There may be a completely different story behind the numbers.

According to data compiled by Redfin Corp. from 25 of the largest metro areas, the median down payment for the least expensive 25 percent of properties sold in 2013 was about $3,400 more than in 2007. And, down payments rose fastest for lower priced homes.

Interest rates remain incredibility low, but it seems to be more difficult to become a homebuyer. Challenges such as increased fees for FHA loans, higher down payments for conventional loans, tighter credit and less supply are certainly contributing factors.

But, is there more at play here?

A big part of the problem is that many first-time homebuyers, who would be looking at starter homes with lower prices, have self selected themselves out of the home buying process. They fear high down payments, not getting approved and bidding wars. loanDepot’s consumer survey found that the fear of rejection drove almost half of today’s potential homebuyers from the housing market.

In fact, there are low down payment options and even homeownership programs that can help fund down payment and closing costs. However, those living with their parents or recommitting to a more expensive rental agreement don’t know affordable options are available through homebuyer programs and housing finance agencies.

Housing Wire reported that Nomura analysts said:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or that they don’t have a big enough down payment.”

To support that view, Freddie Mac recently shared a survey by Zelman & Associates that found borrowers greatly overestimate the down payment requirement. Amazingly, 60-72 percent of renters believe they need 11-15 percent to buy.

So, are down payments really rising? Yes and no. Many consumers may actually put down more for their down payment because they think it’s required. However, that doesn’t mean there aren’t low down payment and affordable home finance options available. Quite simply, renters just aren’t evaluating their options.

Now may be the best time to start the process: Zillow’s new data shows that renters are paying 29.5 percent of income in rent while homebuyers are paying 15.3 percent of income for their mortgage.

Today’s homebuyers have access to more than 2,100 homeownership programs, 91 percent are funded

Down Payment Resource™ released its third quarter 2014 Homeownership Program Index which measures the availability of valuable homebuyer programs administered by state and local Housing Finance Agencies (HFAs), nonprofits, and other housing organizations. The index analyzes state, local and national programs found in DPR’s databank.

• 2,191 total programs available
• 1,135 program administrators
• 91.7% of programs are funded – up from 90% from June
• 39% do NOT have a first-time homebuyer requirement
• 17% allow owner-occupied multifamily properties
• 25% are available state-wide
• Majority of programs are Community Seconds — providing down payment and closing cost assistance

“The Harvard Joint Center for Housing Studies found that in many metro areas across the country, more than 50 percent of renters could afford to own a home,” said Chrane. “If more buyers knew about valuable homeownership programs in their market, they could buy sooner than they thought.”

#  #  #

We love hearing from real users of Down Payment Resource (DPR). Recently, Peter Faso with Keller Williams in Honolulu, HI and member of HiCentral MLS, reached out to us with a suggestion on how to improve his Personal Marketing Tool introduction page.

We appreciated his excellent idea of better naming the search page to highlight the agent’s name and describe the service to potential buyers—it’s now called the “AGENT NAME Down Payment Resource Center.” Check out how it looks to his homebuyers now!

Thanks for the tip, Peter. We’re sending you a Starbucks giftcard as a thank you!

Do you have a tip to help improve DPR? Contact us with your suggestion!

Would you like to add the DPR Personal Marketing Tool to your email signature, social media, newsletter and website? Learn how it works and get your free personal link today!

Plus, even more improvements

We’re pleased to announce several incremental improvements to the DPR Eligibility Form to improve the retention and progression of consumers and professional users through the search tool.

Here’s what’s new:

• Clarified labels on select form fields
• Organization of several fields to reduce scrolling
• Messaging to ensure proper entry of a location

The changes are subtle and intended to promote further usage and simpler navigation of the DPR Eligibility Form for users once there.

We’re excited to bring Down Payment Resource™ (DPR) to two new multiple listing services—Southeast Michigan’s Realcomp II Ltd. and Richmond, Va. based Central Virginia Regional Multiple Listing Service (CVR MLS).

DPR is now available to more than 335,000 real estate professionals through 20 multiple listing services and REALTOR® Associations.

Realcomp, Michigan’s largest REALTOR®-owned MLS, launched DPR to its nearly 12,000 real estate professional members in September. Approximately 71 percent of Realcomp’s MLS residential listings may be eligible for one or more down payment programs. Read all the details about the partnership in the press release.

“Consumers working with Realcomp REALTORS® will greatly benefit from the resources that Down Payment Resource has to offer,” said Karen Kage, CEO of Realcomp II Ltd. “We are forever focused on serving as the resource for REALTORS® and their home buying and selling clients in Southeast Michigan. Offering tools for down payment assistance, grants, affordable first mortgages, etc., will help prospective home owners achieve their ultimate goal.”

CVR MLS launched DPR to its 4,000 members today.  Approximately 88 percent of CVR MLS’s residential listings may be eligible for programs such as down payment assistance, grants, affordable first mortgages and tax credits. Eligible listings are flagged with a DPR icon and available on the MLS’s Agent Reports. Learn more in the press release about the launch.

“This is going to be an excellent tool for REALTORS® to use to assist homebuyers in exploring a wide variety of available resources. For many homebuyers, producing a down payment can be the biggest challenge in the process, and this product will help them find feasible ways to meet the challenge. We are excited to have the ability to facilitate more opportunities for homeownership with Down Payment Resource,” said Mark Joyner, president of CVR MLS.

Most real estate professionals and homebuyers aren’t aware of the wide range of down payment programs that could make buying more affordable. In fact, DPR’s Quarterly Homeownership Program Index found that 91.7 percent of the nation’s more than 2,100 homebuyer programs are funded and available to eligible buyers.

Learn more about our partnerships with MLSs, Realtor Associations, Housing Finance Agencies, counseling agencies and lenders.

What’s holding your buyers back? More than likely it’s the down payment. Inform your potential buyers that homeownership may be closer than they think thanks to available down payment and closing cost programs.

Our new marketing flyers are designed for use by REALTORS® who are members of Multiple Listing Services/Realtor Associations in our participating markets. It educates buyers about Down Payment Resource and invites them to contact their Realtor to learn more.

Realtors can choose the design they like best, customize with their photo and contact information, save and send to their printer or share online.

Take a look and let us know what you think!

Mortgage credit has remained tight since the housing crisis. The response was intended to ensure sound, well underwritten mortgages were provided to buyers, but an unintended consequence was that many buyers were locked out of home financing. Recently, Fannie and Freddie regulator FHFA said that they would take steps to expand credit for the purchase market, including backing loans with down payments of 3%, down from today’s 5%. And, federal agencies approved the final QRM, or qualified residential mortgage, rule that removes a once proposed requirement of a 20% down payment. Finally, individual mortgage lenders began announcing earlier this year that they were easing their loan requirements. (For a thoughtful commentary on the complexities of all these changes and what they mean to buyers, read this post in the WSJ Banking blog.)

Are regulators trying to bring back subprime mortgage lending? Um, no: http://t.co/S0OnTUYWC5 pic.twitter.com/MWC2WkkY5s

— Nick Timiraos (@NickTimiraos) October 27, 2014

As we await more details on the FHFA plan, the recent mortgage news has given fire to the old myth that low down payments are what caused the housing crisis.

Borrower beware?

The housing crisis was caused by mortgages with short term arms, no-documentation and other exotic features often not understood by the buyer. No doc loans, liar loans and loans with poor underwriting standards were the cause of the toxic mess. Do you ever hear anyone calling for an end to 100% VA financing? In fact, low and no down payment loans through the VA or housing finance agencies (HFAs) performed better than the conventional market. Why? Studies show that the best indicator of loan performance is actually homeownership counseling. (Here are more facts to challenge the next person who says “low down payments caused the foreclosure crisis.”)

Consider these comments from David Stevens, president of the MBA:

Down payments are the single biggest barrier to homeownership but it is not, by itself, an indicator of ability to repay a mortgage. The move to bring back the 97% LTV will come with higher premiums for mortgage insurance, more scrutinized underwriting requirements, and will only raise the maximum LTV by 2% for the GSEs from 95% to 97%. Any allusion that this is returning to the kinds of antics that led to the housing bubble is simply ridiculous. QM eliminates no-doc, neg am, balloon, extended term, shorter term arms, IOs, and more. Every loan must meet the ability to repay standard. Just because the Director and the team at FHFA, as well as the MBA, realize that many Americans do not have the luxury of wealthy parents to provide a gift, or excess income beyond the fixed expenses of rental costs (which are rising), consumer debt, child care, and more to save up for a down payment as easily as others, does not mean they should miss out on what could be the lowest interest rates we will experience in our lifetime. The future buyers will be younger and heavily dominated by minority applicants in this country. Responsibly letting qualified buyers take advantage of this market by expanding LTVs by 2% is exactly the right thing to do and will help these homebuyers but will also help the economy. Each new home built adds 3 jobs in this country and over $100k in economic stimulus, per the NAHB.

Important alternatives

Homebuyers and real estate professionals should know there are other alternatives in this market that provide even more flexibility and benefits to buyers who need it. The Consumer Financial Protection Bureau (CFPB) provided an exemption to QM and QRM for HFA program loans because of the key role HFAs play as responsible providers of affordable mortgage credit to low- and moderate-income and other underserved borrowers. Homebuyers can find some of the safest and most affordable loan through HFAs.

First-time homebuyer sales are at historic lows, however data from the Harvard Joint Center for Housing Studies (JCHS) shows that in many metro markets more than 50 percent of 25-34 year-old renters have the income and credit scores to qualify for a mortgage today. These sidelined buyers are holding onto the belief that all home loans come with a hefty down payment and stringent qualifications. And, it’s keeping them from investigating their options. Could access to homeownership programs be the answer?

There are nearly 2,200 such programs across the country and more than 91 percent are funded and available to eligible buyers. Homebuyer programs can be coupled with affordable FHA and VA loans as well, helping buyers save on their down payment and closing costs. Our Quarterly Homeownership Program Index highlights the diversity of programs available to meet the needs of all types of buyers.

How many renters could qualify?

Let’s take the JCHS data a step further to quantify how many renter households are qualified to buy a home today. According to the Census Bureau, there are 11.1 million renter householders between 25 and 34 years old. And, the JCHS found that on average 50 percent are qualified to buy a home today. That’s 5.5 million potential homeowners with the income and credit to qualify. Yet, most of the individuals and families don’t know they could qualify and there are affordable options available. Take the step to educate your buyers about programs in your market and move the needle on homeownership.

You may know about the VA home loan program for veterans—featuring zero down payment loans with competitive interest rates and flexible underwriting—but you may be surprised to learn that in recent years demand has led to even more programs and organizations working to meet veteran housing needs.

Why? There are approximately 22 million veterans in the U.S., many of whom are eligible for VA benefits. In fact, veterans are the fastest growing part of the market today.

VA loans perform very well with default rates as low as or lower than the conventional market. Lenders and other partners want to work with these qualified and eligible homebuyers. To that end, more financial institutions and homebuilders are partnering with nonprofits to help veterans find affordable housing. National housing columnist Ken Harney reviews some of the growing programs in his latest column.

In addition, Businessweek reports that the Department of Housing and Urban Development (HUD) is urging mortgage insurers that rely on Fannie Mae and Freddie Mac for business to offer supplemental protection for lenders to military members and veterans.

It’s important to note that VA loans can also be paired with other down payment and closing cost programs, even though the loan requires zero percent down. When veterans layer programs, especially through a down payment grant, they can build immediate equity with the down payment dollars. At Down Payment Resource, that’s why we include a question about military status in our search form. It allows the homebuyer to discover all types of program and loans available for their personal situation.

For more information on serving military and veteran clients, watch our on demand webinar with the PenFed Foundation about their unique Dream Makers grant, available nationwide.

We just returned from the National Association of REALTORS (NAR) Annual Conference & Expo in New Orleans. Some of the news discussed included the results of their Annual Profile of Home Buyers and Sellers. In fact, the headline of the November 3^rd press release highlighted first-time homebuyer challenges: NAR Annual Survey Reveals Notable Decline in First-time Buyers.  

The share of first-time buyers dropped 5 percentage points from a year ago to 33 percent, representing the lowest share since 1987 (30 percent). Among 23 percent of first-time buyers who said saving for a down payment was difficult, more than half (57 percent) said student loans delayed saving, up from 54 percent a year ago.

There are solutions, but we know that 97 percent of first time homebuyers have no idea they exist. We’re referring to the many down payment and closing cost programs that could help their savings go even further—not to mention help keep their retirement savings intact.

The lack of first-time homebuyers is a big issue and one that the entire real estate industry needs to help solve. Housing and consumer data continues to suggest a big disconnect between perceived affordability and real affordability—especially for first-time homebuyers. The fact is there are affordable financing options, available through state and local housing finance agencies and coupled with valuable homebuyer education. According to our latest Quarterly Homeownership Program Index (released in September), there are more than 2,100 programs and 91 percent have funds available for buyers today.

I’m asked regularly why NAR isn’t taking the lead in messaging to its members and consumers the vast opportunities to help millions of people buy homes much the way they did a few years ago when the Federal Housing Tax Credit was available. We all remember how effective that campaign was when orchestrated with NAHB and MBA. Today’s first-time homebuyer challenges as well as the program opportunities dwarf the benefits offered by the Housing Tax Credit.

– Rob Chrane, President & CEO, Down Payment Resource

Dear Friends and Partners,

Our team is heartbroken to share the news that our colleague and dear friend, Beverly Faull passed away earlier this week after a brave battle with non-Hodgkin’s lymphoma. An accomplished real estate industry veteran, Beverly became a member of the Down Payment Resource team in 2009 and recently celebrated her fifth anniversary with the company.

We have all admired her professional spirit and tenacity over the years. Beverly believed wholeheartedly in the company’s mission of helping homebuyers access down payment programs. She worked tirelessly to grow DPR to 21 MLSs and Realtor Associations. Prior to DPR, Beverly served in countless leadership roles in the real estate industry, including CEO of the Tucson Association of REALTORS and MLS, CEO of North Texas Real Estate Information Systems, vice president of operations at HomeSeekers.com, head of the MLS division for Fidelity National Real Estate Solutions and ran her own consulting company. Her long standing relationships across the industry demonstrate her strong work ethic.

We were also privileged to witness the dedication she has to her family and faith. She leaves behind three sisters and a brother, three daughters and 13 grandchildren, two of whom (Ciarra, 17 and Zaylor, 3) she adopted and was raising over the past two years.

Beverly’s family requested that any donations be made to the Leukemia & Lymphoma Society. We’re also compiling messages and memories from her real estate colleagues in a special book for her family. If you wish to share a message, please send it to us at info@downpaymentresource.com.

Our team has the highest admiration for Beverly, both personally and professionally. We will miss her dearly.

Sincerely,

Rob Chrane and the DPR team

Below is our letter to the NY Times in response to a recently published op-ed by Peter J. Wallison that argued low down payments were bad for homebuyers. 

In response to the op-ed Underwriting the Next Housing Crisis, we’d like to set the record straight with regard to low down payments. Mr. Wallison uses a series of misleading statements to argue that low underwriting standards—and low down payments—drive housing prices up and make homeownership less affordable. We agree that poor underwriting standards cause countless problems— it’s what drove the private market to subprime loans in the mid-2000s and caused the housing crisis. However, low down payments don’t bring the same result.

Let’s take VA loans for example. These loans—featuring zero down payment loans with competitive interest rates and flexible underwriting—are widely successful and an important benefit for our veterans. These loans also perform very well with default rates as low as or lower than the conventional market. And, even in the ‘80s 95 percent LTV conventional loans were readily available.

Mr. Wallison falsely states that a buyer would take on more risk by turning a $10,000 down payment on a $100,000 home into a lower 5 percent down payment on a $200,000 home. That’s very misleading. It’s the underwriting that’s key here. Buyers must first have the income to meet debt-to-income standards for a higher loan amount. You can’t assume this is the same buyer taking on greater risk.

When the “government got out of the way” in the mid-2000s, we ended up with Wall Street (private lenders) securitizing subprime loans until worldwide financial markets crashed in 2008. The decline of underwriting standards was driven by the private market.

Be careful of the red herring here. Low down payments don’t equal lower-income buyers who can’t afford a home without low underwriting standards.  Low down payments could help more buyers take advantages of today’s low interest rates and avoid higher housing costs due to rising rental rates. Let’s not throw out the low down payment opportunities for responsible buyers who have the income and credit qualifications to buy a home today.

– Rob Chrane

President & CEO, Down Payment Resource

Sometimes what you don’t know CAN hurt you. Seventy percent of adults are unaware that down payment assistance programs are available to homebuyers in their community, according to the second annual America at Home survey commissioned by NeighborWorks America.

When homebuyers don’t know down payment programs exist, they aren’t seeking these solutions. Often, it means delaying homeownership.

From an Inman News story about survey:

There are two common misconceptions about down payment assistance: that only poor people can qualify for it, and that it isn’t available to first-time homebuyers, said Douglas Robinson, a spokesman for the nonprofit [NeighborWorks America], which promotes affordable housing and community development.

“That is not the case,” he said, and why it’s a no-brainer for real estate agents to familiarize themselves with local options.

One tool for digging up information on down payment assistance programs is Down Payment Resource, which maintains a database of more than 2,100 programs that it makes available to buyers and sellers through its own public-facing website, DownPaymentResource.com, and to partners including Realtor associations, multiple listing services and lenders.

Realtors and lenders, it’s time to debunk the myths and make sure all buyers know their options. In fact, Zillow research found that Millennials are actually MORE eager to own a home than older Americans. Their biggest challenge? No surprise–the down payment.

It’s a New Year and we couldn’t be more ready. We recently completed our 2015 business planning and we look forward to sharing exciting announcements in the weeks and months to come, including:

• New team members
• New tools
• New data
• New customers

The only thing that isn’t new is our commitment to helping real estate professionals succeed.

Does your 2015 business plan include helping buyers secure their down payment?  We can help you get there.

New Year, New Heights

While recently flying a Delta 777 simulator, a few things reminded me of successful agents and brokers:

• Take off and landing requires the same series of actions and checklists no matter where in the world you are.
  • All real estate may be local, but how it should be practiced is global. The same best practices work in all markets and under all conditions.
• Close your eyes and you would not know the difference between a simulator and the real thing. I was cautious and tentative at first; my 13 year old granddaughter requested maximum turbulence. The realism made it creepy, but a lot more interesting and satisfying.
  • You’re not paid the big bucks for mind numbing hours of routine processes. Clients remember you and refer their friends because of how you handled the critical moments when everything seemed to be coming apart.
  • Get outside your comfort zone, it’s the only way to grow and makes for a more fulfilling business and life.

 2015 is going to be an exciting and rewarding year for those who understand and accept the realities of today’s real estate industry and connect their clients to hard-to-find information that helps them buy a home. Will this be the year for Millennials? Rents are rising and the down payment continues to be a challenge. Helping new buyers can be one of your business goals for this year and we’ll be here to help.

Hitch a ride and climb with us!

– Rob Chrane, President & CEO, Down Payment Resource

The post 2015: Fly Down Payment Resource appeared first on Down Payment Resource.

Information is power, but two recent consumer surveys find that homebuyers aren’t evaluating all their options, potentially leaving money on the table.

 1. Shop your loan. Nearly half of buyers don’t shop around for their mortgage.

According to a new analysis by the Consumer Financial Protection Bureau (CFPB), 47% never considered more than one lender. The CFPB also debunks the myth that shopping around lenders will hurt your credit score. When multiple credit checks are concentrated over a short period of time, they are typically treated as one inquiry and won’t hurt your credit score, according to the CFPB.

Plus, some mortgage loans have introduced changes. FHA recently announced they are making a rate reduction in its annual mortgage premium, saving 2 million borrowers about $900 a year. Buyers should not only shop lenders, but also compare different loan types to evaluate cash to close, monthly payments and other fees.

 2. Research down payment and closing cost programs. 70% of Americans don’t know that down payment programs are available.

A recent NeighborWorks America survey, found that most buyers simply are unaware of programs and therefore aren’t even investigating these programs. NeighborWorks cites two common misconceptions about down payment assistance: that only low-income buyers can qualify for it, and that it isn’t available to first-time homebuyers.

The fact is there are a wide range of programs available in every community across the country—more than 2,200 programs. Buyers should ask their lender or Realtor about program options that can be combined with their first loan. Buyers can also find affordable home loans through their state or local Housing Finance Agencies (HFAs), featuring lower minimum down payment requirements, competitive interest rates, down payment programs and homeownership counseling.

We know it’s exciting to start touring your dream homes, but put these two steps first. When you have your home finance details in order, you’ll know what homes and price points will best fit your situation.

The post Are you skipping these two critical home buying steps? appeared first on Down Payment Resource.

February 4, 2015

Down Payment Resource and RealtyTrac released a joint analysis on the availability of down payment programs across the country.

Media contact: Tracey Shell, tshell@downpaymentresource.com

Read the full report on RealtyTrac’s website.

Key highlights:

• Out of more than 78 million U.S. single family homes and condos, more than 68 million (87 percent) would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.
• The average amount of down payment assistance across all counties is $11,565.
• At least one down payment program is available in all 3,143 U.S. counties, and more than 2,000 counties have more than 10 down payment programs available to prospective homebuyers.
• More than half of programs (54 percent) are Community Seconds, a second mortgage issued by an HFA or nonprofit organization with a very low or no interest rate. The payment on the second mortgage may be deferred or forgiven incrementally for each year the buyer remains in the home. In a typical scenario this could reduce the amount of cash needed to close from $20,000 to $200 (see infographic below).
• Other major program types:
  • First mortgage loans with below-market interest rates or 100 percent financing.
  • Mortgage Credit Certificates (MCCs) that provide up to $2,000 in annual tax credits for the life of the loan.
  • Neighborhood Stabilization Program (NSP) loans and grants designed to revitalize communities that have suffered from foreclosures, high unemployment and other concerns slowing housing recovery.

“Many homebuyers, especially Millennials, haven’t fully investigated their home financing options because are pessimistic about qualifying for a mortgage. Our Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s homebuyers. In fact, 91 percent of the 2,290 programs in our registry have funds available to lend to eligible buyers. Plus, income limits vary depending on the market and programs extend beyond just first-time homebuyers,” said Rob Chrane, president and CEO of Down Payment Resource. “It’s important for buyers to research down payment programs as part of their loan shopping process.”

“Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is that the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country,” said Daren Blomquist, vice president at RealtyTrac. “Prospective buyers — or their agents — willing to put in a few minutes of time to find out what programs are available to them will put themselves in a much better position to successfully purchase a home.”

See the difference a down payment program can make for a buyer’s cash to close.

The post 87% of U.S. Homes Qualify for Down Payment Help appeared first on Down Payment Resource.

February 9, 2015

Down payment help widely available

• The report expanded to include 2,290 programs, up nearly 100 programs from the September 2014 index.
• Programs from over 1,200 separate housing agencies and program providers are included.
• 18 programs are available nationwide.
• 24 percent of programs are available state-wide, not specific to a county or neighborhood.
• Approximately 91 percent (90.6%) of programs have funds available for homebuyers, down slightly from September (91.7%).
• This quarter’s report saw an increase in Mortgage Credit Certificates (MCC) and Combined Assistance programs, which combine a first mortgage with down payment and closing cost funds.
• Many of these programs can be layered with each other and can often be used with most loan products, including VA and FHA.
• More than 14 percent of programs are special opportunities available exclusively for veterans, buyers with a disability and other professions or special circumstances.
• The South leads the nation in the total number of available homebuyer programs, followed by the West.
• The states with the greatest number of down payment programs are California, Florida, Texas, Maryland, New York, Georgia, Pennsylvania, Massachusetts, Illinois and Colorado.

Read the full index summary.

View HPI 1st Quarter 2015.State data.

Related: View joint analysis with RealtyTrac on the availability of down payment programs across the country.

@dwnpmtresource and #DPRIndex

The post Homeownership Program Index Q1 2015 highlights appeared first on Down Payment Resource.

Minnesota-based Barker Hedges Group shares how it successfully targeted a niche market

by Rob Chrane

I’ve written that real estate is missing a significant opportunity to reach first-time homebuyers and millennials who don’t know that they are qualified to buy a home today.

However, we do see agents, brokers and others in the real estate industry who are aggressively and successfully serving this growing market. (By the way, if you doubt that working with first-time homebuyers is going to be essential to your success, look at the latest demographic projections for this group.)

Meet Matt Barker and Brandon Hedges from Minneapolis-St. Paul, Minnesota.

I first noticed the Barker Hedges Group several years ago because of their website’s phenomenal click-to-lead conversions using our tool provided by NorthstarMLS. They have been most generous in helping us understand how they’ve built a successful business focusing on first-time homebuyers and education.

We commiserated over a warm lunch on a recent cold Minnesota day about why so many agents intentionally choose not to serve first-time homebuyers. On the surface, the answer may seem simple enough — bigger houses generate larger commissions. And I get that — I was a commissioned agent and loan officer for many years.

But the real factor in growing sustainable success is expanding your referral base. Very few agents kick-start their new careers by listing and selling million-dollar homes. More competitors chasing fewer units makes that difficult for an inexperienced agent.

Focusing on first-time homebuyers is how Barker and Hedges built their business, but even as they and their clients graduated to bigger, more expensive homes, they did not turn their backs on new homebuyers. If anything, they’ve redoubled their efforts by providing more tools, education and well-trained colleagues to deliver consistently high levels of service.

And it’s paid off with volume and a team of almost 20, which they believe still has plenty of room to grow. So how’d they do it?

One method they use is recruiting agents new to the business and then supporting them with training, tools and implementable systems. These agents think it’s pretty cool to start writing their first contracts within weeks of coming on board. And those commission checks that veteran agents turn their noses up at? They beat the take-home from the new agents’ last jobs and sustain them on their way to becoming top producers. Some end up with million-dollar referrals early on in spite of their primary focus. You’ll get more chances at home runs if you just get in the game and hit for singles and doubles.

Faster startup times, regular commission checks and building a successful business are the results of such efforts.

One of many interesting insights that Barker and Hedges shared over lunch was that pairing new agents with first-time homebuyers makes for great chemistry and happy customers. Neither has preconceived ideas about how the process is supposed to work; therefore, both are open to following tried-and-true best practices.

Their company website is successful because it opens up more opportunities for their buyers by sharing information about available state and local homeownership programs.

According to Hedges, “It gives us a jumping-off point, and a lot of people are able to start sooner than they thought.”

They also don’t feel the need to become subject matter experts; they work with lending partners who know how to get the job done. Barker and Hedges say that providing more education and data about local programs on their website is one more way to help people see that they need the help of a professional.

Or, as Brian and Anna, two of their many satisfied clients, say, “You really do need a Realtor who knows what they are doing and has time to really explore your options with you.”

We’d love to highlight you next time, so send us your stories!

Rob Chrane is a former Realtor and broker with more than three decades of experience in real estate and mortgage finance. He is the president of Down Payment Resource and a regular contributor for Inman News.

The post Pairing new agents with first-time buyers pays off appeared first on Down Payment Resource.

By Rob Chrane

We’re impressed by Goldman Sachs’s new animated infographic dedicated to the attitudes and interests of millennials. In just a few minutes, you can learn quite a bit about the largest generation in U.S. history.

• 93 percent want to own a home in the future.
• Marriage and family are being put off until later in life, but more than 70 percent want to have family one day.
• While many major purchases, such as cars, aren’t as important to them, buying a home was considered extremely important or important by 70 percent.

But what really got us thinking was how much millennials’ affinity for technology has changed their shopping behavior. Their knowledge and ease of use of web-based tools puts them ahead of other demographics for online price comparison and shopping. As price is a more important factor to them than for other generations, they are also seeking value.

Consider millennials’ focus on fitness and wellness. They use apps and online tools to find healthy foods and track fitness goals. They are familiar with finding everything they need to reach their fitness goals online. And, because it’s a key value, while consumption in other areas is declining, millennials are spending more on athletic apparel — a lot more.

What does all this mean for housing?

Millennials want to buy a home, but they want value. They want to know they are making a wise and affordable decision. And they are looking for solutions online. They expect to see product comparisons, options, reviews and detailed information when searching and shopping online.

Plus, their active lifestyles will impact where they want to buy. They want to find the right community as much as they want to find the right house. Most importantly, it will all depend on their ability to find the right home financing solution for their situation.

Real estate professionals, ask yourself these questions to determine how well positioned you are to serve these digital natives and prospective buyers:

• Are you offering homebuyers what they want and in the format they want it?
• Is your website educating your target audience?
• Do your listings provide details beyond just the basics?
• Do you share buyer success stories and agent reviews?
• Is your site visually stimulating — from desktop to mobile?

Millennials will be online first to find these answers. When home shopping, they will want to know as much as possible — from school and walkability scores to loan options, including homeownership programs.

Rob Chrane is a former Realtor and broker with more than three decades of experience in real estate and mortgage finance. He is the president of Down Payment Resource and a regular contributor for Inman News.

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First-time homebuyers are a target audience for many homeownership programs, but don’t overlook the number of programs available for repeat buyers.  In fact, our Homeownership Program Index found that 37 percent of programs have no first-time homebuyer requirement. Moreover, down payment programs use HUD’s definition of a first-time homebuyer—someone who has not owned a home in three years. That opens up opportunities for buyers who have rebuilt their credit and rented recently.

A great example of one of these programs is the Illinois Housing Development Authority’s (IHDA) new @HomeIllinois program that offers $5,000 in down payment help for credit worthy borrowers. It’s available to first-time homebuyers, repeat buyers and homeowners looking to refinance. Available statewide, the program also offers competitive interest rates, lender paid mortgage insurance and tax savings. Eligibility is based on income, with annual income limits of up to $94,500 for households of two or less and $108,675 for households of three or more.

@HomeIllinois was introduced after IHDA’s very successful 2014 where they helped over 10,000 homebuyers access $1.2 billion in affordable home loans and down payment assistance through their programs. That’s more than 20 percent of the total first-time homebuyer market in Illinois!

IHDA is just one of many housing finance agencies across the country helping to meet the needs of today’s new buyers. Use Down Payment Resource to discover what’s available in your market.

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