Looking to sell a home? Know your audience!
This article from NASDAQ sums up the current real estate market as well as any other I have seen over the past 2 years. Yet, I’m not showing the link because I think this is a well done article. It is shown to make an important point.
The number of first-time home buyers has declined significantly, even compared with just one year ago when the market was already in decline. As this story relates, the trend for “investors” to pay cash for lower priced properties is still on the rise. While the tighter mortgage restrictions continue to make it a challenge for more and more people to get a mortgage, the number of first-time home buyers likely won’t be rising for some time.
Those who are currently home owners and would like to upgrade or downsize to a different home are often stuck with a mortgage they can’t get out of. If they take a loss to sell, they may not be able to afford what they want instead. And on it goes.
There is an important message in the NASDAQ story. Know your audience. If you are trying to sell your home, chances are you are doing everything you can to make it “family friendly” upon showings, and probably within your agent’s outside advertising. The above referenced article should make it clear that “family friendly” is not your audience.
Now, this doesn’t mean that you don’t need the new curtains or to keep the place looking good as new. But it does mean that you need to focus on the value of your home to an investor. That is who is buying, and, as statistics show, without the agony of waiting on getting a mortgage.
The priority should be on showing your potential buyer the ways your property for sale could make he/she/them money within the next 5 years. Although I have seen only a few examples of this of late, they are too few and far between.
One 3-bedroom home that I know of for sale has a lower level “family room”. It is not a basement, has window decorations and is a separate wing on that level. It so happens that the other homes in the development are all either 2 or 3 bedrooms. A few of the other units (both 2 and 3 beds) are also for sale, and now at well below the original new construction prices. Yet, only the advertising for this home points out that it is ready as a 4-bedroom home. At most, the current or new owner could put up a partition “door” and add more privacy, giving them a 4-bedroom home for under $100 (for the partition).
An investor with cash is more likely to see the value of getting a 4-bedroom house at 3-bedroom home pricing, knowing that he/she/they will eventually have a higher profit capability.
Again, based on current trends, being ready to show a cash investor how to get a 4th bedroom in this home is a more likely “sale” than a first-time buyer with a big family knocking on your door to see it and then trying to get a mortgage.
Before I hear from realty agents out there, I am well aware there is a way this needs to be done. This property needs to be listed as a 3-bedroom home. Understood. But within the description and the “sales pitch” it should be clear that the easy opportunity exists to create a 4th bedroom which would be larger than one of the upstairs bedrooms, without any room additions needed. That is targeting cash investors, and that is, at the moment, targeting who is buying.
Many homes for sale have at least one capability to increase in value with certain additions or improvements that cash investors would be interested in. A cash investor may not care about new curtains and new carpeting, which they could get for a few hundred dollars down the road when they are ready to sell. That same investor may instead notice if the property is zoned for an additional level, a pool, more parking, or whatever it may be.
Sellers should also monitor local business news. Watch for stories such as major retailers looking to open in specific cities or communities, new train or bus stations or routes, and new schools to be planned. A family, married couple, or individual probably doesn’t care about what will be built by 2016 nearby, but a savvy cash investor does. They can buy a property, hold on to it (without a mortgage to bog them down), maintain it, and be ready to put it on the market in time to be convenient to the new train station or whatever is being constructed.
Advertise the home without the “move in condition”, “near schools”, “breakfast nook”, and other sales points which target home buyers looking at 30 days from now. They either aren’t buying right now, can’t get a mortgage, or both. Advertise with any and every sales point that would cause a cash investor to see something that will be of value in 3 to 7 years. Know your audience.