Many parts of the country are seeing an uptick in real estate activity. We’ve been hearing for months now that buyers have returned; that it has become cheaper to own than to rent in many markets; and that sellers are realizing their once unsaleable homes may have a market.
If you’re a seller, it’s helpful to understand the mindset of today’s buyer, to understand what they’ve been through and what they’re willing to do — or not do — to get the home they want.
The ‘crash’ had a big impact on today’s home buyers
Many home buyers on the open house circuit today may have been out there a few years back. They’re experienced buyers who were searching for a home before the credit crisis and market crash and quickly jumped ship, not wanting to make it into the history books as yet another homeowner whose property was underwater. After the crash, prices seemed like such a good deal. But there was still the fear prices would fall further. Buyers couldn’t bear the thought of signing the papers, only to see the market go down another 10 percent. So they sat on the sidelines for years and are beginning to return now.
New-to-market buyers are savvy
Of course, there are buyers entering the market now for the first time, too. They may be recently married, have a stable job or have committed to living in a certain area for the next five years. These folks have been casually observing real estate from the sidelines recently. They watch the local news, see real estate stories online, and probably have the perception that the market has been doom and gloom, though they feel it just may be the right time for them.
Their confidence is back
No matter where today’s home buyers come from, they have one thing in common. They all have a sense of confidence about the real estate market. Maybe they’ve been renting the past five years and have come across online calculators or research that helped them realize rents have risen too much, that they can actually afford to buy and pay less per month. It’s possible they met with their CPA recently, who suggested they could benefit from the tax savings of owning real estate. It could have been that, at the Christmas table this year, they found out Grandma Lorraine left them a small amount of cash when she died last year.
They’re on a mission
Whatever their background or recent experience, today’s home buyers are coming to the real estate market in a bit of a “herd” mentality. They see reports of markets rising and interest rates still at 20-year-lows. They recognize rents are rising. These buyers, working with a local real estate agent, have already been pre-approved by their lender. They’re on a mission. They want to get into the market early. They don’t want to miss the boat.
They’ll pay a little more to get in the door
Today’s buyers are forgiving of small flaws in a property and aren’t afraid to pay a little more to get in the door. In essence, they’re the ideal buyers. Their attitudes, coupled with low interest rates and inventory, are the recipe for the beginning of a sellers’ market.
Their blinders are off
But some things have changed. Unlike the buyers of 2004 or 2005, today’s buyers have lived through our countries’ economic crisis and market meltdown. They may be back and they may be serious about buying, but they aren’t going in with blinders anymore.
Advice to sellers
Getting ready to sell your home and your agent tells you it’s a “sellers’ market”? Yes, it’s true the market is shifting back in favor of sellers. But it’s not as easy as throwing it on the market and waiting for offers to come, as it often was during the boom years.
Buyers, though ready and able, will demand a little more, may negotiate more, or may simply not want to feel they’re being taken for a ride. The littlest feeling of a not-so-good deal or something going sideways can still scare a buyer away. When this happens, you’re left with a property that goes “back on market,” and that could leave a stain on the listing.
While things are in your favor, be open to a little negotiation and be ready to treat the buyer fairly and honestly. Don’t assume you have complete control of the negotiations or the sales process. Be mindful that, while you may not have been one of them, many sellers have been desperate to sell or get out of their current homes in the past. Many of them would be grateful just to have a buyer today—and they, for better or worse, may be your competition.