Data from Zillow Group’s Consumer Housing Report 2018 reveals a sizeable generation gap between Millennials and Baby Boomers. What these younger buyers and sellers want may surprise you.
Yet, even more significant, are their attitudes toward the real estate process and how they differ from those of previous generations. Compare the opinions of Millennials with those of their parents’ generation, the Baby Boomers (ages 54-73), and it quickly becomes apparent that this is not your father’s house-hunting experience.
According to the report, Millennials as a group are more likely to assume an active role in the real estate process, taking on activities that were once considered the sole duty of the agent, such as deciding which properties to view when buying and determining the listing price when selling.
While these younger clients overwhelmingly prefer to work with an agent, they’re also self-educated in the real estate process and are taking on a much more active role in certain tasks compared to that of their parents’ generation.
Not surprisingly, the tech-savvy Millennial expects their agent to expertly manage the more complex transactional steps with the best tech to get the deal done quickly and smoothly while keeping them apprised every step along the way.
To create the 2018 report on consumer housing attitudes, Zillow Group teamed up with a market research and data analytics firm to conduct a nationally representative, online quantitative survey of more than 13,400 key household decision makers on everything from renting and buying to selling a home.
The researchers discovered a significant generational shift surrounding the processes of buying and selling a home. For example, Baby Boomers looking to buy will interview an average of 1.6 agents before hiring one, whereas Millennials will interview an average of 2.7 agents.
Also, when evaluating an agent, the study found that 57% of Generation Z buyers (ages 18-23), 48% of Millennials (ages 24-38) and 46% of Generation X buyers (ages 39-53) who use an agent find online reviews and ratings to be very or extremely important versus 30% of Baby Boomers (ages 54-73) and 29% of Silent Generation (74+) buyers — good news for Zillow Premier Agents who use dotloop’s instant client review request feature when they close a deal.
If a Millennial doesn’t know how to do something, they “Google it” or “YouTube it” for instructions, while Baby Boomers are more likely to hire a professional to help.
Rapidly rising housing prices have also influenced this younger generation’s view of real estate. Most Millennials have never known a buyer’s market. For them, purchasing a house can create a major financial stress. Many need to rely on their family and friends for help with a down payment with a greater portion of their income going to pay the mortgage.
Thus, it’s little wonder that Millennials are constantly seeking ways to gain the upper hand in the process, including self-education to stay more involved and save money in their real estate deals.
That said, this younger generation places high value on having the right online tools. According to the Zillow housing report, Millennials are most likely to use online resources (88% versus 79% of Generation Xers, 70% for Baby Boomers and 51% for Silent Generation buyers).
Younger buyers, who are more likely to face stiff competition in the urban markets they tend to favor, also place importance on an agent’s negotiating skills and strategies to help them prevail with an offer. According to the report, 84% of Generation Z buyers and 73% of Millennials working with an agent rank them as very or extremely important agent qualities.
Interestingly, Millennials are more likely than their parents to take on key listing activities. While all sellers look to their agents for pricing advice, the Zillow study found older generations are more likely to seek agents’ advice to determine the list price than younger generations with 89% of Silent Generation sellers noting that they rely on agent advice, compared with 75% of Baby Boomers, 66% of Generation Xers and 62% of Millennials.
The research also found that Millennials are more involved in hiring inspectors (33% of Millennials); taking an active role in photography (32% of Millennials versus 11% of Baby Boomers); and actively promoting their home themselves on social network sites (38% of Millennials versus 10% of Baby Boomers).
Based on these attitudes, the housing report identified a new type of client, a younger-skewing client base that the researchers labeled the “Do Some of It Yourselfers.” In other words, as a seller working with an agent, many Millennials consider it their job to help find interested buyers.
This active role mindset can also pose challenges for today’s agent, as lower commissions or rebates appeal to 59% of Millennial sellers and 52% of Generation Xers, compared with 42% of Baby Boomers and 38% of Silent Generation sellers who find them very or extremely important in selecting an agent.
In the pursuit of minimizing costs and maximizing success, the twenty- to thirty-something generation tends to take every advantage technology can offer. Unlike their predecessors, they want a teammate relationship with their agent whom they can trust enough to readily share information. Research also shows that they would rather receive this information via text rather than a call (think dotloop’s new text Messenger feature). But most of all, they want their agent to use their market knowledge to give them the edge in the deal.
In other words, well-informed Millennials won’t settle for an agent whose tools and expertise are no better than what they can do for themselves.
Many thought-piece articles on real estate talk about the coming widespread disruption of technology in the future, but the transformation of the industry by its largest group of customers has actually been in effect for some time now.
According to a recent study by Pentagon Federal Credit Union, the majority of Millennials are planning to buy over the next two years, with their share of the market expected to grow even more rapidly.
Millennials don’t want their agent to be the sole authority and information gatekeeper that was the norm for their parents’ generation. Rather, they’re looking to partner with an agent who can supply expertise on everything from neighborhood characteristics to legal requirements, using the best technology to speed up offers, smooth the transaction process and offer the most up-to-date knowledge on the progress of the deal.
Those agents who embrace these changes by adopting real estate transaction management technology and other digital resources will succeed in gaining a greater share of the Millennial business by offering them the mobility, convenience and expertise their younger clients crave.