Friends making the leap into home ownership can pressure others to do the same.
It's a sign of the times that the constant exposure to the fabulous lives of friends and family can lead us to distraction. When it appears everyone else is living a life of luxury and excitement based on their social media posts, many people suffer from FOMO - Fear of Missing Out.
According to the 2018 Homebuyer Insights Report from the Bank of America, FOMO is having an impact on many millennial new home buyers. In fact, not only is it affecting first time buyers, but buyers in general. They refer to "instagrammable" houses as a potential incentive for millennials to be persuaded into considering making a home purchase.
Looking at the Numbers
33 per cent of those surveyed expressed a feeling that if their friends can afford to buy a home, why shouldn't they be able to as well. 25 per cent expressed a feeling of missing out when they viewed posts of their friends making a home purchase and 24 per cent were convinced it was time to grow up and buy a home when seeing their friends are doing so. 23 per cent also expressed feelings of jealousy when they viewed the homes their friends were able to purchase.
Signs of FOMO
It is a good idea to be able to recognize the symptoms of FOMO:
The home buyers seem to be obsessed with being everywhere and doing everything all at once
They are not able to decide what they want, because they seem to feel if they settle on a specific check list, area, etc. they might miss out on something better (This also means they have FOBO which can be even worse, as it means they have Fear of Better Options arising)
Obsessive phone use even when meeting with you to discuss important details
A visit to their home shows they are living beyond their means with expensive clothes, furnishings, technology, etc.
All of these signs can prove to be a challenge for real estate agents as it interferes with their ability to commit, not to mention to be realistic with whether or not they are ready and capable of making a home purchase. The truth is, although they might prove to be a little more emotional than most buyers, they still need to understand the same things -- maybe with a little more patience required!
First and foremost the easiest yet harshest reality check tends to be finances. Having them visit a bank for pre-approval will help them see what mortgage they can afford if any. They can consider how much they are currently paying in rent, versus what they would have to pay in mortgage fees to decide if now is the time to make a move.
Address What they Can Afford
If they do get pre-approval, the next step is to show them what they can afford and where. This can often be a challenge when they look at where they would have to live in order to own a home. This is not always bad, as often they see a lifestyle they did not think they could have.
Make a Pro/Con List
You can also help them make a pro/con list so they can consider rent versus mortgage. This can help them see what they will have to give up to own a home, but also provide them with the benefits of home ownership as well.
Needs VS Wants
Another list you can have them prepare is the old reliable needs versus wants. This allows them to look at what they really need, and how their checklist compares to what they can afford. You can also help point out the positives and negatives of living outside of the city, if this is where their budget leads them. For example, the commute alone can really interfere with their quality of life depending on how much time they will spend travelling. On the flip side, they will have a beautiful home and property to enjoy on the weekends!
FOMO and FOBO can cause millennials to make rash decisions that they might regret in the future. Being there to guide them through the home buying process will help them make informed decisions instead of going by the pressures brought on by the fear of missing out.