Keeping up with the ever-changing ins and outs of the real estate market can be a challenge. Buying or selling a home in 2011 is a totally different ball game than it was in 2006. Five years ago, prices were high and it wasn’t uncommon for a home to go out in multiple offers over asking price. Today, prices are lower and buyers have become much more cautious. Understanding the just how today’s buyer operates has gotten a little bit easier, thanks to the blogging team over at Zillow. They’ve broken it down for us by naming three types of buyers: “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.” Let’s examine further…
1. The Home Stealer
According the Zillow bloggers, this type of buyer is probably the least likely to actually purchase your home. “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.” This type of buyer may make unreasonable requests from the sellers, (i.e. asking that the neighbors cut down their tree), or avoid answering questions regarding their finances, experience in the market, etc. While they may be serious about buying a home at some point, they’re probably not serious yet.
2. The Market Feeler
As the name implies, this is the buyer that is new to the market and is carefully feeling it out. They’ve made the decision to buy but want to take their time deciding. “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, they’ll likely hold back on making a reasonable offer because they just are not ready to dive in. The Zillow team recommends that sellers should, “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.”
3. The Real Dealer
The Real Dealer is ready to make their move–they are the real deal. This buyer has developed a rapport with their agent, they’re familiar with local market conditions, they have spoken with a lender and received a pre-approval letter. “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.” They’ll bring their family, friends, co-workers, their contractor, their designer, etc. to see your home. This buyer will spend time visualizing how the home will feel once they are living in it. For the Real Dealer, “When it’s time to write an offer, the contract comes with a local bank or mortgage broker pre-approval letter. Their offers are usually within striking distance of the asking price.” Sellers should be encouraged to, “Be responsive, act quickly, and make yourself available.”
Spotting the Buyer
It’s up to the listing agent to separate the Stealers from the Feelers and the Real Dealers. According to the Zillow experts, “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.” Sellers with their listing agent should find out as much as possible about the buyer. Ask questions:
- 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?
Sellers take note: “You can understand a lot about who you are dealing with, which will ultimately help you in your negotiations…Knowing as much as you can about potential buyers helps to tip the balance of power a little bit back in your favor.” At the very least, it will help you avoid wasting time with any less-than-serious buyers.