Home buyers used to have it easy – all they had to consider when buying a home was price, condition and location. Getting loans was a snap, and reselling the home was never a worry.
But today’s recessionary market is throwing home buyers a curve. They’re not so certain home buying is a good investment, and neither are their bankers.
If you’re a home seller, you need to know what buyers are facing in today’s real estate market, so you can do the one thing that will help the right buyer buy your home.
Price it to sell.
- Buyers begin their search for a home with prices. Buyers may search many neighborhoods or look at homes out of their price range to get an idea of the marketplace. But, when it comes to serious shopping, they know their price and use it to see which homes they can afford.
- Buyers are prequalified by their lender. A serious buyer will not be satisfied with day dreaming for long. They’ll share their financial information, and get prequalified by a lender who will tell them exactly how much they can afford. Is your home in the right price range?
- Buyers work with real estate professionals. Once they have a green light, buyers start shopping. They ask their real estate professionals to start gathering and presenting homes they might like. If your home is priced too high, your best, likeliest buyer will never see it. Is your home overpriced compared to the competition?
- Buyers have incredible sources to compare homes. Videos, virtual tours, feature sheets and multiple photos are the eye candy. They quickly sort through what’s available to a short list of the most appealing homes in their price range. Did you de-clutter, clean, stage and update your home?
- Buyers choose homes based on bang for the buck. As buyers walk through listings with their real estate agent, they’ll quickly make snap decisions based on size, condition, and location as compared to price. Does your home offer the most bang for the buck?
- Buyers use the same comparables you do. Just as you and your real estate agent have examined the market, buyers and their agents do the same. They know which homes are overpriced, and they’ll assume that an overpriced home comes from either an unmotivated or unrealistic seller. They’ll make their offer to the seller whose home offers the most for the money and who appears most reasonable to an offer. Do you appear negotiable?
- Buyers’ banks confirm prices with appraisals. Today’s appraisals are strict. New codes of conduct require banks to avoid pressuring appraisers to “hit the numbers.” Appraisers are required to go back as long as one year, to determine if your home is in a “declining market.” If so, the appraisal can come as much as 5% under your list price. If the appraisal is under the list price, the bank won’t lend. Are you prepared to lower your price to make the deal go through?
- Buyers face unprecedented banking challenges. Banks no longer offer non-conforming loans with abandon. Many banks are balking at offering conforming loans, and those are government-guaranteed. They require stricter proof from buyers that they are able to repay their loans, often qualifying them at much lower levels. Are you willing to help your buyer by paying down points?
- Buyers are scared. They have to have a good reason to buy a home, and news of declining prices hasn’t provided much incentive. Help them by showing them all the ways your home has rewarded your ownership. Show them how much you pay in property taxes, how much you get as a homestead exemption, how much you’re able to write off your income taxes as a homeowner. Are you willing to share what buyers need to know?
- Buyers don’t have to buy. They want to buy. They want the joys of homeownership, and it’s your job as a homeowner to provide them with the tipping point they need – the best home at the best price. Is your home priced to sell?