Seller’s Guide to Understanding Today’s Buyer
That’s right— it’s not 2006 anymore.
Five years ago, it was a seller’s market in many metro areas. Buyers would go to extraordinary lengths to get the home they wanted and a real estate purchase was top priority. They’d constantly monitor new homes for sale. They’d tirelessly tour open houses. Bid well over the asking price. Swallow the roof repair costs. Allow the seller to continue living in the home for two months after closing. All of that was no problem — it was all part of getting into the market.
After the real estate market upheaval of the past few years, those buyers are long gone. Some became renters. Many who would be ready to “trade up” to a larger or renovated home have decided to make appropriate fixes to their current home instead. Some are stuck in their homes due to poor equity. Others are on the sidelines waiting for home prices to bottom, or the economy to rebound.
Who does that leave in the pool of buyers today? The Home Stealer, the Market Feeler, and the Real Dealer. Unlike buyers five years ago, they’re far more cautious — sometimes to the point of inaction. Knowing the type of buyer you’re dealing with can help you avoid a lot of pain and wasted time and might help you get a better deal.
The Home Stealer
In the game of baseball, a Home Stealer scores points for his team. In the game of real estate, a Home Stealer is a strikeout, at least for the seller.
A seasoned Realtor can usually spot Home Stealers. They’re not terribly experienced in the local real estate market and in most cases, they have little or no relationship with a real estate agent. They’re likely not pre-approved for a mortgage but will say that they are. They’ll withhold information, thinking that staying coy helps them in negotiations. Finally, without solid knowledge of the offer-writing process, local market customs, or the advice of a local Realtor, they may make outrageous requests from the seller. I’ve seen Home Stealers ask the seller to make major modifications to a room or ask a neighbor to cut down a tree.
In short, they’re not real buyers. They may be in a few years. For now, they like the attention. By writing offers and acting important, they get their egos stroked while wasting everyone else’s time. Their goal is to “steal” a home by making a really low offer and/or squeezing as many concessions out of the seller as possible, sometimes after having only visited the property once.
Advice to sellers: If the buyer can’t or won’t answer legitimate questions about themselves, their finances or experience in the market, they’re not serious. Don’t waste your time; Home Stealers are opportunists. Ultimately, your property represents just another opportunity to them, rather than the home of their dreams. If you’re inclined to take less than your list price, say no to the Home Stealer, reduce your price and give the rest of the market a shot at it. You might end up with a Real Dealer (more on them in a minute).
The Market Feeler
Market Feelers have just entered the market and are “feelingit out. There’s no urgency for them, and buying a new home might actually be optional. They may fall in love with your home, but they want to take their time deciding. They might come across as a Home Stealer by the type of offer they make or as a Real Dealer by their interest in the property. They’re tough to spot, but a good listing agent will ask all the right questions.
Because they’ve just jumped into the fray, Market Feelers may give you a low-ball offer. It’s not because they’re trying to “steal” your home. It’s usually because psychologically, they’re not quite ready to dive in. Low-balling is a comfortable way of sticking a toe into the water.
Unlike Home Stealers, Market Feelers are more likely to disclose their financial situation to their seasoned agent. They probably have a pre-approval letter from a lender, too. They’re likely represented by a local agent and seem to be well-versed on local market and conditions. They may even come for multiple showings. But when it comes down to it, their offer is too low.
Advice for sellers: Try to work with them at first. Respectfully move on from the low-ball offer but with the realization that the buyer might return with a reasonable offer later. Market Feelers are often on their way toward becoming Real Dealers, once they can get beyond their inexperience and overly cautious approach. Unfortunately, that transformation might take months.
The Real Dealer
These buyers are “the real deal.” They’re working with experienced agents and brokers, with whom they have good relationships. They’re experienced in your local real estate market. They’ll spend a lot of time in your home. They ask a lot of questions because they’re seriously interested and want to know as much as possible. Don’t be insulted or bothered by their questions; be sure to answer them. Once they’ve visited a few times, they bring friends, co-workers, family members, a trusted contractor, and probably a tape measure on return visits. They might ask your Realtor to see the attic or the sub-basement.
When it’s time to write an offer, the contract comes with a local bank or mortgage broker pre-approval letter. Real Dealers (through their agents) will often submit a letter of introduction to the sellers, giving information about themselves while also spelling out the terms of the offer. Their offers are usually within striking distance of the asking price.
Advice to sellers: This is what you’ve been waiting for. Be responsive, act quickly, and make yourself available to Real Dealers.
How to Spot The Buyer
These days, the listing agent has such an important role in negotiating the transaction. They are the only ones that interact with all parties of the transaction. With your agent’s help and bird’s-eye view of the deal, find out everything you can about potential buyers. Why are they buying? What do they do for work? Where is their office? What is their motivation for purchasing? Did they just get a new job or have a new baby? How long have they been looking at real estate? How many offers have they already written? You can understand a lot about who you are dealing with, which will ultimately help you in your negotiations.
Depending on your area of the country, it’s still a buyer’s market and will continue to be for some time. Knowing as much as you can about potential buyers helps to tip the balance of power a little bit back in your favor. At a minimum, by being well informed, you’ll avoid wasting time with Home Stealers and early-stage Market Feelers.