Buying real estate as a first-time buyer, move-up buyer, scale-back buyer is a different type of buying from buying as a real estate investor. Investors typically have other things in mind beyond having a nice place to sleep.
Investors are future focused. That future might be 5 years, 5 months or 5 weeks, and in rare cases, 5 days. They consider the difference between the initial investment and the final sale. They look at the costs of renovations in comparison to rents received over time. Every decision has to make sense and it has to make cents.
I know a lot of sellers think investors are just cheap and they want to steal their home, but that isn’t always the case. Of course, everyone wants a good deal, but an investor is looking at the future impact of a current investment. Whenever available funds are used to buy a property it creates an opportunity cost that may prohibit the investor from making a better investment in the event one arises during the current property preservation process.
Every purchase is, or should be, made with caution, as well as with an eye on future time-lines and the bottom-line. A wise investor makes sure that both sides of the deal come out of the process with a sense of satisfaction even though there is typically some give and take on both sides.
There will always be those times when one side of a deal will benefit more than the other. That happens in common home sales also. A seller should not automatically assume an investor is trying to take advantage of him because he offers less or asks for more than the seller expects from any other home-buyer. The investor is future focused. If he can’t make the numbers work out, he will move on to another opportunity, and he should.
Working with investors can be a quick, satisfying process for sellers if they understand the investor mindset. As with every real estate deal, a seller or buyer should go into the deal with his eyes wide open and accompanied with a talented Realtor at his side. When you’re ready to buy or sell, call your Cornerstone Business Group, Inc. agent. We started as a group of real estate investors bent on helping home-buyers and home-sellers get great deals, and we are an investor’s best friend when it comes to the same. We know the investor mindset, the process and the bottom line because we are investors.
Sellers, there are more expenses to selling your home than commissions if you’re not ready to sell. One of worst things a seller can do is overprice his/her home when it first comes on the market. A small overage is one thing, but when that overage hits 10, 15, 20, 30% and beyond, it’s like burning dollars in your furnace to stay warm.
What are the unrealized expenses of overpricing a home? I only say unrealized because it seems that sellers are the last ones to realize the costs of overpricing. Let’s assume the house is in good condition, ready to show and is in a good location, but it’s priced too high. What are the unrealized costs?
- The monthly expenses of maintaining a home that could be used in purchasing a new home. (Electricity, water, heating fuel)
- The other periodic expenses that occur and need to be paid, such as: property taxes, insurance, maintenance costs, etc.
- The expense of keeping the house ready to show. Who wants to keep their house ready to show seven days a week for six months, nine months or a year? You can never really take a day off from living in a museum.
- The expense of having to pick up and leave the house for showings over and over. That may inspire more dinners out, more shopping trips and of course more inconvenience and more expense.
- The expense of giving a neighbor an insight into what not to do when she’s ready to sell. She watches your unsuccessful attempt to sell your house and then lists hers for 10% less. It sells immediately. You blame it on your lame Realtor, but the truth is it’s your price.
- The expense of stress on the family. If you have children or pets in your house the above issues also affect them. Kids can’t have kids over because they might have to leave at moments notice, dogs and cats end up crated for hours on end and neither can use the house the way they did before it was listed.
A house that sells quickly is just as likely to sell quickly because it was listed well rather than because it was listed low. When you hire an Realtor to sell your house, make sure your hire one that you have confidence in and then listen to his/her advice and insights into the local market.
A buyer will likely buy another house that is similar if the price is lower. No matter how wonderful your house is, it’s in competition with every house on the market. If your house is the most expensive one, it will likely sit longer than similar properties. Think about the unrealized costs of overpricing a home.
Check out Beth Atalay’s blog: You Are NOT Ready To Sell Your House Yet!!