A Real Estate API can be a very effective tool if your buyers need to bring in others to help with a home purchase.
Because here is one of the latest real estate trends: despite the famously skyrocketing education costs and low-paying jobs of this generation, Millennials are poised to make up the largest demographic of new home buyers in the country.
This is great information as a real estate agent looking to know their clients better. But there’s a twist.
Because so many members of this generation have all decided to purchase a home at once, home prices in the $200,000 to $300,000 range are scarce. Buyers now need to stretch their budgets to get into a starter home.
Therefore, many of these young adults in their 20s and 30s are turning to their parents to fund a down payment in this high-priced housing market.
Rising numbers of Millennials need assistance
The FHA (Federal Housing Administration), a government agency insuring home mortgages, offers home loans through private lenders which are typically going to be more accessible to Millennials.
The down payment can be as low as 3.5%, as opposed to 20% through a conventional loan. But even these low rates are a struggle for some. The FHA revealed that over 26% of those who received loans had financial assistance from a parent or other relative to provide the down payment. This is a definite increase, from 22% in 2011.
Is parental assistance with down payments risky?
Traditionally, home buyers who have to get help affording their down payment are viewed as a risky bet.
If they themselves don’t have as much to lose if they get laid off and go delinquent on mortgage payments, the lender thinks there is a higher chance of not getting paid.
Some parents who are called on for this assistance may think the same way, as they don’t want to give a gift which may be used unwisely or a personal loan which never brings any return.
Others in the industry feel that parents giving their adult children down payment money perpetuates imbalances in supply and demand in some competitive housing markets.
Use a Real Estate API to navigate parental risk perception
Not everyone takes such a dim view of asking parents to help with a down payment. In fact, many industry executives have said that family assistance does not entail as much risk as assistance from the seller or other types of assistance – because of the family involvement.
In a tough housing market or life situation, the borrower actually feels a more intense level of obligation to protect or pay back their parents’ gift.
While real estate agents are certainly not family therapists, in engaging with Millennial first time home buyers and their parents, this is a fact that can be pointed out if there are any questions or concerns.
Here’s something that will help with the discussion, which as you can imagine, has very emotional implications.
Bring in the facts.
A Real Estate API gives agents access to local real estate data tools to explain to parents why the home purchase is a sound investment.
The parents, being older and possibly more experienced in homeownership, are interested in this data. They know what it like is to invest in a home…and watch it appreciate. Or not.
They will be very interested in comparing recent home sales data in the area, and seeing the current trends in home prices.
Depending on the area, an agent can use a Real Estate API to display positive neighborhood characteristics including local school data, demographics, crime rates, and access to amenities.
Show hard data with proof that their investment in this home is justifiable, and that the area is being improved and poised to go up in value and desirability. Those local statistics will go a long way toward helping everyone involved feel at peace with their decision to buy a house.
Real Estate API can promote your brand as the one with local data
Agents can also preemptively support Millennials and their parents through this decision by distributing important information through their websites, newsletters, and social media content.
They can create the perception in the community that they are the agent with the local data, the ones that young people will turn to when they know they will need to convince their relatives to dish out some of their savings.
Write an engaging and informative blog about parental involvement in home loans, as well as the great attributes of the local neighborhoods they are farming.
Use real estate data tools to come up with hard facts that can be turned into helpful infographics and Instagram photo captions.
By educating the public that parental help with down payments are normal and acceptable, agents will run into fewer clients who are struggling with this important issue.
And when approaching sellers, they can show home owners that they have the tools to help convince buyers, even with help from their parents or relatives, that the price for that home is reasonable in today’s market.
Third parties will be investing in properties but not living in them. They will be more interested in the hard cold facts than the people who have already fallen in love with the spacious kitchen or the big open deck in the backyard.
Embedding a Real Estate API into an agent’s website with access to a warehouse of neighborhood data, is the tool to use to address this side of the home buying equation.