2015 tennessee governor’s housing conference “ trends in homebuyer education” 2015 tennessee...
TRANSCRIPT
2015 Tennessee Governor’s Housing
Conference
“Trends In Homebuyer Education”
Milt Sharp, Jr. President eHome Network
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Agenda
• Background• Emerging Strategies• Sustainability of services• Lessons Learned• Implementation Ideas• Questions
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eHome Background
• A web-based education program for prospective homebuyers linked to local counseling services
• Developed by Community Ventures Corporation, a nonprofit HUD-approved counseling agency and NeighborWorks Network members
• Based on “Realizing the American Dream” curriculum• Exceeds “National Industry Standards” for Homeownership
Education
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Our Three Business Goals
1. Increase the revenues and the sustainability of local counseling agency partners
2. Increase the perceived value of homeownership education and counseling (HEC) by consumers and partners
3. Increase the market share of first-time homebuyers who receive homeownership education and counseling (est. at <10% now)
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eHome Growth: 2010-2015
• Over 160,000 completed users in past 5 1/2 years• Almost 50,000 customers so far in CY 2015• Over 400 nonprofit partners serving all 50 states including
Puerto Rico and Guam• Approved by USDA, NeighborWorks America and 14 State
Housing Finance Agencies• Provided over $2.4 million in revenues to support local
counseling services in first six months of 2015
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Pop Quiz!
Quiz on recent home buyers – mostly sourced from the National Association of Realtor’s “2013 Profile of Home Buyers and Sellers”
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Question #1
a. 18%b. 27%c. 40%d. 50%
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What percentage of all home buyers were first-time buyers in the past decade?
Correct Answer:
c. 40%
• Forty percent of recent home buyers were first time buyers.
• The percentage of first-time buyers has ranged from 30-50% since 2001, peaking in 2010.
• Today it is 30%, but varies greatly by market.
8What percentage of all home buyers were first-time buyers in the past decade?
Questions #2
a. 25 to 34b. 35 to 44c. 45 to 54d. 55 to 64
What age range represents the largest segment of home buyers?
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What age range represents the largest segment of home buyers?
Correct Answer:
a. 25 to 34
• The 25 to 34 age group represents 30 percent of buyers, (followed by the 35 to 44 age group at 21 percent).
• Of the 25 to 34 age group -- 54 percent tend to be first-time buyers and 14 percent repeat buyers.
• The median age for all home buyers is 42, and 31 for first-time buyers.
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Questions #3
a. Talk to a real estate agentb. Search online for properties for salec. Visit open housesd. Contact a bank or mortgage lendere. Participate in a homeownership seminar or
counseling session
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What's the first step buyers often take during the home-buying process?
What's the first step buyers often take during the home-buying process?
Correct Answer:
b. Search online for properties for sale
• Nearly half of all buyers said their first step was to look online for properties for sale.
• Second largest group said they contacted a real estate professional as first step.
• 90 percent used the internet during the process. All other sources (billboards, TV, real estate magazines, yard signs) of information are declining.
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All Buyers
First-Time Buyers
Repeat Buyers
Looked online for properties for sale 41% 35% 45%Contacted a real estate agent 18% 14% 20%Looked online for information about the home buying process 11% 17% 8%
Drove-by homes/neighborhoods 6% 11% 3%Contacted a bank or mortgage lender 8% 5% 9%Talked with a friend or relative about home buying process 6% 11% 3%
Visited open houses 3% 3% 4%Looked in newspapers, magazines, etc. 1% 1% 2%
Attended a home buying seminar 1% 2% 1%
First Step Taken in Home Search13
Check In: How’d you do?14
No need to share your score, but how does the profile of typical first-time buyers strike you?
• Important preparation for first-time homebuyers
• Growing market, especially for younger buyers and financially illiterate buyers
• Lenders and government officials see value in reducing loan defaults
• Prevention of future foreclosure crises
The Value of Homeownership Education & Counseling (HEC)
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Research on The Value of HEC
Reduced loan delinquenciesAvila, Nguyen & Zorn, 2013
First-time buyers who received HEC had a 29% reduction in delinquency rates
Improved financial health and increased knowledgeStaten, Elliehausen and Lundquist, 2002
Borrowers who received HEC had significant increases in their credit scores and/or had improved overall credit health
More efficient transactionsHartarska, Gonzalez-Vega and Dobos, 2002
Borrowers are better able to measure “ability to pay” and select better loan products.
Increased mortgage sustainabilityNeil Mayer, Urban Institute, 2011
Counseled borrowers are 67% more likely to remain current on their mortgages
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Why Consumers Don’t Take HEC?
1. They haven’t heard about your services2. They think they “know it all”3. They think friends, family members, lenders or Realtors will
fill them in4. “They don’t know what they don’t know”5. They are afraid it will slow the process 6. They think it takes too much time7. They’re not sure what the value is8. They’re not familiar with your office location
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Why Consumers Take HEC?
1. They want access to down payment money and other assistance
2. They want to understand the process3. They are looking for a “trusted advisor”4. They’ve heard about your services from other
friends, relatives or partners5. They are afraid of making big mistakes6. Your services are accessible and convenient
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Emerging Strategies
• Better understanding of target markets• Making services more convenient• Offering multimodal delivery options• Offering down payment assistance• Getting a stronger web presence• Better use of referral partners
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Better Understanding of Target Markets
• Gain a better understanding of your key target markets in terms of potential buyers
• Look at your database of past buyers• Identify specific target markets (groups)• Understand who they are, where they are, what
they want, and messages to reach them• “Every customer is a focus group”
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• More younger, first-time buyers • (roughly 30-40% first-time buyers in 2001-2014)
• More technology savvy buyers • (90+% of all buyers used the Internet multiple times to search
for homes last year)• Potential buyers are wary, busy and looking for “trusted
advisers”• Buyers want choices and convenience
Better understanding of target markets
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Millennial Buyers
In 2014, 30% of homebuyers were Millennials – who were born between 1980-1995.
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Millennial Buyers
Millennials also represent one of the largest segments of the U.S. population (72.9 million Millennials in 2012)
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Millennial Buyers24
Millennial BuyersMillennials represent over 66% of first-time homebuyers.
Millennials66.6%
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Millennial Buyers26
Reaching Millennial Buyers
• Most Millennials own and use multiple mobile devices and multitask regularly. Your information needs to be on different platforms and available anytime, anywhere.
• Social media and peer-reviewed content is critically important. Consider “refer-a-friend” type personalized promotions.
• Outreach campaigns that are smart, funny and optimistic are more likely to be effective with Millennials
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Making Your Services More Convenient
• Improve your overall process – keep people moving – wait lists are a thing of the past.
• Talk to customers and partners about the process and their concerns.
• Understand where your bottlenecks are
• Avoid “one size fits all” solutions.
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• Let people choose the approach they want• “Multi-channel delivery approach”
• Face-to-face group classes• Online training• Phone counseling• Face-to-face counseling• Or a mixture of the above
Multi-Modal Delivery Options29
Better Use of Technology
• Use online or PDF program applications
• Use online education programs such as eHome America, eHome Money, eHome Foreclosure
• Use distance communication for follow-up guidance and advice
• Use email and e-newsletters for staying in contact with customers
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Online Appt. Scheduling 31
Portland Housing CenterDownload PDF Application with “Chat” Help
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INHP’s Online Loan Application 33
Promote Down Payment Help
50% or more of properties for sale are DPA eligible (Source: DownPaymentResource.com)
The average qualified buyer will receive $4,000+ or more (Source: DownPaymentResource.com)
Down payment assistance is the #1 reason why potential buyers take HEC
Partner with local, regional or state agencies that provide down payment assistance
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Strong Web Presence
• 90+% of potential homebuyers go online for months to research about buying a home
• Counseling agencies need a strong web presence to reach these potential buyers
• Do “Search Engine Optimization” work to make sure your agency is near top of the list of any web search
• Make your website easy to use – one or two clicks at most to get an action step
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Strong Website with Simple Navigation
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eHome on NHS Cleveland’s Website
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Better Use of Referral Partners
• Referral partners must feel that your HEC program is “the best in the region”
• They need to feel engaged in the program
• Services must be timely, convenient and respectful of clients and partners
• Clients need to be “referred back”
• Provide materials and tools that they can use to promote the program
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Distance Communication
• Instant Messaging
• Telephonic Counseling
• Video Conferencing
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Distance Communication
Advantages
Access AvailabilityAffordable
DisadvantagesUnreliable
technologyConfidentialityCrisis
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Watch Your Language
• Use culturally-appropriate language• Some people don’t like the use of the word
“counseling” or “counselors”• These words have perceived negative connotations –
that is, it’s for people needing rehabilitation• Perhaps use more positive words such as “advisors”
or “homeownership experts”
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MN HOC Advisor’s Network 42
Advisors – Not “Counselors”
Check In
• Are there other effective technology you have used to reach first-time homebuyers?
• Are there technology strategies you are thinking about implementing and would like to discuss?
• Do you have other questions?
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Question #1
• How many of you currently charge for your Homeownership Education and Counseling service?
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Question #2
• How much do you charge• We do not charge• $1 - $30• $31 - $75• $75 or <
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The Case For Sustainable Course Fees
• Public partners (such as HUD) and private partners (such as lenders) rarely cover the full cost.
• In order to increase production and gain market share, nonprofit providers need to reduce delivery costs and/or charge higher fees to be sustainable
• Many consumers see a clear value proposition (especially with down payment assistance) and appear willing to pay a fair fee for education.
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Online Home Buyer EducationBuyers Will Pay for Convenience!
• 24/7 availability at home -- at their own pace
• Evenings and weekends are precious
• No childcare or travel costs
• = Savings of $50-$100 or more per household
• No need to wait for next class offering in a month or two, or juggle personal calendar
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Increase Market Share
• There are over 2 million first-time homebuyers annually in the nation
• The nonprofit HBE industry is educating less than 5-10% of them according HUD estimates
• We can grow this market dramatically, but we all need a sustainable business model that works!
HBE & C
All Others
New Home-owners
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• Charge a fee of $99 <• Consumers are willing to pay for convenience – based on
competitors’ prices and successful models from urban and rural agencies
• Charge $99 or more for HEC, regardless of delivery method(s) or suite of services offered
• $99 is less than a quarter of actual cost to deliver education and counseling to consumers
49Sustainability Strategy
Experience of Beyond Housing (St. Louis)
• 2014: 400+ eHome certificates, revenue over $50,000
• In-Classroom: $95 fee in advance or $125 at the door
• Online (eHome): $125
“Our eHome fee has not been an issue for buyers. We have goals to issue 1,000 eHome certificates in 2015, and aside from the outcome of more educated buyers, a check of $8,000 a month is pretty nice!”
– Chris Krehmeyer, President
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Lessons Learned
Once adopted by local agencies, eHome America can quickly become buyers’ preferred method for obtaining homebuyer education if required for down-payment or closing-cost assistance
“Since introducing eHome as an additional service, it has become the
preferred method over our in-person workshops. First-time buyers like
the convenience and how user-friendly the course is.”
– Henry Dawson, Jr., GuideWell, Housing Counseling Coordinator
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Lessons Learned
Once state and county authorities realize the benefits of eHome America, they can more confidently require online education for certain loan or grant programs.
Why?
These buyers are motivated, mortgage-ready, and can quickly meet any education requirements by using eHome America.
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Lessons Learned
When a lender encourages mortgage-ready buyer to complete education online, the buyer will pay $100+ for the course
Online education can be successfully combined with classroom offerings to reach a more diverse group of buyers
Without the convenience of an online option, many younger buyers will choose not to receive homebuyer education
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Implementing Your Strategy
Personally meet with potential partners and share the benefits of using eHome America: It’s convenient It’s available 24/7 It won’t slow down the process It meets National Industry Standards Personalized follow-up is available Counseling can improve loan performance
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Identifying Good Partners
• Target high-producing lenders and Realtors who promote affordable homeownership
• Look for lenders or government agencies who offer significant down payment assistance
• Credit unions often make good partners since they have similar missions as counseling agencies
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What Lender Partners Want
1. They want more homebuying customers
2. They want the process to go smoothly and like customers who understand the homebuying process
3. They don’t want delays
4. They prefer “mortgage-ready customers” who have resources and knowledge
5. They want to play by the rules
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Implementation Ideas
• Promote eHome with highly visible registration buttons on your homepage
• Develop co-branded promotional materials with your partners• Offer discount coupon books that your partners can share with
customers• Use positive language – such as offering “personalized
advice” rather than “counseling”
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Take-Aways
Many of today’s first-time homebuyers are Millennials (ages 25-34) and tech-savvy
These buyers are looking for value, but demand convenience and timely services
Recruit partners with good financial products and services Work with these partners to refer buyers into your program Charge $99 < for your services
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Questions?59
Milt Sharp, Jr.
President, eHome Network
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More Questions: