Tuesday, June 3, 2008

Are Buyers Spoiled?

For the last few months, I have been working on and off again with several buyers, which is keeping me really busy. However it is proving difficult to find a home that each of them likes. Now, trust me, we are finding homes that are fantastic, but it seems buyers want the cake and to eat it too in the current real estate market. My question has to be, are buyers spoiled when it comes to amenities inside homes?

Over the last five years, with the increase in home "appreciation" equity, many home owners could afford to renovate their aging homes. Trying to make the home more modern, it was common to put granite counter tops in, hardwood floors, stainless steel appliances, and exotic wood cabinets. Builders jumped into the fray as well and offered all types of previous "upgraded" amenities as standard options.

Rehabbers that bought homes to fix and flip were making a killing on net profit, so to make their homes more appealing, they were putting in the best products. I remember watching one of the cable home improvement shows where a 900 square foot home was being rehabbed, which they priced moderately, but it had granite countertops and high end appliances. As a former rehabber myself, a few things you have to look at when considering what to out fit the home with are:

  • value of the home

  • type of buyer

  • location of home

If the home is not in a great area, or has a low value, then one should not over build the home with luxury amenities that are not supported by the surrounding homes. Unfortunately, I saw this happening time and time again over the last several years, and it looks like buyers are now used to top of the line, even in the smallest homes.

One new home buyer I represent has been looking at homes near Lake Nokomis in Minneapolis. They can only afford a certain amount of home, which means they cannot buy a home even a few blocks from the lake. Most of the homes we are looking at were built 30+ years ago, some need minor updating, while others may need a ton of work. Obviously, the less work to put into the home the better for my buyers.

What has surprised me most is that we have found a few homes that are PERFECT for them, being completely renovated. The only thing they don't have is granite countertops, high end appliances, etc. The buyers refuse to accept any house that doesn't have these amenities, I have come to learn. I have tried to explain to them that in their price range, these "luxury" items are hardly found, but they sadly refuse to believe it.

So my question is, have buyers, especially first time home buyers, been spoiled by the boom years? Growing up in a lower income family, one thing I learned was that sometimes you have to work your way up to what you really want. We bought a modest first home five years ago, and it took three years to finally get the money to tile the floors. After hard work, we were able to build a new, larger home, this last year.

But it seems to me that the new generation of buyers no longer want to work for things. They want it all, right now. With the market haven fallen the last two years, many buyers now expect to get everything for nothing. Sadly, I have to try and bring current buyers into reality, but it is no easy task. Buyers are even shunning homes that need a little updating via carpet or new vinyl because they don't want to do the work later. Sometimes, you just have to look past these minor flaws if your goal is to get into a home.

So what's an agent to do, when buyers just won't come to reason? Well, I guess just keep showing homes until it finally sinks in because, after all, this is just one more learning experience for the first time home buyer in Minneapolis.

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