Turn Renters Into Home Buyers

Zillow Premier Agents who are looking for a renewable source of home-buyer leads might want to take a fresh look at renters.

Often viewed as dead-end leads, renters represent a pool of potential buyers — present and future — as well as a plentiful source of all-important referrals, especially among younger buyers who love to share their experiences in person and online with friends.

Many renters are already considering buying
Nurturing renters makes sense when you look at data from the Zillow Group Consumer Housing Trends Report 2018:

• 46 percent of renters — defined as someone who moved within the past 12 months — already have plans to move again, either now or within the next year. Another 22 percent are contemplating a move within the next two or three years.
• 34 percent of renters who plan to move in the next year are looking to buy a home.
• 46 percent of all renters consider buying instead of renting, and 20 percent seriously consider it.
• Young renters are especially keen on buying, with 52 percent of millennials (ages 24-38) saying they’ll consider buying instead of renting their next home. And those young renters are more likely to experience the types of life events that prompt people to uproot: graduation, new jobs, marriage and the arrival of children.

For renters who are partnered, renting may be the first step on the journey to homeownership as they combine households and incomes and plan for kids. That may be why 53 percent of partnered renters consider buying, compared with just 39 percent of solo renters.

Renters also are more likely to consider buying if they have children under 18 living at home, or if they’re living with other generations of family members; 58 percent of renters with young children and 68 percent of renters in multi-generational households say they consider buying during a move.

Pet owners, especially those with dogs, are more likely to consider buying than renters with no pets. More than half (54 percent) of renters with dogs and 48 percent or renters who live with cats say they consider homeownership, possibly due to rental restrictions regarding pets or the desire for a yard or a larger space for pets to roam.

Know when — and how — to take action
So what do the numbers mean for agents? And what are some ways to nurture renters until someone is ready to buy?

Bret Calltharp, Director of Industry Outreach at Zillow Group, says that discovering the reasons why people are renting is key. While there are certainly renters who enjoy the lifestyle and freedom that comes from renting, others may lack information on what it takes to buy a home.

Misconceptions about credit scores and down payments abound, he says, and prevent many renters from even exploring whether they can afford to buy.

Calltharp, who has advised thousands of agents during his 15-year career in residential real estate, notes that renters who are new to an area may want to get a feel for the place before they commit to buying.

“This business is so referral-based, it’s an excellent way to pick up clients,’’ he says. “If you provide great service to the person who’s renting, they might know six or seven people who want to buy. Renters typically are younger, which means they’re more likely to tell their friends if you do a great job. Millennials love to give reviews, and word-of-mouth is important to them.”

A source of supplemental income
Given that the typical renter spends an average of 2.7 months looking for their new home compared with 4.4 months for home buyers, serving renters also can help agents supplement their income while waiting for a sale to close.

Terms of a client’s lease provide a natural framework for further nurturing the relationship.

“You have the advantage of knowing the exact date that they need to stay or move,’’ Calltharp says. Staying connected is key to the relationship, and he suggests checking in within six months in case the renter is thinking of buying, as many are.

Calltharp says follow-up can be as simple as asking, “How are you doing? Are you happy where you’re at? Have you thought about what your next move is going to be?” The important thing, he says, is to be top of mind when they’re ready to move again.

“It’s amazing what happens when you put even a little bit of effort into follow-up,’’  Calltharp says. “If you can come into it from a relationship mindset instead of a transactional mindset, it will increase your bottom line.”