REI INK

SFR Emerges from Pandemic

Will Other Factors Impact the Industry in 2022? By Tim Reilly This time last year, I compared the Single-Family Rental (SFR) market to the great Gold Rush of 1849. Supply constriction, low interest rates, rising home and rental prices and strong returns created a highly attractive environment for a growing population of professional investors searching for the same hidden treasure. The “Goldilocks” market conditions triggered in part by the COVID-19 pandemic have turned SFRs into a highly valued and resilient asset class that has proven, once again, it is here to stay. The SFR industry has continued to outperform expectations with unprecedented activity stemming from record number securitizations, new market entrants, and expanding warehouse banking lines. SFR Real Estate Investment Trusts (REITs) have been one of the top-performing real estate sectors throughout the pandemic. But how will continuing lack of supply, increasing rates, and other evolving market dynamics in 2022 impact the industry? And what does the future of the single-family rental look like? Before we get to these questions, let’s start with a high-level overview of the asset class and a deeper dive into its performance in 2021. The SFR Market Grows Up In the wake of the Great Recession, the housing environment was nearly the opposite of how it looks today. Excess supply and nonexistent demand which followed the mortgage market collapse led to plummeting home prices. Some daring and intrepid investors stepped into the breach to purchase foreclosed properties with the intention of rehabbing and renting them before reselling the homes when the market recovered. The unintended consequence caused by these investors’ actions resulted in the stabilization of home prices in an otherwise rapidly depreciating housing market. They were buyers when everyone else had soured on the national housing market. As home prices began to rebound, many of these investors continued to lease the properties to consumers who were looking for long term, stable suburban rental opportunities managed by professional property owners. The new owners found that the cash flow, historically low interest rates, and steady price appreciation were a profitable recipe. The business model’s early success attracted the attention of more capital markets participants and more large institutional investors who could aggregate large numbers of rental properties. The win-win recipe for consumers, owners and capital market participants ignited the new single-family rental asset class. At the onset of the COVID-19 pandemic, there was widespread concern that the SFR market would suffer as unemployment could lead to rental delinquencies. Yet, in reality, the SFR market experienced an unprecedented boom. The pandemic created a heightened demand for more square footage, less urban density, and privacy for the new “work-from-home” environment. The new combination of factors drove more renters to less dense, more spacious single-family homes outside of cities. And as commercial real estate and hospitality investments looked uncertain, institutional investors looked to more stable investments in residential real estate. The Wall Street Journal reported there was more than $150 billion of private-equity real estate cash looking for a stable investment haven in 2020—and many fund managers turned to SFRs. Even record-low housing supply challenges that escalated throughout the pandemic did not slow the momentum in the SFR market. The SFR industry continued to creatively adapt to the low housing supply by offering new Build-to-Rent (BTR) communities. In fact, BTR housing became the fastest growing sector of the housing market, with more than 44,000 rental homes built in 2020 and 51,000 built in 2021, according to the National Association of Home Builders. According to the Single-Family Rental Survey conducted by JBREC/NRHC, 26% of portfolio growth for SFR operators came from BTR homes, rising from 11% in 2020 and up sharply from just 3% in 2019. Professionally managed BTR communities with amenities like pools, fitness centers, playgrounds and walking trails provide a lifestyle that appeals to a wide variety of renters from Baby Boomers to Gen-Z. Without a doubt, 2021 was the best year ever for SFR capital markets and its participants. A record number 29 SFR securitizations closed in 2021, far outpacing the 14 securitizations closed in 2020. Smart money was on the SFR industry as the JBREC/NRHC Single-Family Rental Survey reported that single-family rents rose 9% year-over year in the fourth quarter 2021. Single-family homes built to rent are delivering strong returns to investors as well—in November 2021 The Wall Street Journal reported the average risk-adjusted annual return for built-to-rent investments reached 8%. The SFR industry continued its evolution as the asset class offered many more varieties on the home rental concept for both consumers and investors alike. Not only is BTR a new twist on the rental space, but rent-to-buy has also reemerged as another investment vehicle in 2021. The year was not short on new mergers and acquisition activity, joint ventures, and entrants into the vibrant market. At this point SFRs have proven to be a resilient investment, run by forward-thinking creative minds and emerging from the pandemic as the number one asset class. Following the “Best Year Ever” While the growth seen in 2021 will be hard to top, the SFR market is poised for healthy growth in 2022 and beyond. According to PwC and the Urban Land Institute’s Emerging Trends in Real Estate 2022 report, single-family homes rank number one in both investment and development prospects. There is still untapped potential and room for the industry to grow. While there has been concentrated growth in certain metros, especially within the Sunbelt states, the share of SFRs owned by institutional investors is only about 1% of the national housing supply. Investors have begun to open up professionally managed rental opportunities in secondary and tertiary markets outside of the original and primary “Sand States” purchase footprint. Both economic factors and shifting consumer preferences are converging to drive and sustain demand for professionally managed SFR homes. Those economic factors include record high housing prices and increasing mortgage rates that make renting more affordable compared to buying. According to the Radian Home Price Index, provided by Radian’s

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Picket Homes – World Class

Picket Homes is Transforming Residential Real Estate By Carole Vansickle Ellis Picket Homes was founded in 2019 in response to what the company’s founders saw as a looming sea change in the single-family residential real estate sector. “We had built out a roadmap for how we thought the industry would evolve over the next few years and how we could be a part of that evolution,” recalled Charlie Mullan, co-founder and chief strategy officer at Picket Homes. “We knew a massive change was coming to the single-family asset class and wanted to bring positive, disruptive consumer housing experiences to the people living in those properties.” Mullan, along with co-founders Hench LeMaistre (CEO) and Q Shay (CTO), founded the company on a stated goal to “build a world-class housing product for residents.” In the process, they knew, they would have to build a world-class housing product for large-scale and institutional property owners as well. “We designed Picket Homes to be a platform that is truly the best of both worlds and that could usher in the next generation of single-family rental products,” LeMaistre explained. “The best way to usher in the next generation of single-family rental products is to optimize institutional returns by catalyzing a better experience for millions of people living in rental homes across the country.” The result of this grand idea was a system that is simple on the surface but highly complex underneath: a technology platform that relies on what Picket Homes refers to as “Decision Science” in order to help institutional investors acquire and build portfolios of single-family rental homes and then, Mullan added, “manage those homes in highly efficient ways [that] deliver exceptional returns to investors and exceptional housing and living experiences to residents.” In 2020, the COVID-19 pandemic accelerated the trends that had shaped the company’s founding insight: that the unique characteristics of single-family rentals make them attractive to large-scale investors seeking stable returns and long-term growth and to Americans seeking geographic freedom, lifestyle flexibility, and personal convenience. “When those trendlines converged, we had already imagined a world where large-scale investors could quickly and confidently deploy capital into the sector,” said Shay, “and the increasing ranks of American renters were looking to more easily find the high-quality homes and high-quality amenities that supported rather than stymied the lifestyles to which they aspired.” Picket Homes consists of a proprietary investor services platform, called Decision Science, and two wholly-owned subsidiaries, Inertia Realty Services and ElaraOne (“Elara”) Home Management. “Our vision is for Decision Science to become the most-used and -trusted toolset for end-to-end investment management in SFR,” Shay concluded. Using Data & Science to Make Fast, Actionable Decisions All of the Picket Homes founders have complementary backgrounds that have clearly shaped the mission of the company. Mullan studied economics in college and founded his first startup before he graduated. Shay specializes in what he calls “tech-powered change” and cut his teeth at Amazon in the early 2000s, where he led teams of more than 150 people focused on engineering and international retail. Much of his work there remains in effect in the company’s hiring practices and technology infrastructure. LeMaistre has spent the last decade focused exclusively on institutional single-family rental operations and has overseen ground-up operations for more than 80,000 properties worth more than $20 billion. “Our founders bring together world-class technologists, operators, engineers, and builders to focus on the rental space,” said Mullan. “We believe it is the perfect marriage for this time and this industry.” Picket Homes uses a process it calls Decision Science in order to optimize and streamline all aspects of single-family rental ownership. The Decision Science platform, abbreviated DS when used at the company to refer to various operational facets powered by the process, is based on multiple systems that work in tandem to help institutional operators make decisions and acquisitions quickly. For example, when new properties enter an MLS system in markets across the country, the company’s dynamic modeling system assigns those listings a “DNA score” that may range anywhere from 0 to 100. That score will be uniquely adjusted to fit a client’s custom investment strategy, or “buy box,” so that available properties that are the right fit may be easily identified at any time. Much of the data that feeds into the DNA score also is used for an asset’s return analysis, which includes suggested rental comps and localized datasets designed to help users compose their offers directly through the platform and stream-line the underwriting process as well. “We do all of the facilitating work to make the process a seamless experience,” said LeMaistre. “We want our clients to be able to log in and acquire properties using a singular process across multiple geographies. The experience today for most owners relies on different brokers, different models per market, and then some way of funneling all that information into spreadsheets. It’s a really inconsistent process. We bring all of that into a single platform for our clients.” This all-inclusive process centralizes things for Picket Homes clients, but it requires constant work and scrutiny from every angle by the experts behind the scenes in order to make the system effective. “Everyone has a different way of doing things, and I do not mean just in terms of our clients!” laughed Shay. “Every state, every jurisdiction, every agent and company has a unique way of operating. The only way that we could enable companies and their own underwriters, originators, and analysts to work across all jurisdictions nationally is to build a pipeline for executing transactions that would meet universal customer needs while allowing for a high degree of customization. It can be tough.” Picket Homes answered that tough call with determined creativity and what Shay calls “micro-scale innovations behind the scenes.” Those innovations often involve intense analysis of markets and market behavior, but the company is equally dedicated to careful scrutiny of the resident experience as well. Mullan explained, “We are offering residents an innovative renting experience that is good

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Eviction Management

Transitioning From a Default Property to a Paying Asset By Nickalene Badalamenti-Kalas The government-mandated forbearance period on default properties expires this coming June. These properties will increasingly require eviction and asset stabilization services to ready them for new tenants. What many may not be aware of is the delicacy — and absolute compliance — with which these services must be administered. A single misstep anywhere in the process, and the process will begin all over again. The current tenants remain in occupancy, incremental costs are incurred from legal and court fees, and the property continues to generate zero income. To facilitate the transition from default property to paying asset, small and mid-size investors and trusts — and their attorneys — are turning to asset management companies with the regulatory expertise, eviction and nationwide in-the-field infrastructures, to manage this process and migrate these properties to tenant-ready, income-generating assets as quickly and comprehensively as possible. THE RENTAL MARKET As more and more properties emerge from forbearance, many investors are collecting portfolios and preparing them as rental properties, either as single-family rentals, high-quality vacation homes, or for short-term rentals such as Airbnb.  Whether they decide to “fix and flip” or “buy and hold,” whoever has their new acquisition tenant-ready the soonest will see the fastest returns. EVICTION/LOCK OUT FACTORS In simplest terms, the eviction/lockout process consists of servicers like Five Brothers coordinating all activities with all stakeholders, including the investor, the attorney, the field service professionals, and local law enforcement. Amidst the eviction process, there are very specific compliance requirements mandated by the court, as well as local, county and state ordinances, and they must be followed to the letter. These regulations vary significantly from market to market, and asset management field service companies must be conversant with ordinances in each. For example, New Jersey and New York have strict mandate requirements regarding the number of field service professionals needed on site during an eviction, unless it is specifically overwritten by the sheriff. In certain markets field service professionals may be required to be licensed, such as movers or storage facilities in order to have the capability to remove debris, personal effects, furniture, and even vehicles from the property, and relocating it to storage facilities or dumps. Consistent with the specified lockout date and time, the need for an experienced eviction team to coordinate and complete lockout procedures is paramount. Another example of the need for accuracy: if the field team is even 5 minutes late, the sheriff can call off the lockout process, the property remains occupied, continues to generate no income, and the eviction process may be required to start from scratch. The need to understand and fully observe all local statutes and maintain the highest professional standards cannot be overstated. The original eviction request may be a simple lock change, but once the interior of the property is accessible by the sheriff, he or she could immediately order a complete trash-out of the property, potentially involving hundreds of cubic yards of debris. If the sheriff requests a complete trash-out and/or seasonal maintenance to mitigate blight or violations in the property’s disposition, the field team must be capable of completing that task while on site. The field team is also responsible for providing the client with progress updates throughout the eviction process. CASH FOR KEYS A pre-eviction strategy called “cash for keys” offers a cash sum for the return of the property’s keys. Utilizing this tactic can save an investor money and help avert damage to the property inflicted by the current tenants out of spite or rancor towards the investor. In certain cases, this may take the form of forgoing the security deposit if the property remains undamaged and in broom-swept condition. INSPECTIONS Once the property is unoccupied, investors have the authority to begin rehabilitation to get these assets into tenant-ready condition. This begins with an inspection that thoroughly documents — with geo- and time-stamped photographs — the condition of the home and all work needed to prepare the property for the next tenant. These photos also help validate that the products and services ordered by the investor are those being utilized in the rehab. Geo- and time-stamping are becoming industry norms, and many funding partners are beginning to require them for fund disbursements. ASSET STABILIZATION For portfolio properties that are unoccupied, engaging in-the-field asset stabilization activities to ensure the property is in immediately-rentable condition is important. These activities may include minor rehabilitation work, yard cleanup, pool openings and closings, gutter clearing and lawn care. In colder climates, winterization may be necessary, ranging from heating and plumbing fixture maintenance to insulation work. BEST-IN-CLASS DISASTER TECHNOLOGY Five Brothers utilizes proprietary asset stabilization disaster technology called CLADE, an advanced mapping system designed to help investors monitor property status in the advent of natural disasters or severe weather events. CLADE leverages geospatial technology to help determine the likelihood of damage to properties potentially in a storm path, and to allow proactive measures to reduce or prevent damage. If damage is inevitable, CLADE technology helps investors determine which properties in their portfolio have likely been impacted, and generates a report sent directly to the investor. They can then order FEMA inspections, hazard claims repair bids, as well as remediation and restoration work. SERVICE FLEXIBILITY The need for fluency in the eviction, inspection and asset stabilization process is essential. For investors without a dedicated asset stabilization team, Five Brothers can seamlessly function as the in-house field service company, providing all the elements required to remain in-the-know with compliance changes as they occur, and ensuring that property requirements are met quickly, completely, and compliantly and returning the property to tenant-ready status.

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Small MarketS

Single Family Homes vs Multi-Family Homes By Scott Sklare As an investor, real estate broker, advisor, and owner of a property management and rehab company, I am often asked, what I prefer: Single Family Homes (SFH) or Multi-Family Homes (MFH). My honest answer is “it depends!” I happen to prefer SFH, but I invest, own, and manage both types. In reality, there is no right or wrong answer. Most everyone knows something about houses. Most everyone has an opinion about what prices are doing – or tell you about a good deal they or someone else got on purchasing their personal residence. Amazingly, only a tiny percentage of the population invests in houses. Most recently, the large investment houses have started buying single-family homes in select markets and that should tell you something. This article is about the benefits of investing in SFH in a relatively small market. I reside in south-central Wisconsin, and the specific Metropolitan Statistical Area (MSA) that I am going to use as an example is Janesville-Beloit, Wisconsin. Relative to my earlier comment regarding large investment houses – a market like Janesville-Beloit is somewhat “under the radar.” Very few large investors have heard of it, or paid attention to it, and that is a good thing. Why Single-Family Houses are a Great Investment After 40 years of real estate investing, I much prefer houses vs apartments. I believe that houses make more money with less work than other real estate investment types. That is probably contrary to most gurus’ opinions. I own and manage both. The tenants in apartments come and go more often – higher turnover. Most every time a tenant moves, the unit requires more work on my part to get it “rent ready” for the next tenant. Tenants in apartments tend to be more demanding. I get more complaints about the neighbors, such as, “my neighbor is smoking cigarettes, my neighbor is smoking marijuana, my neighbor is loud, noisy, messy…” House tenants are significantly different. I find that house tenants treat the house as if it were their own. In all likelihood, it is a family that is on a quest to buy their own home and is grateful to be living in their “own/rented” home. As a result, house tenants stay longer — on an average of three to five years. That is important to note — a long-term tenant reduces your maintenance and vacancy expenses. I do not have to repaint, clean, or replace flooring until they leave. If you happen to be an investor and a licensed real estate agent/broker — that tenant may turn into a buyer for you someday. If you treat them right, they will hire you to be their buyer agent, providing an additional, built-in stream of income. Another reason I prefer SFH is that houses maintain their value whether they are occupied or not. Apartment building value is predominantly determined by the amount of income it produces. Houses are more liquid. You can buy a house with a smaller down payment. There are many more buyers for houses than for bigger properties. You have both investors and families looking for their personal residence. Apartment vacancies are typically 10% whereas house vacancies rarely exceed 5%. Analyzing the Small Market Demographics Prior to investing in any given geographical area, town, or city, it is in your best interest to look at some key factors; geography, demographics, education, industry, largest employers, households, business conditions, employment/unemployment rates, and so forth. In a nutshell, you want a stable economy and a stable workforce with a variety of industries that will represent a good and healthy rental market. First a little bit about the MSA. Janesville-Beloit is just about a straight shot, 45-60 miles south of the state capital, Madison, Wisconsin (state capital and home of the University of Wisconsin). Here is some basic demographic information: Median Age » 40 Ethnicity » Caucasian — 80%, African American — 10%, Hispanic — 10% Education (Post-secondary) » 55% Household size » 2.6 Median Home Value » $147,000 (35% within $90,000-$130,000) Median Household Income » $59,000 (50% earn between $35,000-$100,000) Estimated net worth » $129K Renters vs Owners » 35% renters, 65% owner-occupied Employed population » 50,583 Unemployment rate » 3.8% Households » 42,333 # of businesses » 3,360 Economic Development Activity Economic development activity is an important consideration when investing. Most recently Amazon, Staples, and Dollar General built 3,000,000 square feet of warehouse space and created over 1,500 new full-time jobs. The jobs represent industry-leading pay and comprehensive benefits packages. Capital investment exceeded $200 million dollars. There is a sizable segment of the population that rents and has a household income of $59,000. Again, at a high level, that means that a large portion of the population will qualify for a monthly rental rate of $1,200 to $1,500. A Real-Life Example – The Return On Investment Let’s conclude with an example of buying a Single-Family Home, Long Term Rental in a small market, specifically, the Janesville-Beloit Wisconsin market. Property Information » 3 bedrooms » 1 bath » 6 total rooms » 1.5 stories » 1100 finished sq ft » .13-acre lot size (roughly 40×120) » Centralized location » Forced air furnace » Municipal water/sewer » Fresh paint » New flooring » New counters, new sinks » Open floor plan » Property Taxes — $764 Year 1 Analysis Purchase         $89,900 Closing $1,000 Repair $0 Total    $90,900 Down Payment           $17,980 Loan Amount   $71,920 Amortization   30 years Interest rate    4% Monthly P&I    $345 Annual Income            $14,414 Annual Expenses         $9,005 Annual Cash Flow        $5,410 Cash on Cash ROI        28.5% Equity  $19,696 Annualized Return      32% Prior to making an investment decision, real estate investors have many factors to consider regarding asset type, market size, financing options, etc. By carefully conducting “Real Estate 101” due-diligence and collaborating with a local advisor who is knowledgeable about the local area and market, the investor can minimize risk and achieve returns that surpass other investment opportunities.

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Choosing the Right Title Company

Title Clearing is An Often-Overlooked Area for Risk Mitigation By Dax Junker Risk and reward have always been intrinsically bound together across investment types – including real estate. The more risk an investor is willing to take on an investment, in general, the higher the potential rate of return and reward. Over the last 15 years, with interest rates stable or declining, the real estate market has, overall, been appealing on many different fronts. But the last 12 months have seen a sharp reverse of that trend and a sizable jump in rates. Add in exponential increases in home values, rising inflation, supply chain disruption and labor shortages, and a new work environment brought about by the pandemic, and suddenly real estate investing looks different. But a smart investor knows that volatile and dynamic markets often bring the best opportunity if you know where to look. A smart real estate investor also knows it is important to find partners to work with that can help reduce their risk in a myriad of small ways that all add up to larger returns. Title clearing is an often-overlooked area for risk mitigation. Finding Opportunity in SFR The world changed dramatically when the COVID-19 pandemic hit because people were forced to spend more time indoors, often living and working in the same space. That dynamic caused many people to begin looking for more space. For many people, more space does not equate to buying when you add up rising interest rates, a 20% down payment on a $300,000 median house price, and the cost of maintenance and repairs associated with long-term home ownership. In that context, Single Family Rentals begin to make a lot of sense for more families. SFR tenants obtain the feeling of being in a home, they tend to stay in one place longer and take better care of their residence because they treat it like a home, not a temporary stop. Many real estate investors saw that trend and are finding opportunity in single family rentals. With single family home prices rising, families are having to rent instead of buy and investors are buying into the SFR market in a big way. In fact, according to Forbes, almost 20% of single-family homes sold in 3Q21 were sold to investors. The John Burns Real Estate Consulting firm has even reported recently that investors accounted for 33% of all home sales in January, 2022. When rates began rising in 3Q last year, it was broadly recognized that the refinance boom was over and title companies needed to shift their focus. With the investor market taking off, that appeared to be a good direction. While working with investors has some minor challenges, there are also some big benefits – for both the investor and the title company. For a title company, one of the biggest benefits of working with investors is that most of them with any experience at all know the business and the process really well. They also understand that title search and clearing, done right, inherently reduces risk, can eliminate a lot of problems down the road, and makes closing a lot easier for everyone involved. What Investors Should Look for in a Title Company For investors, it is important that your title company have team members that are regionally or state focused. Title laws change from state to state and a national company with local knowledge can actually help an investor grow their business rather than force them to work with a different company for different geographic locations. That can add confusion and cause errors, costing an investor time and money. An investor should also make sure that their title company works with national underwriters for two major reasons. First, a title company should offer their clients the best option for them, and that level of variety means you can cover many different types of deals in many different environments, again — to the benefit of your investors. Second, that geographic variety helps find underwriters that may also be local experts in areas with specific issues they are more familiar with, helping to reduce risk on particular types, or locations, of investment. Last, but not least, any strong title company should have the technological tools that integrate across vendor platforms to deliver fast, accurate information as soon as possible. There are smaller title companies that have not made the investment in technology that they need to and not having the right tools can actually add risk to the process rather than reduce it. In an era where people do not seem to disconnect from their phones and email, it might seem odd to mention communication with investors as a challenge — but it truly can be and getting communication right is key for title clearing. Some investors might be working 20, 30 — up to 75 or 80 deals — at a time and they need answers right away. Ensuring that an investor gets the information they need, when they need it, is so mission critical that we are building out a dedicated call center so that we can be that much more responsive to investors’ needs. We do not ever want to hear that one of our clients lost a deal because we did not get back to them in time. Finally, some title firms work on a volume basis – so the bigger the volume, the higher you climb on the processing list and a smaller investor’s transactions get bumped down the list. That type of volume focus actually punishes investors that might do a lot of deals over a period of time, not just all at once. It also eliminates the possibility of relationship building where working with the same people allows your firm to get an understanding of the personalities involved, develop a preferred workflow, and deliver quality results. So before choosing a title company to work with, do some research and ask them how much experience they have, if they can execute

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Homebuyers Speak Out

There’s a Lot to be Learned from Homebuyer Behaviors By Miriam Moore The dramatic real estate landscape of the past two years has given lenders, servicers and investors the opportunity to see just how directly market conditions can shape homebuyer behaviors and influence their perspectives. And while the surge in buying and refinancing activity came as no surprise to anyone given the extraordinarily low interest rates, it is worth looking more deeply to see some of the less obvious implications of how buyers responded to market challenges and opportunities. In January 2022, ServiceLink set out to do just that by partnering with Schlesinger Group to survey 1,000 homeowners who had purchased a home within the past five years. The 2022 ServiceLink State of Homebuying Report (SOHBR) provides year-over-year data that reflect generational trends among recent homebuyers, attitudes toward alternative paths to homeownership and the role of technology throughout the process. Navigating Opportunities and Challenges As record-low interest rates met record-high home prices in 2021, homebuyers had some tough decisions to make. Some dove into the real estate market headfirst, believing they might never see rates like that again. Plenty of others thought about buying but backed out. More specifically, 24% of the homeowners surveyed for the 2022 SOHBR said they considered buying a home but ultimately decided against it. High home prices (44%) and low housing inventory (28%) were among the top factors that held them back. That’s quite different from sentiments shared in early 2021, prior to the historic increases in home prices, when only 31% cited high home prices and only 8% low inventory. The primary reason homebuyers said they had deferred in 2020 was that they decided to upgrade their current homes instead (34%). Year-to-year differences are apparent in the refinance space as well. The majority, 62%, of 2022 SOHBR respondents who refinanced said they did so primarily to secure a better mortgage rate, while only 44% of 2021 SOHBR respondents who refinanced cited the mortgage rate. Instead, more than half (55%) of refinance decisions made were related to borrowers’ desires to make home improvements (only a quarter cited home improvements as a reason for refinancing in 2022’s SOHBR). In total, 30% of 2021 SOHBR respondents told ServiceLink they refinanced their current home, and 25% in 2022. Some respondents are leaving the door open to the possibility of refinancing in 2022 (23% say they are likely to refinance). When selecting a provider for refinancing, respondents stated they are looking for the following factors: the ability to close quickly (41%), ability to complete most or all of the refinance process digitally (34%), ability to complete the application digitally (33%), positive online reviews (31%), in-person customer service (27%) and recommendations from friends or family (27%). Leaning into Mortgage Technology The pandemic helped accelerate adoption of digital mortgage solutions by lenders, servicers and borrowers. Homeowners have expressed their desire to keep that momentum going. More than two-thirds of them (69%) said they used technology to research property listings; they also leveraged technology to take virtual property tours (37%), electronically sign documents (36%), digitally review closing documents (34%) and more. While the use of technology in these applications has been steadily trending upward over the past several years, the use of eSigning and digital document review spiked last year, as more lenders adopted the technology to support people sheltering in place or limiting their in-person interactions. In ServiceLink’s 2021 SOHBR, 10% of homebuyers said they had eSigned documents and 13% digitally reviewed documents prior to closing; those percentages rose to 36% and 34%, respectively, in the 2022 study. It is likely that these and other technology solutions will continue to grow in use as they facilitate a smoother homebuying process. Homebuyers across generations and gender say they especially appreciate the convenience/ease of use (72%) and time savings (60%) real estate technology offers. Embracing the Influence of Millennials and Gen Z The youngest subset of buyers, Gen Z/millennials (ages 18-40), continue to be a driving force in the housing market: 36% of them bought a home in 2020 or 2021, and 26% say they are likely to purchase a new home in 2022. Additionally, 32% plan to refinance this year. Looking into their motivations for buying their current home, 42% said they were upsizing from their current home, 21% were taking advantage of attractive interest rates, 17% needed more space to work remotely and 14% bought it as an investment property, among other factors. What truly sets this group of buyers apart from older generations, however, is their openness to new ideas — 23% would purchase a home without seeing it in person first, for example, and 55% either have, or would be willing, to buy a home at auction. This willingness to buy at auction also came to light as part of another ServiceLink study in late 2021, when 75% of millennials (ages 25-40) surveyed said they would consider buying a home at auction. They and others who said they would consider buying at auction were motivated by potential cost savings and a faster homebuying process. Fulfilling Homebuyers’ Needs for Education In addition, homebuyers would likely appreciate specific education about their homebuying options. For example, 30% of respondents are not sure if they would be willing to buy at auction because they do not know enough about the process. They want information that will put them on equal footing with savvier buyers who understand all of their options. Envisioning the Path Forward The results of the 2022 SOHBR confirm that homebuyers are strategic in their decision-making process, taking market conditions as well as their own financial standing into account before moving to purchase or refinance a home. Lenders and servicers who understand their thinking and support their needs are in better position to earn their trust and business in 2022 and beyond. To view the complete 2022 State of Homebuying Report, visit: svclnk.com/state-of-homebuying-report-2022

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