving for the down payment, and supporting them rental-to-rental as they make their journey to a new home, might help to nurture the relationship early at the rental stage, says Ken Laroza, director of broker relations for Zillow. He advises agents look at the relationship through a five-year lens, which promises to pay off in high business volume.
Regardless of whether a millennial renter buys from you or not, chances are good that they’ll refer you if you deliver the best experience possible, says Laroza. “Millennials tend to be really loyal to those who treat them well.”
Another way to prime the renter for buying, says Brent Davies, a former property manager and admin assistant for David Dorman C21 Professional Group, Ocoee, FL, is to cross-market with preferred lenders who can help young potential buyers learn to repair credit issues, such as college debt.
The millennial renter may also need a little reminding that they can actually save money by buying. Kevin Grant, broker/owner of Staged to Sell Realty, Jacksonville, FL, educates millennial renters via Zoom interviews, which he posts to social media or emails in a drip campaign, demonstrating how owning is often more affordable than renting.
“When you can show that the principle, taxes, interest and insurance add up to what they’re paying in rent, those two numbers are many times similar. But this house you’re going to buy will make four, five or even 10% more in additional dollars in the future. Secondly, going through the mortgage process, filling out the ‘paperwork’ has gotten so much easier,” says Grant.
Both processes, comparing rent to owning and taking the transaction digital in an end-to-end contract to close, can both be accomplished on dotloop’s transaction management platform. Through the platform’s free interactive real estate forms and worksheets resource guide, users will find a digital mortgage calculator to quickly calculate estimated monthly payments.
2. Use the Work/Life Rule When Posting Social
“When it comes to social media, millennials want to look at agents or companies and see actual people,”says Philip Gazca, whose social media referrals comprise a large portion of his business. “They’re not just looking at information about buying and selling. They want to see your lifestyle. They’re picking agents who they want to work with in the same way they look at restaurants. They want to know what an agent looks like, their values and their reviews.”
Instead of advertising your agent skills in every social post, Gazca recommends telling the story of your business with real-life people, a trend in social media. Then, let your millennial followers serve as your social influencers.
Gazca has found success by creating “almost a virtual TV show,” storytelling through pictures and videos that provide an insider’s look at properties he tours.
Consider expanding your social palette from Facebook to posting 60-second videos on Instagram, Twitter or TikTok.
3. Treat Them As Collaborators, Not Clients
If you want to cultivate a millennial home buyer, you have to treat them more as “collaborators than clients,” Gazca says. They want to be involved.
At the same time, millennials can be somewhat commitment-phobic if they’re feeling pressured, so don’t push too hard, warns Gazca.
“Millennials don’t like to feel tied down. That’s one of the biggest challenges; they tend to be collaborative and want to feel like they’re working with you, rather than ‘I’m the real estate agent and you’re the client.’”
4. Take the Transaction Completely Digital
Ask any millennial what their communication preference is, and they will most likely tell you it’s texting. “Millennials are more willing to text than actually answer the phone. That’s why I ask the question, “How do you work best?” says Gazca.
Marianne Fearon, an agent with Berkshire Hathaway HomeServices Florida Network Realty, Atlantic Beach, FL, has found that this ability to interact with the millennial client immediately is critical. “If you as an agent can do that, you’re going to be able to work for them. Many millennials won’t even check their email,” says Fearon, who uses the dotloop mobile app, which offers a texting feature that lets agents share and eSign contracts, get instant notifications and submit for approval.
5. Consider Lease Management
In 2020, when most of San Francisco’s tech and other industry-based employers suddenly shifted their workforce into remote mode, many millennials, who might have been paying $3500 or $4000 for single rentals, headed out of town in search of less expensive and roomier properties. Boston and New York City also witnessed what seemed like sudden vacancies overnight.
In California, Cassandra Joachim, Director of Business Development with dotloop integration partner Intellirent, automation software for rental screening, witnessed a mass exodus of San Franciscan renters heading toward Sacramento and Lake Tahoe, Napa and Reno with one mission: To rent and buy properties with more space and fewer roommates.
As Joachim reminds, “If an agent isn’t taking advantage of the rental market by offering leasing services, they’re missing a rewarding opportunity to capture leads for future buyers.”
The dotloop/Intellirent integration can help simplify lease management by allowing agents to create loops directly from applications, upload rental documents in dotloop, and autopopulate data. “If you’re using Intellirent and dotloop, you’re saving time by reducing double entry, while ensuring data accuracy, and you’re done in under 24 hours,” she says. “And maybe a year from now, you have a ready-made lead gen database.”
In the future, Gazca predicts that millennials will soon be starring as major players in the real estate industry as buyers and sellers. As they pay off their student debt and secure more stable incomes, they’ll not only comprise a larger portion of the buying pool, he says, but they’ll also start changing the trends in how transactions get done. Why not get ahead of the curve and start nurturing this high-potential demographic today and prepare for a more profitable return tomorrow?