The Anatomy of Today’s Homebuyer

The real estate market is somewhat of an enigma these days, with some metro markets booming while others are showing signs of slowing. But no matter whether we examine supply shortages or interest rates, rising rental costs or increasing urbanization, there is one thing that matters most: home buyers.  In fact, homebuyers are so important to the housing market they’re like the engine, the fuel and the steering wheel of the car!

For sellers looking to gain a competitive advantage and net top dollar, understanding homebuyers is more critical than ever. By looking at who they are, what they value, and how they operate we can really market your home sale with maximum efficiency.

So what do today’s homebuyers really want?

Modest floor plans

Surveys show that American homebuyers are starting to walk away from the cavernously large McMansions, and want slightly smaller floor plans with more warmth and style instead.

The ideal home size in 2000:

9%   800-1,400 sq ft

28% 1,401-2,000 sq ft

27% 2,001-2,600 sq ft

13% 2,601-3,200 sq ft

9%   More than 3,200 sq ft

The ideal home size in 2015:

9%   800-1,400 sq ft

32% 1,401-2,000 sq ft

27% 2,001-2,600 sq ft

12% 2,601-3,200 sq ft

6%   More than 3,200 sq ft

We can also look at new home construction for clues as to what the home buying public wants. In fact, the estimated average size of new homes has declined as such:

2008 2,520 sq ft

2009 2,480 sq ft

2010 2,377 sq ft

2015 2,152 sq ft

Interesting real estate fact:

Just how much has our preference for bigger homes grown over the generations?

In 1950 there was an average of 290 sq ft per person in the American household.

These days each person has about 924 sq ft in an American household!

It’s not just married couples buying homes!

9% of all single males buy a home, while an impressive 16% of single females buy a home!

These days, 13% of homes are purchased by multigenerational households.

Why are multiple generations in the same family buying a home together? Here are the top reported reasons:

24% Cost savings

23% Adult children moving back in

18% Caretaking for aging parents

10% Spending more time with aging parents

Where are home buyers searching for homes?

The top six sources for home searches are now:

1.     Online websites

2.     Real estate agent

3.     Mobile website or app

4.     Mobile search engine

5.     Yard sign

6.     Open house

By the way, the typical home search takes 10 weeks!

Tech is playing a more important role than ever

76% of buyers visit a home after first finding it through an internet search!

43% of buyers looked for properties online as the first step in the process.

89% used the internet throughout their home search.

78% visited more than 3 sites prior to taking action on a real estate site.

Where are buyers looking to live?

50% Suburbs or subdivisions

16% City centers or urban areas

11% Rural areas

3% Resorts/recreation areas

First-time homebuyers are trending a little older.

Age of first time homebuyers:

68% 34 and younger

29% 35-49

14% 50-59

7% 60-68

3% 69-89

Millenials are holding off on buying far more than their cohorts in previous generations.

Reportedly, saving a down payment is the biggest obstacle to buying for most people. It seems like high debt load is the main reason people can’t save the money to buy a home, including:

50% Too much credit card debt

46% Too much student loan debt

38% High car loans

When they do buy, the 5 most important factors that influence their buying decisions include:

1.     Quality of neighborhood

2.     Easy commute to their job

3.     Overall affordability

4.     Close to family and friends

5.     Quality of school system

How do home buyers differ by generation?

Gen Y

32% of all buyers

Average Age: 29

Household Income: $76,900

Size of Home: 1,720 sq ft

Median Price: $189,000

Gen X

27% of all buyers

Average Age: 41

Household Income: $104,600

Size of Home: 2,100 sq ft

Median Price: $250,000

Younger Boomers

16% of all buyers

Average Age: 54

Household Income: $96,900

Size of Home: 1,890 sq ft

Median Price: $216,000

Older Boomers

15% of all buyers

Average Age: 64

Household Income: $76,400

Size of Home: 1,800 sq ft

Median Price: $215,000

Silent Generation

10% of all buyers

Average Age: 73

Household Income: $63,600

Size of Home: 1,800 sq ft

Median Price: $190,100

What are they buying homes for?

60% of home sales are for the buyer’s primary residence

21% of home sales are for vacation or second homes

19% of home sales are for investment or rental properties

It’s all about the amenities

According to surveys, the top 10 amenities homebuyers are looking for include (in no particular order):

1. Walk-in close in the master bedroom
2. Low-E windows
3.  Linen closet
4. Separate shower and tub in master bathroom
5. Programmable thermostat
6. Great room
7. Energy-efficient appliances and lighting
8. 9-foot plus ceilings on the first floor
9. Separate laundry room
10. Insulated front door

Other polls of single buyers report that important amenities differ by sex:

Single female buyers prefer:

New kitchen appliances

En-suite master bath

Single level home

Single male buyers prefer:

Stainless steel and granite

Cathedral ceilings

New homes

Walk-in closets

Energy efficiency and working towards Green Homes is key

 These environmentally friendly features are critical to home buyers:

Heating and cooling costs

35% very important, 49% somewhat important

Energy efficient appliances

22% very important, 45% somewhat important

Energy efficient lighting

22% very important, 45% somewhat important

Landscaping for energy conservation

10% very important, 37% somewhat important

Environmentally friendly community features

10% very important, 34% somewhat important

Solar panels installed on homes

2% very important, 9% somewhat important

Green homes made up 17% of overall residential construction in 2011, but 38% of all new homes in 2016!

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Look for part 2 of this blog where we reveal far more interesting statistics, trends and facts about today’s homebuyer!

10 Important questions every home seller should ask.

1. Should I get my home staged?
To correctly market and sell your home, you should start seeing things through the buyer’s eyes as they first walk into your listing.  Does it still look lived in?  Are personal affects everywhere?  Is it too cluttered and are design elements non-neutral or noticeable?  Studies show that by decluttering your home, removing most personal affects, and staging your home with furniture and artwork, it will sell faster and for more money.

2. What’s our marketing plan?
This is where the homeowner and real estate agent sit down to map out a comprehensive plan how to market and sell their home.  Just listing a home on the MLS isn’t enough – you both should be clear on what tactics and marketing efforts will be used to gain maximum exposure, bring potential buyers through the front door, and ultimately sell for the top dollar at the best terms.  Remember to ask about open houses, social media and online advertising, and setting up a schedule of future price reductions that follow a timeline.

3. Am I being realistic about pricing?  
Every seller wants more than their home is worth and every buyer wants to get it for less than it’s worth, but the price negotiation will probably end up somewhere in the middle.  Pricing a home should be based on logical data not emotion or personal beliefs, in the form of a detailed Comparable Market Analysis presented by the listing agent.  If you’re outside the bubble of realistic pricing and where the appraised value will come back you’re going to end up with a lot of frustration and wasted time, so ask questions to make sure the deal makes dollars and sense.

4. Is it more important for my home to sell quickly or for every dollar possible?
Of course we want the highest possible price for our home but we also want it to see quickly, not sitting on the market for month after month as other sell, possibly holding us back from finding our next dream home.  For that reason, buyers should understand that the higher the price, usually the longer it takes to sell (and the less interest and offers you’ll have.)  So think of the balance between price and timing like being on a seesaw, and the buyer should ask what’s the proper balance.

5. Is there anything that’s outdated or needs fixing or remodeling?
Doing some light cosmetic fixing and modernizing in your home before it goes up for sale can bring you far more dollars once the deal closes.  Painting and landscaping are the two most inexpensive ways of making your home stand out, and modernizing the kitchen and bathrooms, particularly with new fixtures and flooring really will catch a buyer’s eye.

6. Would I buy my house for this price?
That’s the ultimate questions, isn’t it?  Would you buy your home (or one like it) for the price you have it listed at?  If the answer is no, or if you even have to think about it for a while or hemm and haw, then you probably need to get realistic and readdress the pricing, condition, and marketing strategies.

7. What are the terms?
Too often when we get an offer on our home, we focus only on the price.  Bu the terms of the sale count, too – not just in closing an amicable transaction on time but the wrong terms can cost your money.  Ask your realtor to thoroughly cover timelines, contingency plans, and all the fine print of costs, inspections, etc.

8. Am I making it accessible enough for buyers?
If you really want to get your home sold, you’ll want to make sure potential buyers and buyer’s real estate agents have full access to your listing.  Ask your realtor if the listing is convenient enough for buyers to look through on short notice, or if an arduous process of limited showing hours and appointments will deter buyers – and lose you money.

9. How will the buyer’s pest, roof, and home inspections come out?
Of course getting an offer from the buyer and going into contract is just the start of the process to close the sale, so ask a few questions in anticipation of their inspections.  Buyers should always get home inspections and roof certification inspections, chimney inspections, etc. and a pest inspection is mandatory.  So if you know there will be issues that come during these inspections, think about making repairs and addressing them ahead of time.  That way it won’t slow down the sale – or lead the buyer looking to renegotiate the price.

10.  How soon am I ready to move and how flexible am I?
Once the buyers make an offer it sometimes dawns on the homeowner that a closed sale means they’ll have to move out in short time, usually about 30 or 45 days.  Be prepared for that day by starting to pack, organize all of your possessions, and possibly start moving furniture and boxes off sight to a storage unit ahead of time so you’ll have flexibility once you sign on the dotted line.

Does it make dollars (and sense) to fix up your house before selling?

As the real estate market gains momentum and people start thinking about selling in the spring, a common question is: "What’s the payoff on fixing things around the house before we put it on the market?" 

The last thing you want to do is undergo extensive repairs that cost you money – and valuable time, only to find you don’t recoup that cost once the house sells.  Then again, leaving obvious fixes left undone can turn buyers off, and drastically reduce the price of any offers that come in.  So what’s the happy medium?  Here is our expert opinion on what fixes will add bang for the buck once you sell – and what to leave off your To Do list. 

The reality is that a declining market in the period between 2007 and 2012 drove all housing prices down.  As a function of increased inventory – including plenty of foreclosures and short sales – people got less money back from remodels and repairs they put into their homes, too.  The good news is that remodeling costs have dropped 10-15% in the last 5 years, too, even as the cost of building materials has risen 17%. 

But there are smart ways to “spit shine” the look of your house, focusing on signature and most-viewed areas that will yield you the most money back when offers come in. 

Try to understand it from a buyer’s eye; when they first walk in, their eye takes it all in as their mind categorizes each detail into positive, neutral, and negative features.  If you have a woefully outdated bathroom, for instance, that may trigger the thought that it needs to be updated – causing them work, and taking money off their offer price.  If they walk in and that same bathroom is newly remodeled with high-end tile, fixtures, and decorations, that would be a positive factor that might put you ahead of the competition, and if it was clean and new but with nothing fancy, a neutral factor.

At the very least, you want to eliminate the negative factors that will ding your asking price.  Those include health and safety items – like a leaky roof, overburdened electrical panel, or bad smoke detectors, which will all be flagged in a home inspection, anyway. 

So what repairs will yield you the best return on investment?

That’s easy -  focus on the kitchen and bathrooms as your remodeling priority.

Kitchen: 

-Fix any broken doors or tracks on cabinets and drawers.  If they are outdated but functional, consider having them painted.  Lay down new wax paper in the bottoms. 

-Modernizing lighting by installing a cool new fixture over the sink doesn’t cost much.

-Replace old tile or cheap linoleum countertops, possibly with granite (ask your realtor if that surface is recommended.)

-Add a nice new sink faucet and fixtures.

-A hanging pot rack or wine rack is a great signature piece.

-Retile the floor with nice, big, earth tone tiles to get rid of old 6” tiles or linoleum.  Laying them down in a diamond formation – instead of square – looks great, too.

-Paint the walls a neutral color with satin or eggshell paint.

Bathrooms:

-If the toilet works fine, just put a new seat and lid on it.

-Replace your shower curtain with a nice new one.

-Install a new mirror and medicine cabinet and also replace your sink with a new, modern sink and vanity set.  The sink area is where people look first and spend the most time in the bathroom, and they have great deals on sets that come with a nice faucet and fixtures as well.

-Install new earth tone large tiles on the floor.  This is especially easy since the bathroom floor doesn’t cover a lot of surface area. 

-While you’re at it, take down your towel racks and TP holders and replace them with nice new ones.

-Pop in a cool signature lighting fixture over the sink.

-Paint the walls in a soft, neutral color with satin or semi-gloss, and your bathroom is ready!

Here are a few ideas for other areas of the house that won’t cost much:

-Add new high wattage light bulbs to illuminate the house well, especially dim areas.

-Take down old wallpaper, that’s always a no-no.

-Take down paintings or decorations (except for a mirror or two) and fill the nail holes with spackle, sand to smooth, and paint over them.

-You don’t need to paint the whole inside of the house, but do cover any brightly-colored rooms or high-traffic areas with a new coat of paint in a light, neutral color.

-If the outside doesn’t need new paint, a good power washing is a great way to make it look better.

-Paint your front door with a shiny, traditional color – like red or black – and remove any screen doors over it. 

-The garage door also looks better with a coat of paint, and if it needs it, think about painting the trim only (if you can get away with it) just on the front of the house.

-Clean your windows well, inside and out.  This is a great alternative to replacing them, which can be very expensive.

-Hire a stager if your realtor recommends.  Usually this pays off the best with high-end listings.

-Sprucing up the landscaping is one of the best and cost-efficient ways to improve the curb appeal of your home.  Make sure to weed, prune, lay down some fresh stone or mulch in beds, and plant nice flowers in the front yard, especially on the way to the front door.

-Pools, hot tubs, decks, garage additions, or trying to enclose and winterize patios and sunrooms never pays off when selling a home.

- Get your carpets professionally steam cleaned unless they are really bad and in need to replacement.

-Same thing, you can have someone refinish real hardwood floors, which will make them sparkle.

The repairs that give you the best % payback:

-Exterior siding – adding nice fiber-cement siding to the exterior of a home instead of repainting pays back 78% of the cost.  However, this may differ depending on what part of the country you live in and you never want to stick out in the neighborhood (have siding when everyone else has stucco, etc.)

-Replacing an old or shabby front door pays by 73% of the cost.

-A reasonable kitchen remodel yields a 72.1% return on investment.

-Putting in a new garage door will pay back around 71.9% of the cost. 

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We hope the information helps!  Remember to call us if you have any questions about selling your home or what to fix up before it goes on the market.