How to Educate and Convert First-Time Home Buyers
By: Kyle Kamrooz
January 21, 2020
By:Kyle Kamrooz
January 21, 2020

How to Educate and Convert First-Time Home Buyers

After much hand-wringing that millennials would rent forever, this generation is finally buying homes – and in fact has made up the largest generational group of homebuyers in recent years (36 percent in 2018).

Surprisingly, they were held back by a lack of savings and a mountain of college debt, not an aversion to home ownership. This generation, however, is different from the ones that came before – and all first-time homebuyers are different from those who have bought in the past. 

Here’s what Originators need to know to ensure they’re offering enough support to first-time and Millennial customers to ensure a positive experience for everyone involved.

Educating Today’s First-Time Homebuyers

For today’s Originators, discovering what questions first-time homebuyers have is as easy as looking at search behavior online. Tools like Keywords Everywhere and Google Keyword Planner reveal exactly how many are typing various terms into their browsers every month. 

Among the most popular searches for first-time homebuyers are queries about…

  • The home-buying process
  • Tips, seminars, classes, and workshops on buying a home
  • Down payments
  • Calculators (for down payments, mortgage payments, taxes, total monthly payments, closing costs, etc.)
  • FHA loans
  • Grants available in the borrower’s state
  • Taxes
  • The home-buying timeline

In other words, first-time homebuyers have questions about almost everything. As an Originator, you can demonstrate value to your first-time homebuying clients by being a trusted source for answers and educating prospects. 

There are several ways to do this effectively. The most effective is to provide answers in multiple formats, because today’s buyers are likely to rely on both online and offline media to find the information they want. For example, you might meet your customers’ needs by doing the following:

  • Including content on your own website or linking to helpful information from a non-competitor’s website. This HUD page, for example, offers a wealth of resources for first-time homebuyers.
  • Posting useful articles and resources to your social media account (or your organization’s). This gives prospective homebuyers a reason to follow you and keeps you top of mind as they engage with your posts.
  • Offer seminars, classes, or workshops on the home-buying process tailored to first-time homebuyers. This is a great way to generate leads and build trust among potential customers.
  • Talk to customers and potential customers in person, whether that’s in your office, at an open house, or somewhere else. Be ready to spend more time answering questions than you would with more experienced buyers.

While it’s true that having an online presence will help you connect with today’s first-time homebuyers, in-person conversations may matter just as much. Research from Ellie Mae can help us understand why.

Converting Today’s First-Time Homebuyers

Today’s first-time homebuyers are slightly older than members of previous generations were when they bought their first homes. While 37 percent of 25- to 34-year-olds (Millennials) owned homes in 2015, 45 percent of Baby Boomers and Gen Xers did at that age.

This generation of first-time homebuyers is also more likely to rely on digital tools for nearly every aspect of their lives (dating, ordering cars, shopping, etc.). It’s no surprise, then, that they’re also more likely to find their homes via websites and apps – and that they expect their lenders to be able to serve them digitally, from application to close.

What may surprise Originators, though, is that many first-time Millennial homebuyers also want lots of in-person contact throughout the home-buying process. In fact, Ellie Mae’s 2019 Borrower Insights survey found that…

  • Baby Boomers (i.e., the most experienced homeowners) were the only generation from which more than half of respondents considered “not having to meet in person” to be an advantage of a digital mortgage application.
  • 79 percent of Millennials reported meeting in person frequently with their lenders, compared with just 61 percent of Boomers.
  • Lenders tended to reach out to Millennial customers more than twice as often as to Boomers, but Millennials were still about six times more likely to report that their lenders hadn’t reached out enough. 

Collectively, these findings illustrate how important it is to stay in frequent contact with first-time homebuyers. It’s important to note, though, that this frequent contact from Originators needs to supplement – not replace – the digital tools lenders make available

The key to converting today’s first-time homebuyers lies in blending the digital (listings, applications, processes) and the human (in-person meetings, emails, texts, seminars, and phone calls). Providing both lets lenders engage with customers in the ways they’re most comfortable engaging while also easing any discomfort they have around the homebuying process.

Building Trust Online and Off

Today’s homebuyers have different expectations of the technology available to them during the homebuying process, but they still want to buy from a lender they trust. Building that trust comes from both online and offline sources: providing helpful answers to customers’ questions, pointing them toward resources they can use to get more information, being easily reachable and available via online and offline channels, and having an intuitive, efficient online application. 

Converting first-time homebuyers in the digital age requires not only being an expert in the work you do but also being able to deliver your expertise in the many digital and human channels younger and less experienced homebuyers prefer.

Curious about how updating the digital side of your offering might affect your bottom line? Check out our ROI calculator to get an idea.

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