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In the past, there have traditionally been two types of buyers for the most part -- the end user and the investor. Fairly straightforward, end users typically were in the market to occupy the home as their primary residence while investors would most likely seek to rent the home. Today, we have new dynamics when it comes to buyers. There are the end users, builders, flippers and hedge funds buying homes. Here’s a quick look at each.
End Users
These
are buyers in the traditional sense of the word and they are seeking a home to
move into that will end up being their homestead. Buyers in this category are most
influenced by location and condition of the home, fueling demand for certain
types of homes and ultimately driving prices in some locales more so than
others.
Builders
Builders
tend to buy homes with the intent to tear down the existing structure and then
rebuild a much more expensive house on the lot. These types of buyers will come
by and often buy additional lots on and around the property and they offer
homeowners at or more than asking price.
Flippers
Primarily
the amateur or small-sized investor, this type of buyer seeks low-priced homes
with the idea that with some renovations they can turn around and resell the
house for a significant profit. This type of buyer was especially prevalent in
the years immediately following the housing market crash in 2007. As time goes
on, however, they are accepting a shorter and shorter margin for profit.
Hedge Fund / Wall
Street
This
is one type of buyer that is relatively new to the scene. Larger scale
investors that are buying blocks of properties and then holding on to them do
so with the intention to keep them as rental homes or ultimately put them into
REITs.
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As
a result of these changing dynamics on the buying side of real estate, we are
seeing a lot more inventory tied up that might normally have been available for
end users. The result is a decreased supply with a constant stream of demand –
ending up in prices getting pushed up.
In
the midst of all this, it is critical to have an agent that understands how to
properly structure an offer. The last thing you want to happen is for you to
lose the home because of less than perfect representation. You need someone
that truly understands the dynamics of our buyers’ market and how to leverage
your position. There are other terms that can be added to your purchase
agreement to make it more favorable for you.
If
you are in the market for a new home, contact us today for a custom
consultation on your needs and we will get to work finding and getting you the perfect home.
