It may come as no shock to you to you how it seems to be taking much longer for listings to sell, in almost all price ranges. Another realtor friend shared that the amount of showings he has on his listings has gone down considerably, especially in the last 75 days. Every week I meet with the top agents in Marin and San Francisco County at a network meeting and the consensus there is that even the large under $1,000,000 thousand buyer pool we had 6 months ago seems to have all but evaporated. When you are contemplating selling anything, and especially Real Estate, it is important to know what to expect before you start. How many buyers are out there? How long might this take? How much room should I expect for negotiation? What should I do to make my home more attractive to buyers? For each home the answers may differ slightly, and knowing the answers is one of the most important services any good realtor can offer. What is happening RIGHT NOW, not 3 months ago. The only real way to do that is to see all the listings, talk to all the listing agents about their traffic and offers and know what the homes in escrow actually sold for. What is the buyer pool for a new listing and as importantly, are these buyers motivated? Are there buyers waiting for a home like yours and, if so, at what price? Lastly, are these serious, motivated buyers or are they offering on multiple properties as so many buyers seem to do these days? These are the 2 types of buyers to be aware of. First, some important perspective….
As a seller, the first thing to understand is that we are still spoiled. Back in the 1990’s it was perfectly accepted that homes would take 6-12 months to sell. Many agents wouldn’t take a listing for less than a 9-12 month commitment from a seller. Showings, and offers, would go in cycles and it was not uncommon to have perfectly nice homes not have a showing for weeks at a time. Even though everyone accepts that the market isn’t appreciating the way it used to, they aren’t accepting that homes are going to take LONGER TO SELL because there are less buyers. We have all heard the stories of homes selling in 3 days, a week, 4 hours and it DID happen. But that was based on a market we may not see again for a long time. It was based on 100% buyer motivation. Buyers would do anything to buy quickly because to wait meant they would have to pay more. That doesn’t exist today, in fact many buyers are perfectly willing to take their time. More on that type of buyer in a minute. For now, lets accept what nobody in todays “I want it now world” wants to accept-selling is going to take longer, and maybe much longer. Consider the following statistics. First, the amount of homes has gone up every week for 13 weeks in a row. Next, the average time it takes to get a buyer that sticks is way up in all price ranges. Finally, the amount of new escrows has gone down each month since June. Now, none of these facts are “the sky is falling” information. I am fairly convinced that the end of tax credits in Spring has something to do with this but so does a number of other factors including that this typically happens this time of year. Also, as I have recently mailed out to a number of people, I am still selling nice, “regular sale” homes for much more than competing short sales because there is always demand for quality. It is clearly however, taking longer to do it.
Which brings us to the topic of this post-what are these two types of buyers and what does it mean to sellers and the market overall? To keep it simple, the two types are buyers that “have” to buy now and those that maybe want to buy now, but only if the deal is good enough. For example, a buyer that has just sold their home and is selling because they need a larger (or smaller) home is a “now” buyer. They aren’t waiting for anything, they are motivated because they sold and have to buy. 5 years ago, most of this type of buyer were moving up, today more of them are buying down. Either way, this is the type of buyer every seller wants to view their listing. Next, is the buyer that is renting and is tired of it, or living with family or friends and decided “now is the time”. They may even have a deadline to reach, such as the end of a lease. This buyer is often a first time buyer but not always. The bottom line though is they are another “now” buyer. If the right home comes up, they are offering. Contrast these motivated, “now” buyers with the buyer that can buy, they are qualified, but have absolutely no time-table. they can and will buy only if the home and price are perfect. Often this buyer makes multiple offers on short sales hoping to get that great deal they can tell their friends about. If they have to wait 6 months for an answer-no problem. Almost any agent can tell you about a buyer they know that has been looking for over a year-or more. That is this type of buyer, for sure. Now, for a seller that wants market value, this buyer is probably not your buyer, and in this market there are a lot of them. I am fully convinced as the short sales and foreclosures are absorbed over the next few years, this buyer will help lead the next cycle of stability and appreciation. As they start to sense that the great buyers market is nearing an end, their motivation will increase and they will become “now” buyers. Unfortunately, that time is still clearly years away.
To sum up then, sellers need to know the difference between these two buyers. When we give feedback to our clients it always revolves around the buyers that viewed their home’s motivation-are they “now” buyers or not? If the feedback that is given can’t answer what they want AND when they want it, the buyer is likely not the type you are looking for. All sellers will have both types view their home. Knowing the difference between the two, and accepting that the process takes much longer, is the key to success.