The Anatomy of Today’s Homebuyer, Part 2

Who exactly is today’s homebuyer? In part one of this blog we outlined facts, statistics and data on today’s homebuyer demographics, as well as what they’re looking for and what’s motivating them.

From square footage (less) to relationship status (more single homebuyers, especially single women), what’s most important (quality of neighborhood above school system and affordability) and which amenities are hottest (walk-in closets, tech and green homes), by knowing what buyers are looking for and how they operate, we can market your home sale with maximum efficiency.

So what do today’s homebuyers really want – part two?

So what are some things that will send potential buyers running for the next listing?

56% of buyers say they’re turned off by bad or strange odors

70% of home shoppers are scared off by damp patches, stained walls and ceilings (as they should be!)

54% of potential homebuyers report that dull lighting or a lack of natural light is unattractive

25% found outdated bathrooms unappealing

15% don’t even want to walk in a cluttered room, and

14% dislike décor that is in bad taste or over the top

Agent-assisted home purchases are at an all-time high of 87 percent, while only 7 percent purchasing directly from the previous owner and 6 percent buying from the builder.

What are the pain points for homebuyers? Asked to rank the most difficult step in home buying, this is how today’s homebuyers responded:

51% Finding the right property

23% Paperwork

17% No difficult steps

14% Understanding the process

13% Getting a mortgage

13% Saving for the down payment

As we documented in part one of this blog, the vast majority of homebuyers start their search for a property online on websites or the MLS. Here are the features of real estate websites they found most valuable:

84% Found detailed information about properties

87% Found photos very useful

45% Found interactive maps very useful

42% Real estate contact information

42% virtual tours very useful

Homebuyers are increasingly concerned with the location of their neighborhood in proximity to where they work when faced with increasing commute times. According to surveys, how important is a reasonable time and cost of commute to work for today’s homebuyer?

32% Not important

30% Very important

38% Somewhat important

It seems like all single buyers want two things in a home these days: central air conditioning and a house that’s wired. But according to the sex of the homebuyer, their priorities may differ from there.

Single Men:

Stainless steel and granite countertops

Cathedral ceilings

New homes

Walk-in closets

Single Women:

New kitchen appliances

En-suite master bath

Single level homes

Do buyers want condos, single-family homes, or townhouses? Well that may depend on their age group, as their area significant differences by generation.

Gen Y

84% Detached single-family homes

7% Townhouses/PUD

3% Condos

Gen X

89% Detached single-family homes

5% Townhouses/PUD

2% Condos

Younger Baby Boomers

82% Detached single-family homes

9% Townhouses/PUD

3% Condos

Older Baby Boomers

81% Detached single-family homes

5% Townhouses/PUD

5% Condos

Silent Generation

71% Detached single-family homes

8% Townhouses/PUD

10% Condos

Multi-generational housing is growing rapidly:

13% of all homes are purchased by multigenerational households.

57 million people are living in multi-generational households, double the number in 1980.

1 in 5 Younger Boomers purchases a multi-generational home.

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

First-time buyers are lagging:

The historical norm for first-time buyers is 40%.

However, the percentage for first-time buyers is now 32%, the lowest number since 30% in 1987.

Incomes among homebuyers are rising.

The median income for homebuyers is now:

Repeat buyers $98,700

All buyers $86,100

First-time buyers $69,400

How about luxury homebuyers?

70 percent of luxury and high-end buyers say the location of their home is the most important factor.

Homes near the beach or mountains are still popular, with great views and access to leisure activities paramount, but many younger buyers are purchasing property with acreage in the country or rural settings, too.

And 54% of luxury buyers still put top priority on a chef’s kitchen when they go looking for their next home.

60 percent of affluent customers want hi-tech and wired homes, fully automated so they can control features like lights, security systems, video cameras and intercoms, climate control, TVs and music, window shades, and door locks from an iPad, remotely via a mobile app, or even with voice activation.

In fact, almost 90 percent of this demographic of luxury homebuyer said they wouldn't even consider living in a home that isn't tech-friendly.

Buyers want green and environmentally friendly homes that are also energy efficient. Two thirds of high end buyers looked for Energy Star-rated windows and doors and insulated glass, and 18 percent of those surveyed reporting that they a home's Green-LED certification was very important.

Open floor plans are more important than ever according to 39 percent of high-end buyers.

Media rooms still are in vogue, with 60 percent of respondents looking for homes that contain one, and 19 percent looking for home theaters.

Home gyms and specialty exercise rooms were an important feature for 50 percent of buyers.

28 percent of luxury homebuyers want swimming pools.

Outdoor kitchens are still a red-hot trend, with nearly half of new luxury buyers on the hunt for homes with that feature. But aside from the typical wet bar (desired by 42 percent of respondents), they’re also looking for warming drawers, sinks, and climate controlled wine, beer, and beverage fridges. 

Buyers also are looking for outdoor fireplaces and fire pits in close proximity to the swimming pool and outdoor entertainment area.

Open rooftops are being utilized as spaces for entertainment, exercise, reflection, yoga, and sunset watching, and also to create stunning rooftop gardens and green areas.

Luxury homes appeal to car aficionados with subterranean parking, high-tech automated parking, and even glass ceilings or walls so the autos are on display as you walk through other areas of the house.

They want dedicated wine cellars with precise climate controls and also dining and tasting areas to host their friends for vineyard-quality events and parties.

Super purification systems are one of the biggest new attractions in the luxury market, with filtration systems that include UV lights, humidification systems, and energy-efficient fans run to keep the air purified.

10 Costly mistakes sellers make when pricing their homes.

1. Being too emotional.
We understand that your house is your home, where you raised you family and have a lot of your life invested. But selling your home should be viewed as a business transaction, not personal. By taking emotion out of the process as much as possible, you’ll make clear and rational decisions in your best interest. Ask any successful businessperson and he or she will tell you that emotion, fear, anger, ego, and personal feelings end up costing you money!

2. Pricing it unreasonably high.
Of course the ultimate goal is to get as much money for your home as possible when it sells, but that’s not going to happen if it never sells! There’s nothing wrong with starting with a listing price on the higher end of the spectrum but home owners need to realize that the higher the price, the fewer potential buyers you will get and the longer it usually takes to sell, if at all.

3. Ignoring the “price tag” test.
Let’s say you walk into your favorite store and pick something beautiful up off the shelf. What’s the first thing you do? Look for the price tag. If it’s too high, you cringe and put the item it right back on the shelf. If the price is significant but fair, you may look it over a while as you deliberate the price versus value. But if it’s on sale, you run to the register before someone else snatches it up! It’s the same thing with selling your home. When your priced way too high, people aren’t even going to look at it, or put it right back on the shelf. That means no offers. You want your price to be in that midrange where it’s fair for the value so you attract plenty of buyers but also get the most money possible.

4. Not sparking a bidding war.
Sellers often forget that one of the best strategies is to price your home aggressively to create a bidding war. Psychologically, our consumer behavior is dominated by a fear of loss even more so than the hope for gain. Put simply, that means people will move, act, bid, offer, hustle, risk, and do just about anything to ensure they don’t lose out on a great deal. By pricing your home a little lower on the range of what’s fair and reasonable, you create a massive sense of urgency with potential buyers. They know others are looking at this great deal and they need to put in the highest possible offer to get the home. You’ll probably get multiple offers, which can be leveraged against each other to bring the listing price up even more. Done correctly, a bidding war will get your home sold quickly and yield fantastic offers – often well over asking price!

5. Not listening to the market.
When we list a home, we do a comprehensive market analysis to present to the seller, showing the hard data exactly what similar homes in the same area are selling for, as well as what other competition is out there. We’ll make our best professional recommendation on the listing price, but the final decision is up to the homeowner. No matter where you set your initial listing price, pay attention to what the market is telling you – what the data says. Ignoring this and making decisions on emotion, fear, or hope for gain can be very counterproductive and cost you in the long run.

6. Not realizing price reductions can work to your advantage.
Price reductions are often viewed as nails-on-chalkboard negative by home sellers, but in fact they are a valuable strategy that ensures they yield the highest possible sales price. When listing your home, we should set an initial price aggressively but also map out a strategy and timetable of price reductions. If there is little interest or offers within a certain time frame, it’s time to reduce the price until we find the “sweet spot” of price vs. value! Once you price your home in that sweet spot, you’ll get plenty of quality offers at the best possible realistic price, and actually close on the transaction. Handled correctly, price reductions are a great tool to test the market incrementally, create momentum, and make sure every possible dollar lands in your pocket when it sells.

7. Forgetting to think from a buyer’s perspective.
Instead of thinking, “This is what I want for my home,” and “I want to sell at this price,” try to put yourself in a potential buyer’s situation. Imagine yourself hitting the home buying circuit on a busy Saturday and how you would view each listing. For instance, buyers usually start from the bottom of their price range and then work their way up, and as a home seller, realize they will be viewing a lot of other listings in the same price range as your home – your competition. Understanding the process from a consumer’s perspective will help you strategically set your price to get the highest and best offers from those busy buyers!

8. Pricing it based off the wrong comparables.
Homeowners are eternally optimistic when it comes to selling their home at the highest possible price, but often times they are using incomplete or irrelevant data to make those decisions. You’ll often hear people say, “My neighbor sold their house recently and it went for XYZ price, so mine should at least be worth that, if not more.” But crunching the numbers, we might find that their neighbor’s house was much larger or sold two years ago. When gauging your home’s value, look for comparable sold properties that were most similar to yours in square footage and amenities, close or in the same neighborhood, and those that sold most recently. That should give you the most accurate representation of what the fair and realistic listing price should be.

9. Forgetting that the home will need to appraise.
Remember that a buyer can make any offer they want, but they most often will need to get a mortgage loan from their partner in the home purchase – the bank. The bank, looking to ensure their investment, will require an appraisal. Appraisers are in the business of rationally and logically valuing homes based on every possible factor, and know the market better than just about anyone. So when you set your listing price, remember that what you want for it isn’t as important as what it will appraise for – which sets the ceiling on what any buyer can and will pay.

10. Trying to inflate the price based on upgrades.
You’ve probably spent many weekends fixing up your home, painting, installing new tile floors, and upgrading all of the light fixtures. While these improvements do enhance the value of your home, don’t expect to get back what you put in dollar-for-dollar. Some upgrades pay off big – like remodeling kitchens and bathrooms- but you can’t automatically tack on the price of all renovations and upgrades to your listing price and expect the seller to go for it. They will, however, make your home much more attractive to potential buyers when you list the home, and that will yield more offers at higher prices.