First things first, every buyer is different and every market is different. So to me, there is no such thing as a typical buyer.
What I can say, I try and take each buyer through the same process. Although some buyers may have had more experience and will move through the process quicker. Every buyer entering the market needs to go through an educational phase. I like to think of it as shopping in a funnel shape. As you enter the top of the funnel, the buyer is being educated on what the market is doing at that moment, seeing a wider range of styles and locations. As the buyer gets a taste of the pace and inventory, we can slowing start to increase the criteria needs in our search and remove parts of the market.
For example, I was working with a buyer looking in South Minneapolis. After 2 days of touring, she fell in love the big 2+ story homes built at the turn of the 19th century. She wanted a wide staircase, butlers pantry and pocket doors. When she identified that, it was a little easier to talk about where she was going to be looking. Knowing the city pretty well, this age of home is normally found in the northern part of South Minneapolis, closer to downtown.
It didn’t take long for her to pinpoint the few blocks we would watch for a listing to come on. Take note, when this buyer was in the market it was the Spring of 2017. The South Minneapolis housing inventory was extremely low and it was much a seller’s market. We ended up reverse prospecting for the buyer and mailing letters to homeowners on these blocks. She ended up seeing 18 homes before landing a contract on a beautiful Victorian home.
With the amount of information about these homes available to the buyers on the internet, I can say the number of homes being seen is shrinking. With photos and 3D virtual tours, the buyer is able to get a pretty good sense on whether they want to take the time to see the home in person. While the number of home they see is shrinking, the lack of inventory is creating an environment where buyers are having to make 3-4 offers before landing a deal.
This can be a little stressful. Losing out on deals and being out bid is just another educational moment by the market. I advise my buyers to keeping watching homes that go into multiple offers quickly through the closing time. This way we can see where buyers are pricing offers and not waste time educating themselves on homes they want. Nothing is more disappointing than finding out you lost out on a house by $3-5k, which over a 30 yr mortgage is nearly nothing in the grand scheme of things.
- Time is everything. Do your due diligence before taking an hour to go see the home in person. This will save you tons of time.
- More education = more confidence when buying. Ask questions!
- During your research phase, watch homes that interest you from listing to close. Track days on market and list price vs sales price.
- Find an agent who knows that market. Everyone knows a REALTOR but can that REALTOR save you time and in turn save you money?
Until next time,