Setting Buyer Expectations in a Seller’s Market in Kansas City

Setting buyer expectations in a seller’s market in Kansas City can save you time, money and frustrations!

Seemingly overnight we have transitioned from a buyer’s market (more than six months of inventory) to a seller’s market (less than 6 months inventory) in Kansas City. Naturally there is some lag between when the news passes this info along. So right now, we have real live buyers in the field, still looking to get that deal of a lifetime, and they are coming up on homes that are going under contract in less than a week, multiple offers and oftentimes now going under contract for more than list price. If you are not ahead of this shift, and setting your buyer’s expectations about the market ahead of time, you could be setting yourself up for frustration and disappointment.

So how do you set buyer expectations in a seller’s market?

In short, data. You should have the ability to pull up market statistics in your local MLS that can show you average list to sales price ratios over a period of time. In the Heartland MLS that report is called the “Market Conditions Addendum” and does a nice job of compiling the data in a very easy format. Let’s be real, all the data in the world doesn’t mean diddly if you can’t interpret it and relay the info to your buyers in a way that they will understand.

So what if your buyers still think that they can go out and steal a property?

So if you have tried to set your buyers expectations by showing them the data that shows them that we are in a seller’s market here in Kansas City or wherever you are, then sometimes losing out on a property is the only remedy. We are the agent of our client. We can provide advice and consult to the best of our knowledge, if your client still wants to lob in an offer then as a fiduciary you have to do it. Just make sure to let them know that they could be losing out on their perfect home, while someone else comes in on top of this offer and takes it.

Ok, great Mat, we hear you, but how can I set my buyer’s expectations in this Seller’s Market?

Simple. Scripts.

List Price to Sales Price
The average list price in (____________) is (__________) but the average sales price is
(__________). That means that sellers are coming down approximately (__________
dollars). The reason I share this information is that I would prefer to turn you down now,
rather than disappoint you later, if you think you could offer $25,000 less than the list price
and actually expect to get it.
So let me ask you a very direct question. If we found you the perfect home and the seller
is only willing to come down about (_________ dollars) how would you feel about that?

If you want even more killer tips on taking advantage of this monstrous shift in the market, reach out to me here!

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Kansas City First Time Home Buyer Fears (part 3)

Can I afford the maintenance?Don't get caught without an inspection!

The third concern of new home buyers in our original survey was “Can I afford the maintenance?” If you missed the prior two posts you can read about Buying in the Right Area and What Happens if Something happens to me financially?

So congratulations! You now own your own home and have the freedom to not worry about what the landlord will say if you paint that wall purple (or Red and Blue). Along with this freedom comes the new “privilege” of home ownership – as my wife like to call it. One of the most scary or stressful things about buying your first home is, even after the inspection, what if something MAJOR breaks down, like the furnace, air conditioner or water heater?

Home Warranties

One way to help mitigate this fear is a home warranty.  The great news about this home warranty is that more times than not, the seller is willing to include it in the purchase of their home. So, if this seller has not kept up on their deferred maintenance you are protected if any of the covered appliances and systems go down for a small deductible as little as $75. We go over this benefit with you in detail during our buyer consultation here at our office.

The Actual Costs

I love my parents! Let me preface this with that, but GEEZ they can scare the BE-JEEBUS out of you when it comes to buying a new home! Everything bad that can happen to your home, will, and will cost you at minimum $5,000 for each event!I know that they are only trying to protect us, but when they don’t like a home, parent’s find it hard to tell you that they don’t like your choice. Instead of hurting your feelings, they often try and scare you with maintenance horror stories.

Here is a list of average costs for upgrades and or replacement costs of most typical projects as a home owner.

Keep in mind, these costs can vary with location, market and even between contractors. It is always advisable to get at least three quotes when planning on spending a considerable amount of money on your next renovation project. We work with many trades and contractors and always keep a list of honest professionals. Let me know if you would like some contractor referrals, I’d be happy to send them your way.

Set Up A Reserve Fund

It is also not a bad idea to set up a reserve fund for maintenance and repairs. A survey showed that a homeowner can plan on spending 1-4% of their homes value per year on maintenance. Keep in mind this is an average over time. Roofs, for instance can be $10-$15k a pop, but they last for 25-30 years if installed correctly. Now in the Midwest, in places like Olathe or Lenexa, you can plan on replacing your roof more often with hail storms, but then your home owner’s insurance usually gets involved there.

So if your home is worth $150k plan on putting $1500 aside a year on improvements and projects to keep your investment running smoothly and by keeping up on deferred maintenance you are saving tons of money in the long run. Go to your bank and have them set up a savings account and label it “Home Repairs” and put in $100 a month into it. If after 5 years you haven’t really needed to use it you may just cap it at that and be okay.

Thanks again for all those who helped put this survey together!

So what crazy DIY projects have you taken on and either surprised yourself with how well they turned out, or did something crazy happen that you can laugh about. Leave a comment below and let us know!

Thanks again for reading! As always, our business is as amazing as it is due to friends and family like you. Without your referrals we would not be here today. Thank you for trusting us with your family and friends!

KC First Time Home Buyers Fears (part 2)

First Time Home Buyer Fears part 2

Yesterday I started to address the results of a survey I posted on my Facebook Fan Page on what are some of your biggest fears when you bought your first home, or what are you concerned with most if you are thinking about buying a home right now. You can read the first post in this series here.

So to quickly recap. What were the top 3 first time home buyers fears in the Kansas City area?

  1. Buying in the right area.
  2. Can I afford it if something happens to me financially?
  3. Can I afford the maintenance?

Can I afford it if something happens to me financially?What now?

This is a really great question, and is still at the front of everyone’s mind in light of the recent economic situation. People who have seemingly rock solid jobs with the city, government, fortune 500 companies are being let go daily. So what happens then?

The first thing is having a great conversation with your lender and making sure you buy what you can afford. A good lender will not just give you a blank check, they will sit down with you, go over your monthly expenses and discuss with you what you could and should take on. The lenders who are still in business are good, there is a reason they have survived the market shift. Listen to them, but more importantly ask them questions. Here are a couple good questions you may consider asking your lender:

  • What will my total PITI (Principle, Interest, Taxes and Insurance) payment going to be?
  • What is my current debt to income ratio?
  • If I needed to sell quickly is this loan assumable?
  • Are there any prepayment penalties if I pay off my loan sooner rather than later or have to sell quickly

I will be going much further into lending, terms and the different products available in a future post.

The next step is making sure you are not paying too much for your home. As a market expert, I see hundreds of homes a month and watch the market statistics religiously. A phrase I use often with my clients is this, “If you are not a little embarrassed by your offer, you are offering too much.” This always gets a smile and you can see body language relax a little. I will always let you know if a property is grossly overpriced or if it is a Smoking HOT deal. Actually, I’m required by LAW to let you know about SMOKING HOT DEALS 🙂 That is, if we have an agency agreement.

Worst case scenario, if you lose your job and main source of income, there are options to mitigate your losses. Not over extending yourself on your mortgage on the front end can help you possibly handle it on one income until you get back in the workforce. Buying it correctly and not paying too much gives you the best opportunity to sell your home quickly and possibly not lose any money.

Stay tuned for part three of this survey Can I afford the maintenance? You can subscribe to this blog by clicking on the RSS feed icon or like our fan page and be updated when a new post hits.

Download our FREE First Time Home buyers eBook that talk about the step by step process that myself and my team will help with.

As always, thanks for reading!

P.S. If you or a friend or coworker is thinking about buying a home or selling a home in the next 30-60 days let us know! We would be thrilled to help your friends and family.

Top 3 First Time Home Buyer Worries. You are not alone.

Stressed about buying your first home?Being a first time home buyer can be pretty scary. It wasn’t that long ago that we sat at the closing table, staring at that seemingly endless pile of paperwork, thinking to ourselves, “Are we really doing this?” At that time I was not a Realtor, I was just like you – but I have never forgotten that butterfly sickness that came over me when it was time to close. So even though I now close 3-4 transactions a month, I am still very much aware of the sensitivities and stresses of the closing table.

I was curious to see if my personal initial fears were shared by many others. I harnessed to power of Facebook and asked a survey question on my Fan Page, http://www.Facebook.com/MatSellsKC and I wanted to discuss the top three first time home buyer fears an also discuss some ways to ease that fear a little bit.

When buying or selling your first home, or if you are thinking of buying a home, what is your greatest fear or concern?

So I posted this question with the option for readers to write in their own answer or vote on one already there. Over 30 friends voted(thanks) and the top 3 first time home buyer fears were:

  1. Buying in the right area.
  2. Can I afford it if something happens to me financially.
  3. Can I afford the maintenance?

Buying in the right area

Okay, I have to bite, we have all heard this term – there are only 3 things that matter in Real Estate – Location, Location, Location. 39% of my friends who took the poll agreed. So what does location really mean, and how can you make sure you are buying in the right area.

There are 5 things to consider when choosing location:

  1. Commute Time to work – Do I get a smaller house and shorter commute, or do I add 10 minutes to my drive time and double my square footage?
  2. Schools– Do the public schools in the area provide the education and extra curricular activities we are looking for, or will be looking for in the near future?
  3. Local Amenities – Are the stores close by? Do we have access to the arts/entertainment? How walkable is my neighborhood?
  4. Public TransportationDo I have access to bus lines, trains/light rail?
  5. Privacy – How close to my neighbors do I really want to be? Can they look right into our bedroom window?

Take some time to talk about or discuss these main issues to help streamline your decision making process. As a neighborhood expert, I can help guide you through some of these decisions and show you all the homes that fit your specific needs and criteria.

I will be tackling fears 2 and 3 on a future blog post. In the meantime, let me know in the comments section below, what other considerations are you thinking about when looking for the right area to buy a home in Kansas City?

Download our FREE First Time Home buyers eBook that talk about the step by step process that myself and my team will help with.

As always, thanks for reading!

If you or a friend or coworker is thinking about buying a home or selling a home in the next 30-60 days let us know! We would be thrilled to help your friends and family.