Drew and Johnathon are hot guys/models/actors/flippers with their own home improvement shows. Chip and Joann are a cute couple and give buyers amazingly beautiful homes on a budget. Then there is the other young couple, who always seem to be on the brink of bankruptcy, but restyle enviable west coast homes. Thanks to these home improvement shows, real estate agents have encountered the “HGTV buyer generation.”
Today’s buyers view homes on television that have large square footage, are completely updated with granite counter tops, ceramic baths and finished basements for under $200k – in Texas. Not so here in my market where comparable homes sell for over $350k.
Home improvement shows teach buyers that homes without updates are absolutely undesirable and updating will cost a big chunk of change. Real-life buyers have heard the term “good bones” about older homes but they lack funding/time/home updating education to seek a home in their ideal location that could use some work. Drew and Johnathon don’t work miracles in my market.
When first time buyers with low budgets look at homes in “real life,” they often see builder grade counter tops, 4×4 tile, tub inserts, 40 year old cabinetry, aluminum windows, linoleum floors, old decks and outdated plumbing. These buyers find themselves calculating what they can/cannot live without to live in a desired area. No wonder rentals are still hot.
Buyers want to be homeowners, but they aren’t desperate. If they are about to make this major investment into their lives, they will be picky because most are not on a timetable—they will wait for a desirable, affordable home to come on the market. Some real estate agents often think of these buyers as noncommittal, or as only warm leads, but really these buyers have their own ideas about how they will or will not spend their money. (Smart Realtors are learning to nurture the nature and help them buy homes.)
Consider a home in my market that is currently listed with a popular agent. The house is beautiful, clean and has some recent updates, however, the price has gone from $489K, has taken 3 price cuts, and is now at $435k. (This is often called “following the market” instead of “pricing to the market.”) However, this home is a hard sell because the backyard is on a busy road. Buyers with/without children or pets do not want to live on a busy street due to the noise and traffic. Buyers want those quiet, private entertaining yards like those they have seen on television or what their parents had.
On the other hand, I also see buyers with smaller budgets with home improvement ideas moving into cities that were once ignored. These towns have homes built around the 1960’s and have good bones but “need some love” (TLC, updating, paint). Towns that out lie large, working cities are booming with buyers and multiple offers. For instance, Warren, Clawson and Sterling Heights border Troy/Warren are where many people work and offer an easy commute. A buyer can get a home under $180k and will have grand ideas about how they are going to eventually update it to their liking. Home improvement shows make it seem easy to paint the cabinets and install quartz counters. Gut the bathroom yourself, then install porcelain tile (tv makes it look so easy), carpet is cosmetic so wait for the sales, engineered wood flooring is affordable and aluminum/wood windows can be replaced with vinyl or fiberglass.
But twice more for a home that still needs updates in the suburbs? Naw, they’ll pass.
For today’s buyers, sellers can list a home that needs work, but sellers should expect to take the lower price to appeal to buyers with the extra cash for updating.
It may be a sellers’ market, but the best Realtors will know who the buyers are and market directly to them for the highest resale rather than post and pray for higher paying buyers to overlook home flaws.