HOME BUYER TYPES AND HOW TO APPROACH THEM

In today’s competitive market, sellers need to have an edge to stand out from the crowd. In order to do so, you need to distinguish between the different types of buyers, and what motivates them. Doing so will help you know exactly what the buyer is after, what their needs are and how they should be approached. So, who are these different buyers?

RETAIL BUYERS

These are the buyers you’ll most likely meet. They are the people looking to buy a home to live in. They come in different types, from family buyers, young working couples to first-time home buyers. These buyers usually will be financing the purchase through a mortgage. Based on this, their primary concern will be the property’s sales price and the level of affordability.

It’s important for these buyers to have a home in a safe neighborhood, that’s in close proximity to their place of work and basic amenities such as schools, shopping centers and restaurants.

BUY-TO-RENT INVESTORS

The main concern of this type of buyer is the property’s ability to generate revenue. What they’re after is a long-term investment that ensures financial security from a property that requires little to no maintenance.

A lot of these buyers look for individual properties that can be rented out immediately, or with minimal work, to start generating income.

FIX AND FLIPPERS

Fix and flipper buyers are often full-time property investors looking for a property that’s below the market value. They are expecting to have to do a lot of rehab work, so they are looking for low priced properties they can renovate, and make a good profit on.

If you’ve tuned in to a couple of real estate shows on HGTV, then you probably get the idea. A run-down derelict property is the expertise of fix and flippers. They restore these homes in need of renovation to their former glory and sell them to the market, in the shortest time possible for a good return on investment.

CASH BUYERS

Cash buyers will often come in with lower offers. They’re hoping that a no hassle, quick close cash offer will entice the seller to accept a lower offer. That’s up to the seller. There are advantages to a cash buyer. It is true, a cash closing can happen within a week. There is no need for the buyer to qualify for financing, and no need for an appraisal. As the seller, you need to decide if a no hassle, quick close is worth the lower price.

Now, let’s look at the age demographics of buyers.

MILLENNIALS (AGE 20-34)

These are the more tech-savvy buyers, who do most of their home shopping through their mobile phones. In terms of their motivation to buy properties, a large majority of them are mostly looking to rent rather than buy, especially when it comes to university students or recent graduates. If they do want to purchase a property to call home, they place a high importance on being close to their place of work (thus the low communal costs). They aren’t too keen on newly constructed properties either since about 87% of millennials prefer older properties rather than new ones.

GEN X (AGE 35-54)

Big life changes such as marriage, having kids, kids moving out for college, or retirement are some of the things that this demographic will be dealing with. Family buyers are often placed under this category, aiming for properties with at least 3 bedrooms or more. The good thing about them is that they’re more financially secure compared to their younger counterparts. However, almost 40% feel financially insecure since they have more debt to deal with than savings. That’s something to take note of.

BABY BOOMERS (55-65)

It’s common for baby boomers to move further away from their previous residences, unlike Gen X and millennials. They are probably closer to retirement and are leaving capital cities for an easier lifestyle. It’s rare to encounter this older generation as your prospective buyers since they’ve mostly kept their own homes for decades.

Older individuals are often looking to downsize. Their children have moved out, and the house becomes larger than they need, or want to take care of.

A good seller should list their house, with the understanding of who the potential buyer will be. Remember, a successful sale is made when the home meets the buyer’s criteria.