MARCH 2, 2015 HARD ROCK TEAM

How Well Do U Know UR Client? One of the most important unwritten laws of real estate is to KNOW YOUR CUSTOMER. Just how much you need to know to be successful in the real estate business is the only real question to be answered. I have some data that can provide some of these answers. NAR posted on 18 February 2015 some data on home buyer characteristics that was generated by an in house study. This study found that 60% of buyers aged 34 and under previously lived in a rental unit, compared to 34% of buyers aged 35 to 55. As expected, over 80% of buyers aged 56 and over had owned home before. Equally as interesting and perhaps also expected, over 70% of the buyers age 34 and under had down payments of 10% or less. The

!1

HOLD A HOUSE OPEN

MAKE A POINT TO HOLD A HOUSE OPEN

THIS WEEK!

1st time home buyers dominate the age 34 and under category

MARCH 2, 2015 HARD ROCK TEAM

10% or less down payment percentage dropped to just over 50% for buyers ages 35 to 55. The 20% and over down payment buyers dominate the age 56 and over market in which 60% of these buyers had the heavier down payments.

1st time home buyers also dominate the age 34 and under category with 70% of these buyers citing their first home purchase as reason for buying. In addition, most buyers who identified themselves as investors were mostly above age 34.

What this tells us is that older demographics have more disposable income—younger demographics have less money to put down on a home and have previously come from the rental market. Perhaps nothing is surprising here—but there is a significant common thread here. It concerns the rental market and the renters in that market.

Most economists and pundits in our profession have indicated that the millennial push into the rental market have pushed up rents in many urban markets and generally supported the construction and conversion of properties to rentals. The millennial demographic has not actually embraced the idea of home ownership over the last 5 to 7 years. Perhaps it's the negative appreciation and the non-liquidity of the recent marketplace that has scared them off.

Other floated reasons concerns the heavy student debt load and the closed door to capital markets. But—perhaps it's just that the amenity rich rental choices in the marketplace are what this demographic wants—and they want it now and do not want a long term commitment to the dwelling.

Whatever the reasons—the millennials have generally been absent in the home buying marketplace. Now—most real estate professionals do believe that in order for the marketplace to establish a better home buying footing, the millennial demographic has to re-enter the marketplace; and they have to come in droves. Millennials have to purchase homes—live , work, and spend in the community in order to counter the negative neighborhood effects of foreclosures and short sales.

Yes it's a tall order. The government is proactive in this. Recently reduced MIP premiums on FHA financing have made mortgages more affordable on a monthly payment level. There is also talk about restructuring student loan payback schedules—but nothing is definitive yet.

That leads the balance of the millennial conversion from rental to homeowner for us to enact.

!2

Let’s Get These Sold! Hold These Open This Week

5 Executive Drive-NN$279,900

4 Westbrook Ave-HPT

$199,900

16 Glen Forest-HPT $249,900

MARCH 2, 2015 HARD ROCK TEAM

For the millennial demographic to really re-enter the market, millennials have to be convinced.

They have to be convinced that there is still the potential of appreciation—appreciation that can be realized in shorter time horizons. They have to be convinced on continued affordability. They also have to be convinced that the current housing stock equals or surpasses the amenities, convenience, and comfort of the rental product. But most importantly, agents and brokers alike have to converse with these potential buyers to overcome the home buying inertia that is holding down the market recovery.

Since a good percentage of leads coming into the Hard Rock Team are these 1st time home buyers, you may have to alter your approach in order to KNOW YOUR CUSTOMER.

If your customer is coming from a rental—ask them what they like and dislike. Inquire about the amenities and ask which ones were important in their decision to initially move there. Rank the reasons in a scale of 1 to 10 and match them with potential homes to see.

Financing is critical to the millennial demographic. Disposable cash for down payments is a critical consideration. The FHA program allows for complete gifting of the down payment and closing costs from a family member or relative. Incorporate these options in your customer conversations.

With the financing discussion comes the credit evaluation. Instead of asking..”How's your credit?”..Ask initially..What student loans do you have? Are they in repayment or deferred status?. Since student loans have a significant impact on cash flow and credit profile—get a handle on these first. If student loan payments are late or behind, immediately recommend a credit counselor. Be proactive now—not reactive later.

Also do your homework on the properties they want to see. Analyze past sales—look for trends in property and neighborhood appreciation and put them in the forefront of your presentation. Also remind them of the tax advantages of owning and how that can impact their tax liability.

You have to remember that the millennial has up until now viewed the rental as a comfort zone. You have to make a compelling argument for anyone to move from their comfort zone. Such an argument has to create a value to the risk—this value has to make the home purchase a better and longer term comfort zone than the rental.

!3

realities Real Estate

Safety first:

Man Shot, Killed During Home Showing

Flip or Flop

Housing Flips May Start to Flop

Major Changes

FHA Changes You Need to Know..FREE Webinar

Fire Up

Fire Up Your Personal Brand-FREE WEBINAR 3/25/15

2015 Goal 100 Closed

YTD 11

w/4 pending

MARCH 2, 2015 HARD ROCK TEAM

Not an easy task—but I feel that your success at this is the most critical component of the housing recovery.

Hard Rock Team Lending Partner Spotlight

Meet Ken Hope with Home Bridge Financial Services, Mobile #757-537-4356

1st Time Homebuyers, FHA, VA, 203K Reno Loans, Conventional 3% down

About Ken Hope

As an Loan Originator, Ken Hope’s top priority is providing personalized and friendly customer service to his clients. With 16 + years of experience and a Bachelor’s Degree in Finance from the University of Maryland at College Park, he carefully selects the best loan options to present each client from a vast inventory of home loan products. Ken’s primary expertise is working with the military, active duty and retired, and helping them navigate the VA loan process. He will find you the best loan program for your family’s needs now and in the coming future. Ken also strives to understand the dreams and desires of his clients and make them a reality. He is proud to be a Loan Originator and looks forward to fulfilling your home financing needs. Let Ken be your personal mortgage originator for life!

!4

Our Mission is to make great things happen in real estate by delivering rockstar service to our clients. We value the opportunity to represent some

of the best people that live in the Hampton Roads area.

Make whatever you are doing today, ROCK!