All the hullabaloo about millennials coveting their social media accounts over face-to-face interactions holds untrue — at least when it comes to real estate, according to a recent survey conducted by the financial wellness community, CentSai. (Full Disclosure: I am the co-founder and president of CentSai.)
In fact, the 2,050 millennials surveyed are more traditional than previously believed when faced with buying a home. Three-quarters of respondents – age 18 to 34 – prefer to use a local real estate agent instead of an online one.
And 71% said they would choose a local lender instead of applying online.
This is in stark contrast to a 2015 Fannie Mae survey, which found 70% of homebuyers would like to obtain a mortgage online and 69% would like to complete a mortgage application online. (Your credit plays a key role in the terms and conditions of your mortgage. You can view two of your credit scores free on Credit.com to see where yours currently stands.)
Millennials Want Someone They Can Trust
Online mortgage lending and brokerage services are expected to transform home buying, but millennials surveyed said that – contrary to popular belief – they prefer local providers due to existing relationships and local knowledge.
“While sites like Zillow are perfect for looking online to size up the market, when it came to using a lender or actually buying a home, personal touch was essential,” said Keenan Spiegel, who bought his first home with his fiancée in Norwalk, Connecticut, last year.
Spiegel, a wealth management associate at Morgan Stanley and director of data visualization for CentSai, said he used a local real estate agent recommended by his family because he wanted to be sure he worked with someone he trusted.
And while getting approved for a mortgage online could have taken minutes, the couple preferred the experience of using a local, brick-and-mortar who was more hands-on and available when they called with an “endless” list of questions.
“We felt local lenders also know much more about the area they service and can provide a lot of information about the community where you’re about to buy a home,” Spiegel said. “We wanted to know about the quality of schools and the crime rates.”
Online Isn’t Everything Yet
Despite the purported savings and the ease of use, online providers may not yet be as big of a disruptor in the sector as one would expect.
That said, the vast majority of millennials surveyed (91%) said they would use an online site or mobile app to research neighborhoods and home prices and help identify the home that they may buy. But they cited various reasons for “going local” when it came to choosing their agent or lender – including personal touch and handholding, longstanding relationships and local knowledge.
A little more than half (56%) of the millennials surveyed plan to buy a home in the next two years, and for this group, online lenders likely need to provide an even more personalized experience to garner business.
The fear of missing out on valuable information that comes out of an in-person conversation still weighs on the millennial mind.
After all, buying a home is a major purchase, and despite all the bots and burgeoning artificial intelligence, the internet still has a way to go before it can mimic sitting across the table from a real estate agent.
Image: Steve Debenport