Things Every Seller Should Know About Today's Home Buyers
The internet and the recent housing crash have changed the way we buy and sell our homes. If you're ready to sell your home, here are some things you should understand about today's buyers.
Today's Home Buyers are Informed
The internet has made it easy to access information about the real estate market. Home Buyers can and will find out what you paid for your home and when you bought it. They will know what similar homes have sold for. With so much information at their fingertips, they will avoid your home if you over-price it.
Don't Rely on Computer Generated Home Values When Pricing Your Home
Buyers are likely to check the online estimates of your home's value. Unfortunately, the information they are viewing isn't always accurate. One of the best known real estate portals comes within $10K of the final sales price less than half the time in Las Vegas. In a report we published earlier this year, they missed by as much as $380K. You can and should go on their website. Claim your home if they allow it. Then list any improvements that might improve the valuation buyers will see.
You should never rely on the computer generated values for your list price. Their values are high as often as they're low. Have your agent show you the comps for your home. Take a look at the photos of the comps to see how they compare to the condition of yours. Adjust the price of your home to compensate for differences in condition and upgrades. How does the location compare? Does your home back up to a busy street? Does it have a view that adds to the value? Your price may differ from the guestimate buyers see online. Your agent will need to point out how you arrived at the value and why it is more accurate than the guestimate.
Today's Buyers Don't Waste Time at Open Houses - They Shop Online
When I bought my first home 30 years ago, I visited open houses. In those days, we looked at newspaper classifieds to find out about new listings and open houses. That was in Santa Monica, CA. A great neighborhood for walking from one open house to the next on a Sunday. Times have changed.
As Realtors, holding an open house can be an opportunity to meet buyers who are just starting to look and haven't committed to a buyer's agent. We can meet the neighbors who stop by who may be thinking of listings their homes. Holding an open house can provide feedback for what the visitors think of a home. We seldom find serious buyers who are ready to "buy now" at an open house.
The serious buyers look at listings online. They schedule appointments for their agent to show them the ones they like. When hiring your agent, confirm that they will provide professional quality photographs. Buyers screen which homes they view by the photos. If they only see a few of the exterior, they assume there's something wrong with the interior. Their schedules are busy and they won't take time to see your home if it doesn't look appealing. Top Realtors are now moving beyond providing photographs. YouTube has become a powerful search engine. Only 8% of today's Realtors are using video, but it is an effective tool. We find it is especially useful for out of area buyers.
Home Buyers Have More Difficulty Getting Mortgage Approval
If you purchased before the housing market peaked, you may have sailed through the mortgage process. At one point, buyers could get mortgage approval based on "stated income" and with "zero down". Getting a mortgage isn't so easy in today's market. The most qualified buyers may have to dig through tons of paperwork before getting their final loan approval.
Your Realtor needs to confirm that buyers have been approved by a reputable lender. It's easy to go online and get a "Pre-qual" letter. As Kyle Hiscock points out in "When and Why Should I Get Pre-Approved For a Mortgage?"
A mortgage pre-qualification can be best described as a prediction on the amount a buyer can borrow. In many cases, a pre-qualification is only as good as the piece of paper it is written on. Many lenders will ask a potential borrower about their incomes, debts, and other assets and use what they are told to issue a pre-qualification. Some lenders will pull a credit report but some will not. This often can lead to surprises in the future once a buyer goes to formally apply for their mortgage.
The full pre-approval letter requires documentation of income, credit scores, bank statements, etc. When sellers accept an offer the home will show as under contract. Buyers will stop coming to see it. If the buyer can't get approved for the amount they're offering, you will have wasted days or even weeks. When the buyer can't qualify for the mortgage, they may even be entitled to the return of their Earnest Money Deposit. Your home will go back on the market. Buyers will see that it has been listed for a long time. They may wonder if there's something wrong with the home that made it fall out of contract. You should only consider offers that are accompanied by a pre-approval letter or a proof of funds with cash buyers.
Social Media Is a Great Resource for Real Estate Info but Buyers Aren't Shopping There
Today's most experienced Realtors are using Social Media to share tips and advice to help home buyers and sellers. Google Plus is one of our favorite resources. Just type in a question and you'll find a variety of articles to answer it. When hiring a Realtor, you may be promised that your home will be promoted through social media. As Karen Highland points out in "Myths About Real Estate and Social Media Marketing", this isn't a good reason to hire a Realtor. The one who promises exposure on Facebook doesn't know -
With advertising and sponsored posts, your listing can be seen by specific demographics who might be actually interested in your home. But the jury is out on whether people come to Facebook to look for real estate. While 92% of homebuyers are looking online, most are looking on real estate specific websites, like Zillow, Realtor.com and Trulia.
Real estate agents get followers on social media by providing useful information. They interact with followers. They may share one of their listings. They'll share a photo of a gorgeous pool or fireplace in a listing. Maybe they'll post one of their YouTube videos of a home for sale. They won't spam their followers with a constant stream of links to listings.
Advice To Home Sellers
Low inventory has given sellers an edge in today's market. That doesn't mean you can get away with over-pricing or sloppy marketing. You need to make sure your home shows well and is presented to attract today's savvy buyers. This will be more important as the real estate market becomes more balanced between buyers and sellers.
Hire an experienced agent who knows your market and keeps up to date with technology. They will understand the importance of online marketing. They'll help you get it ready to list and price it right.