By Karen Dybis
These days, most financial professionals agree it is more difficult than ever to get inside the minds of first-time homebuyers.
They are self-educated, using the Internet to find the best neighborhoods. They have long lists of demands, and they are fueled by advice from friends and family. Yet they feel vulnerable, unsure how to fund the largest purchase they will ever make.
So how do you attract these savvy yet insecure consumers? Experts say the challenge is to develop programs, products and strategies that build loyalty over the long term. This includes help with credit issues, home-buying seminars, providing timely educational materials and relationship-building events, all aimed at turning first-time buyers into regular customers.
On the plus side, the Mortgage Bankers Association over the next two years predicts that home sales will rebound; and declines in the residential mortgage market should start to slow, according to Doug Duncan, MBA?s chief economist and senior vice president for Research and Business Development.
Additionally, "The 30-year fixed-rate mortgage yield should trend modestly higher over the first half of the year, reaching 6.5 percent by the third quarter and edging up just slightly through 2009. Thus, interest rates will still be quite low by historical standards," Duncan said.
The National Association of Realtors annual Profile of Home Buyers and Sellers shows one vital change among first-time homebuyers is diversity; 26 percent of first-time home buyers are of an ethnic background other than Caucasian compared to 14 percent of repeat buyers. Another 8 percent speak a language other than English.
Other demographics are more constant. The median age of a first-time buyer is 32, and their median income is about $60,000. They tend to purchase a home costing $165,000 and plan to stay in that house for six years. Their median down payment was 2 percent in 2006, but nearly half purchased a home with no money down. Of those who make a down payment, 22 percent received it as a gift from a friend or relative, typically their parents."First-time homebuyers are a niche market I regularly sought out," said Karen Deis, president of Foundation Marketing Inc., a company that provides sales tools, seminars and speakers for the mortgage industry. "For the past decade, new homebuyers represent 40 percent of all home sales."
Deis, who has more than 28 years of experience in the mortgage business, said her favorite technique is direct mailing. She frequently sent postcards to apartment complexes where she knew a high percentage of renters could be potential homeowners.
These postcards often invited renters to attend one of her monthly, free home-buying seminars. At these meetings, Deis avoided technical talk and lengthy discussions about lending programs. Instead, she and one or two associates talked about more pressing topics such as the tax advantages of home ownership and how to increase their credit score. Other expert suggestions include:
1. Study books like Home Buying for Dummies and 100 Questions Every First-Time Home Buyer Should Ask is one way to get ideas about what first-timers want to know;
2. Create flyers or mailings that direct people to your personal or company?s Web site is another way to get their attention. This is a great place to post information about mortgage options, giving people time to study the choices available to them;
3. Keep in touch through client events, which give current and former customers a chance to meet and greet one another. It also keeps your name and business at the top of their minds when thinking about home loans.
Karen Dybis has been a professional journalist for more than 10 years in the Metro Detroit area. Her work was featured in The Detroit News, and The Oakland Press - an award winning daily newspaper.