In a buyers market, you have to please more than one buyer
There is popular saying among real estate professionals trying to encourage a newly listed seller:“We only need one” meaning one buyer is all you need to get a sale.
It seems to me that phrase became popular just as residential homes were becoming less popular.As it became increasingly evident to sellers and their nervous agents, that the market was getting away the focus was on getting one buyer instead of worrying about receiving multiple offers.
That was then.
In the current market, a single buyer it seems isn’t enough – now three people have to approve of your home. Here is how that works.
Buyer 1 – This is your primary home buyer. This buyer is anyone who has correctly determined that the best time to purchase a personal residence is when you need a place to live. In previous markets this is the one and only buyer required to close on a real estate transaction. In the current market this is the buyer dozens of home owners and their representatives are trolling for.
In most situations, “Buyer 1” has what every real estate principal covets: leverage. They have lots to choose from, a low interest rate environment, and in many cases time is on their side. What “Buyer 1” is looking for (or at least should be if properly instructed) is:
1.Location
2.Value (price)
3.Condition
All other factors will vary from buyer to buyer and be determined by personal taste and needs. As I have written many times over the last few years the way to get this most important of the three buyers “on paper” as we say is to take charge of the things you can control – starting with price and condition.
If you are in the right location and are marketed properly, Buyer 1 will find you. He or she or they will most likely find you through the mls, a yard sign or more increasingly through an internet search. To make Buyer 1’s first cut you have to have the right price, curb appeal and be professionally photographed.
Once Buyer 1 selects your property to preview it will be all about the features of your home and the appearance first from the street and then inside the home. Is the yard manicured? Is the house clean and clutter-free? Is the home staged such that the rooms look spacious, the closets organized and the walls and floors fresh, warm and neutral?
If Buyer 1 says yes and the home is fairly priced; then they will consider making an offer. Their Realtor will contact your Realtor to notify you of interest and if your Realtor is experienced and savvy will do everything possible not just to encourage an offer but also to make it easy for Buyer1 and their representative to move forward.
Once an offer is made and terms agreed to your home is referred to as under contract; and it is on to Buyer 2.
Buyer 2 – This buyer is disguised as a home inspector. This buyer doesn’t care where your home is located. He or she doesn’t even see how your home looks online or in the virtual brochure. The Inspector may notice your curb appeal but not for aesthetic value. This is the buyer hired by Buyer 1 to identify significant defects with the home. Ultimately, Buyer 2 can’t help but look for every imperfection, or possible imperfection with your home. There are several ways to guard against an over- zealous Buyer 2.
One way is to determine that Buyer 2 is state licensed and ASHI certified. (American Society of Home Inspectors) This will increase the likelihood of having a Buyer 2 who is operating on some level of professionalism.
A second way to neutralize Buyer 2 is to have your home pre-inspected prior to listing. If any defects arise at that time they can be addressed prior to putting your home on the market. Having the systems serviced and/or inspected is prior to listing is also great ammunition for Buyer2.
Try not to take Buyer 2’s evaluation of your home personally. Remember he is hired by Buyer 1 and is trying to earn his keep not tear down your home or interfere with the transaction.
When Buyer 2 is done with a TSA style pat down of your home, you may have to renegotiate with Buyer 1 to move forward. This is not uncommon and barring some unforeseen major defect, terms can usually be worked out with the guidance of an experienced Realtor.
Make way for Buyer 3.
Buyer 3 - Ah, Buyer 3. This is the buyer who cares about everything. Location, price, condition, and perhaps most importantly what other similar homes in nearby locations have recently sold for. Buyer 3 has a secret formula for determining what your home is really worth in dollars and it is entirely possible that every individual Buyer 3 has their own secret formula. No one knows for sure.
The more astute Buyer3’s understand that value is relative and will attempt to see what Buyer 1 saw in the home to justify the agreed to price. They see that true value can only be determined by what Buyer 1 is willing to pay since your home is one unique property.
Buyers 1 and 3 have one very important thing in common – they are controlled by the banks. Buyer 1 in most cases will be financing the purchase and many times the bank determines what Buyer 1 can purchase. In the case of Buyer 3 they are dependent on the bank for most of their business and in some cases it is the bank that compensates Buyer 3 to value your home.
That doesn’t seem like a conspiracy does it – does it? Wonder what GB would say about that?
While Buyer 3 is rarely a concern, depending on the seller’s specific situation, there are a few ways to work with the uncertainty of Buyer 3.
The first way is to set terms in Buyer 1’s agreement limiting the ability of Buyer 3 to arbitrarily alter the agreement. Another way is to leave open the option to find another bank with another Buyer 3 to get a second opinion. The third and riskiest option is to hold the line against Buyer 3’s evaluation forcing Buyer 1 to move forward or force you to find another Buyer 1.
If you are considering selling your home or know someone who is, the 3 Buyers are no reason to be alarmed. They are, however, three very good reasons to hire an experienced Realtor.
I know you have questions about these Buyers.
Call us 804-359-SOLD (7-6-5-3) or click on the contact Mark icon.
Website Design and hosting by AgentAdvantage, official agent and broker website provider of Homes.com
