We have reached a point in our American society where Millennials are quickly taking control of the way we do business, use money and in many ways live our lives. According to Forbes Magazine ¼ of the American population are Millennials. These well-educated and socially minded adults are moving into positions that carry the power to take the business world to new heights.
Companies are pulling out all the stops to attract the cream of the millennial crop. This sector of people has a significant impact on buying trends. It is estimated that they have an annual buying power of around $200 billion dollars.
The change in their core values will affect the real estate industry
So, how will that affect the real estate market? In the Forbes survey (link above) 72% of people in this age group said they would rather lease a home and buy a car if given a choice. The idea of saving is not as important as the idea of keeping a good credit score. They expect to live in comfort and have access to luxuries. With that in mind, 61% admit that they could not afford to buy a home.
Smart people in the real estate industry are paying attention to those numbers. They are reconstructing the way they do business to accommodate this trend. Even our ancestors knew the importance of owning property. In today’s world of finance, the ownership of property brings with it perks in the power of equity, the rise in our financial portfolio and tax benefits. But real estate experts understand that is not the most important issue to most property owners. The driving force in real estate is the ability for that property to bring in immediate cash flow.
The smart agent ensures that his company can satisfy everyone’s needs:
- The property owner gets immediate cash flow.
- The ease of providing short-term leasing facilities (in the business sector and in the residential sector) often leads to the owner opening more of his properties to this option.
- The renter is able to take immediate access to a lovely home without the hassle of shopping, inspections, closings, and using a permanent solution to a temporary problem.
- The real estate agent receives immediate cash flow also. It also puts him in a position of suggesting more property the client can buy and use in the same way. All businesses people are in the market of making money.
Connecting to the Millennials – using their platforms
Millennials do not shop or pay like the generations before them. They are more likely to engage via websites, blogs, and social media. Realtors who do not keep their technology current will be skipped over. The College Investor website stated it this way. “They embrace the work from wherever, and whenever mentality, and are great at using the online economy to their benefit.”
They are interested in comfort, and they are interested in looking the part of a business person. They do not want to be tied down.
This group is more likely to sign a short-term lease on a nicer home or apartment through a company like TheUrbanAvenue, than any other group. They move quickly up the corporate ladder, and they are not going to let something like a lease to slow them down.
A smart real estate salesperson is on every platform on a regular basis. Instagram, Twitter, and other social media sites have connected many short-term leases. As prospects complete their application online, there is enough information to do a careful check on the background of the client.
Get your information from reliable online sources. The day of a handshake, and calling the previous owner where they lived, are long gone. Everyone has a friend speed dial, ready to tell you how wonderful these clients were to do business with.
Investors had a lot to do with saving neighborhoods
When the American Housing Crisis hit, more people were finding themselves homeless, with few options than any time in recent history. This is what changed the face of the American neighborhood. Small businesses were affected as their long-term customers were forced to leave. People left their jobs to travel to other cities to live with family members. Schools were affected as more children were living in cars and could be gone at any moment.
Investors began coming together to take advantage of the real estate crisis and foreclosure prices. By 2011, 1 in 3 homes were occupied by renters. However, these were not renters who were renting because it fits their lifestyle and served them well. These were damaged homeowners who had every intention of one day owning their own homes again.
A Seed Was Planted
Though it was not planned and not the way Americans thought it would go, a seed was planted in the minds of the soon to be next generation. The home was no longer the center of the how a family branched out. They had seen first hand, you could reach out and grab for your dream job and the house you lived in was a secondary issue.
Sales agents were paying attention. They began to recreate their offices, giving the short-term lease more power. They sought out vacation rental homes and these home, which had been empty during the crisis, were soon occupied.
Property owners who were desperate for capital saw immediate cash flow. They were happy with the idea because, with a short-term rental property, they collected security deposits, pet deposits, and first and last months rents twice per year in many cases.
Small businesses began to make a profit as renters had their grass cut, their clothes dry cleaned, their pets groomed, and shopped locally for clothes, furnishings, and cars.
How soon we forget!
People have adjusted. Life moved on. People did what they had to do and as we always do, we survived. The short-term leases became an accepted option for housing for the founders and employees of global commerce. But, some popular vacation cities have forgotten the days of zero revenue from their vacation homes.
San Diego California is a good example of the continual disagreements between continuing with short-term leases and going back to renting their property for expensive fees throughout vacation seasons.
Other cities are also protesting. They want to roll back the hands of time when a neighbor could be your neighbor for a decade.
If a sales agent wants to play this game, they need to know the rules!
Do your homework! There are cities that have surges in tourism, but you cannot always depend on that to secure a short-term rental deal.
You may be listing a nice condo on the beach in Florida. There are certain times of the year where this is a high-demand property. But in the summer months, the heat drives people away.
If you are looking for a place for a family, with children, a short-term lease near Disney World may be perfect. But if the client is a businessman and his wife, a bit further out, where there is room and peace and quiet may be a better fit.
Some areas are short-term lease saturated. They require more work to find a tenant and to get and stay at the top of the list. Also, this will probably drive prices down.
Know what your client needs. Does he travel often? WIll he benefit from a home with a fast and easy route to the airport? Is his office in downtown New York City? Make it convenient for him if you want his company to secure your services again.
So what do we do?
If you have read this far, you should have picked up on one thing. No matter who you are dealing with or what their stand is on home ownership or short-term leasing, they ultimately need an expert. If you do not know about the specifics of these topics, learn them. Put the effort into knowing the trending real estate market, and the traditional real estate market. This is the time, to be honest with yourself and your company about any weaknesses you feel you have. This year offers so many options to the client, that your opportunity to get your slice of the pie is brief.
Here are some more tips:
- Keep your website current and interesting. It must be interactive. Information must be new. Everyone has a website, from the leaders of the industry to their grandmother. A potential client will browse several sites. You have to give them something to remember and a reason to return. There are many apps that are interactive. People love to see what a house would look like if it was a different color or if they added flowers.
- Return emails, texts, and calls immediately. If you believe a buyer will wait for you, you are mistaken.
- Learn to hear what the client is not saying. A general conversation will tell you a lot.
- Know the terms of a short-term lease if you are showing one. Also, know all other options the owner is willing to offer.
- Network with other professionals
- Reach out to owners of websites. Many of them welcome guests bloggers. For some small businesses, it is hard to get fresh information on their limited site. Ask them if you can write an article on your projects for free. Many will say yes.
- If you have a personal site, include a link to your site from your article.
- Hire a publicist to keep your name popular. This will be the best investment you can make in this business.
- Become a member of your local Chamber of Commerce. This puts your face on their list for a new member of the community or someone who is looking to buy or sell.
What to expect in 2019
According to Freddie Mac Forecasts, we will see a slight increase in the home purchase in 2019.
However, the increase will be modest and it is balanced on a rock foundation. New home construction is the driving force in the housing market. The new construction market is the factor holding back the housing restraints that have hurt the market in 2017 and 2018.
There is one issue, that is yet to be seen. If the interest rates for a 30-year mortgage rises above 5.5%, Freddie Mac expects that to cause a decrease in their forecast of a much as 10%.
It is your job to sell – so sell!
Steve Jobs once said, “Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'” People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”
The same can be said about your job. You know the benefits of homeownership. You know the value it adds to a person’s net worth. You know that the home can be leased out if there are times of the year when the homeowner is not working in the area.
A client may come to you thinking a short-term lease is an answer to their problems. But you have all the facts that they may not consider. If this client needs a short-term lease in the same area every year, it may be a good idea to pith the on buying their own turnkey property.
You are in a perfect position to make a sale and keep someone from making a mistake due to lack of knowledge.
Maybe they are in a unique situation where they live in the United States half the year and then work in Europe the other half of the year. Buying a home is still a better option. They can be the one to offer a short-term lease for 6 months out of the year. This allows them to make the rules, plus the mortgage is paid for them while they are away (plus a bit of profit.)
In times like these, a good salesperson thinks outside the box. A good salesperson helps the client solve problems that they don’t know they have. As Steve Jobs said, you are giving the person what they need, not what they want.
The market is open, the options are many
The non-professional real estate sales team may see this as a difficult time. But nothing can be further from the truth. Business is thriving. The economy is doing well according to CNN and other sources, including President Donald Trump.
Trends of short-term rentals, new construction home sales, millennials moving into the worlds of business do nothing but help the smart real estate salesperson. The fact is, no matter which option a person chooses, if you are watching and positioning yourself correctly, they have to go through you.
So take this opportunity to get ready for a good last quarter of 2018 and a good 2019. You have the power to make it happen.