With limited homes on the market and changing priorities, many younger homebuyers have begun to rethink their “must-haves” in the home search. They are now more open to purchasing dated homes that need renovating.
This opens up a great opportunity for agents to target them with homes that they may not have considered before. Those looking to move quickly may now be more willing to make greater compromises in their preferences than they were just a few months ago.
From Fixer Upper to Fully Customized
Most millennials have had to compromise on the size and condition of their starter homes recently, with many purchasing older homes in need of repair just to be able to attain homeownership. Over two thirds, or 68 percent, of millennials would now be interested in a fixer-upper, according to a new Clever survey, which polled 1,000 Americans looking to purchase a home. In fact, they rather like the idea of paying a little less for a home that they can customize to their specific taste and lifestyle.
With the popularity of HGTV shows based around renovation and interior design, the appeal to be creative in the home buying process has grown. In fact, in the past 12 months, millennials have completed more home projects than the silent generation, baby boomers and Gen Xers… combined.
Avoiding the Money Pit
Getting a less expensive home because it needs work is a functional workaround to this generation. That idea tends to appeal to millennials but there are some ways you can help them to avoid costly mistakes when planning renovations. Here are the two most important things buyers should keep in mind according to Drew and Jonathan Scott of the popular HGTV show, The Property Brothers.
1. Budget Appropriately
Regardless of the size and scope of the renovation your new home needs, you should be aware of what you’re getting into before making an offer. That means making sure you’ve budgeted for renovation costs from the outset. The average homeowner typically spends just under $43,000 to remodel multiple rooms in their home, according to Home Advisor. Areas like the kitchen and bathroom can be the biggest projects. The cost of an average kitchen renovation is about $20,500, while a bathroom usually runs between $6,000 and $14,000.
2. Spend Wisely
No matter the project, it’s important to spend your money wisely. To that end, the Scotts say it’s important to keep the function and flow of a room in mind when renovating. “Don’t just think of the aesthetics,” Drew says. A lot of first-time homebuyers prioritize the details of a room like a beautiful light fixture, or the counter-tops, or the furniture. Instead, spend on ways that will maximize the use of the space, he says.
Talk to Buyers About Renovation Lending
With home renovation loans, like the FHA 203k loan, home renovations are simplified for buyers by allowing them to borrow money for both their home purchase and improvement and repair costs using only one loan. In addition, eligible buyers can qualify for a down payment as low as 3.5%. This provides your clients the best opportunity to build their dream home with minimal money down. Buyers would also likely gain instant equity in the home as well.
So, if you have a listing that needs some renovation, don’t shy away from marketing it to the younger generation and pitching the idea of what the home could be, with a little work. Their attitudes and preferences are constantly changing and right now they are one of the best prospects for a fixer-upper homes.
*Not all borrowers will qualify. Contact us for more information on fees and terms.
“’Dated Homes’ No Longer a Deal Killer?” Realtor Magazine, 17 July 2020, magazine. realtor/daily-news/2020/07/17/dated-homes-no-longer-a-deal-killer.
Leonhardt, Megan. “68% Of Millennials Would Buy a Fixer-Upper-Here’s How the Property Brothers Say You Can Avoid Regret.” CNBC, CNBC, 23 Jan. 2019, www.cnbc. com/2019/01/22/property-brothers-advice-for-the-68-percent-of-millennials-who-would-buy-a-fixer-upper.html.