Real Estate Survival Guide with Terry Story
Business:Investing
During this week’s Real Estate Roundup, Steve spoke with Terry Story, the 31-year veteran at Keller Williams, about a fundamental change happening in the real estate industry. Steve and Terry also talked about some key real estate myths that home sellers need to be aware of.
How Homebuyers Are CategorizedAs Steve pointed out early in their conversation, “There’s a fundamental change in how homebuyers were historically categorized and how they’re being categorized today. Now, there are basically three tiers of homebuyers: upper, middle, and lower.”
The uppermost tier are the people who are willing to pay higher premiums for move-in ready homes with all the requisite amenities. Terry confirmed that she sees this type of buyer quite a bit. But she also sees a lot of buyers in the middle tier: people who want homes in their original condition. The goal with this type of homebuyer is to boost the home’s value through “sweat equity”—home improvements.
Finally, there’s the lower tier of buyers. This segment is primarily comprised of flippers or contractors, looking to pick up a home on the cheap, ideally paying no more than 60-70% of its retail value.
Speaking of value, Steve and Terry together noted that, “Land appreciates, houses depreciate.” Even if you’re not a renovator, if you stay in a home for several years, then you’re likely to spend a significant amount of money fixing it up, re-doing it, or maintaining it. Many people, when estimating how much value they have in their home, fail to take into account all the money they’ve put into it over the years, like replacing hot water heaters or heat/air systems.
The Middle Tier Is Falling AwaySteve mentioned that a recent article highlights how the middle tier buyer is falling away. “The reason is that current buyers are more comfortable with technology than they are with construction. Buyers are looking for homes they can move into quickly, homes that already have everything they want.”
There are simply more deterrents for middle-tier buyers, Terry chimed in. “If you’re buying a home that needs renovations, you have to have the money upfront to not only buy the home but then also to hire contractors,” she said. So, more people are in the top tier of those looking to buy a home that’s already the way they want it.
Five Real Estate Seller MythsSteve and Terry then moved on to discuss some common real estate myths that are important for sellers to keep in mind. The first is that you don’t need a listing agent until your home is ready to go on the market. “I disagree with this,” Terry said. “I think it’s better to bring in the realtor before you put your home on the market. That way, they can help you determine what does and doesn’t need to be done to get your home ready to sell.”
Steve presented a second myth: “I do not need to upgrade the property for sale.” But according to Terry, it all depends on what the house needs and what type of upgrades are on the table. Her advice: “If you think a buyer’s going to come in and think it needs $10,000 worth of painting, it’s worth spending $1,000 in painting before putting your house on the market.”
The third myth—that you need to have an open house before you can sell your home—isn’t necessarily true either, according to Terry. “Open houses are a great way to get additional exposure, but the reality is that people are using technology such as real estate websites to decide what they want to look at, and then they’ll make an appointment to look at a home they’re interested in.” And virtual open houses are becoming increasingly more common.
Steve stated, “Number four, I need many open house signs at multiple key intersections.” He started to express skepticism about that one, but Terry chimed in and said that in her experience as an agent, that one isn’t a myth, it’s a good idea.
One final myth: A buyer that’s truly interested in a home will pay more than market value. “That’s a simple, flat out ‘no’,” said Terry. People are smarter and more well-informed as buyers these days. And Steve pointed out an adage that applies well beyond the real estate market: “Buyers only buy what they perceive has good value, period.” Terry added that if you over-price your home, potential homebuyers, even if they like the house, may not make an offer because they don’t think the seller has a realistic view of their home’s value and, therefore, won’t be easy to negotiate with.
If you’d like to learn more about buying or selling a home or to connect with Terry Story, check out Keller Williams!
July 12th - It’s a Seller’s Market for Now, But Things Could “Flip”
July 5th - Increase In Fannie Mae’s Debt To Income Ceiling Should Make Your Next House Easier To Buy
June 28th - Why Are Millennials Buying Homes Rather Than Renting Them?
June 21st - How Will Eliminating The Property Tax Deduction Affect You?
June 15th - It’s Hurricane Season Again! Do You Have The Right Insurance?
June 7th - The Stress Of Moving Is Keeping People At Home
May 31st - Low Housing Inventory Is Frustrating Would Be Buyers
May 24th - Looking For A Retreat? How About Vero Beach?
May 18th - Home Sales And Prices Spring Forward
May 10th - How To Guarantee A Return On Your Home Improvement Investment
May 3rd - What To Do When Your HOA Goes Rogue
April 26th - What Do Bankruptcy And Your IRS Refund Have In Common?
April 19th - The Home Affordability Crisis: Are You Being Priced Out Of The Real Estate Market?
April 12th - Worried About Thin Credit? Get Back On The Grid!
April 5th - Real Estate Prices Are Higher Because Of Millennials Buying Homes
March 29th - How To Buy A Home When You Already Own A Home
June 21st - How Will Eliminating The Property Tax Deduction Affect You?
Aug. 9th - Think Outside The Box To Win In Today’s Tight Housing Market
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