Are millennials really losing their chance to buy real estate?
A divisive topic I get asked frequently. As a millennial REALTOR®, I respond no, millennials are NOT losing their chance. This is potentially a biased opinion, so let’s break it down.
If you have clients in the age range of 25-35 (some older millennials are starting to reach 40-years-old now), I often find there’s a sense of fear when starting the discussion of real estate.
Want to hear more about working with first-time home buyers? In Episode 14 of REAL TIME, we speak with former TV host and broker/owner Sandra Rinomato about the fears or misconceptions that hold some first-time home buyers back and what REALTORS® can do to help them.
As REALTORS®, we have insights into the climate of the market in our cities, we look at the numbers and statistics every day (if not multiple times a day!) to have the most accurate idea of market trends to be able to best advise our clients based on their situation. REALTORS® have exclusive access to the MLS® Home Price Index, the most advanced and accurate tool to gauge a neighbourhood’s home price levels and trends.
The public doesn’t have access to the same information, and they don’t always have our expertise at their fingertips.
So, what can we do to help our millennial buyers?
The first question I ask my first-time millennial home buyer clients is: Why do you want to own real estate?
I often get answers like, “I feel like it’s my next step” or “I hate paying someone else’s mortgage.”
Sure, these are valid points, but I always challenge my clients to help them really gauge if they actually want to own real estate, or if they’re interested for the wrong reasons (for example, “it’s the trendy thing to do because all of my friends on Instagram are buying homes”).
Dig deeper to help uncover your client’s true motivation for wanting to own real estate. This is a great exercise for you as an agent to practice asking qualifying questions, while also an excellent exercise for the client(s) so they can be confident in their reasoning for buying real estate.
REALTOR.ca also allows consumers to browse rental listings.
Tough love and managing expectations
I like to give my clients a reality check. No, you might not be able to afford a 2,000 sq. ft. home near the trendy part of downtown, but there are other options.
I remind my clients of their goal from the beginning of our talk: owning real estate. It may not be, and likely will not be, their perfect dream home, but there’s something to be said about building up equity in a smaller home first for them to be able to purchase a dream home in the coming years.
De-mystifying condo fees
I certainly am not the only REALTOR® who has run into this topic with a client. “I’m not considering condominiums because I can’t imagine paying condo fees.”
We’ve heard it before.
So, how can we help break this down? Help guide your clients by firstly showing them the difference in pricing of a residential property vs. a condominium and secondly, explaining how condo fees work.
For example, when you own a home, the general rule of thumb is 1% of your home price should be set aside for maintenance. On a $500,000 home, that’s $5,000 for the year. A $300/month condo fee works out to roughly $3,600 for the year. Either way, money needs to be set aside for maintenance and as part of a condominium corporation, condo fees are in a way this maintenance cost.
Laying this out for your client may help put things into perspective and open their eyes to the potential of owning a condo.
Stay positive and don’t rush them
With what could be the largest purchase of their life on the line, now’s not the time to say, “if you don’t act now, you’ll be priced out of the market.”
Help your clients set their budgets to save for their down payment, help get them pre-approved and keep them up-to-date with the trends in the areas of the city they’re interested in calling home.
You can be sure they’ll appreciate the effort you put in and will be ready to purchase a home with confidence, when the time is right for them.