Two out of every three millennials planning to be homebuyers don’t know what closing costs are, according to a survey by ClosingCorp.
The survey also found that across all adult age brackets, more than one-third of potential homeowners are "Not Very" or "Not At All" aware of closing costs.
Millennials are often tech savvy but knowledge poor, it turns out.
However, the generation is hardly alone in this regard. 34% of all ages also know little or nothing, about closing costs.
According to ClosingCorp, closing costs are paid when a real estate transaction closes and the title to the property is transferred to the buyer, usually between 2-5%. The fees cover appraisal, inspection and attorney's fees to home warranties.
"Much has been written about millennials because they are the largest generation so far in U.S. history, and their longstanding impact on the real estate market and economy is going to be huge," said Brian Benson, CEO of ClosingCorp.
"Their buying behaviors are much different than previous generations, and of particular concern to the industry is that they are waiting longer to buy their first homes," he said. "This study emphasizes the need to better educate millennials, and really all consumers in general, on the real estate closing process.”
The "ClosingCorp National Closing Costs Survey" of more than 1,000 adults, also showed that most people learn about closing costs from Realtors, or by doing their own research.
In fact, millennial homeowners are more likely to learn about closing costs from a Realtor as opposed to a lender by a ratio of nearly two-to-one.
"This study is very interesting in that it shows millennials are more dependent on realtors than previously presumed," said Benson. "We know they are more tech-savvy than their predecessors, so we believe this really highlights the complexity of a residential real estate transaction. Whether they are researching a home on their own or getting help from an interested third party, the bottom line is that people need access to the correct information, and it needs to be simple for them to understand.”
Nonetheless, the generation is looking to buy.
“The story about millennials not forming households and getting into homebuying is more of a 2012 and early 2013 story,” Realtor.com chief economist Jonathan Smoke said in his annual forecast 2015. “It’s outdated. Our view of 2015 is informed by strong trends and indicators of what’s happening today with millennials."
“In 2014, it’s been a banner year for employment but parsed by age groups those under 35 have been gaining jobs at a 60% faster rate than rest – one of the best years for employment was even better for millennials,” he said.