The key to selling a house in any market is finding the right buyer.
Just a few short years ago, buyers for real estate deals were crawling out of the woodwork, and finding motivated sellers was the challenge. Now, motivated sellers are a dime a dozen, and the challenge lies in how to find buyers for real estate.
In order to sell your property, the most important thing is to determine who the ideal buyer actually is. Now in this article, I’m not referring to the psychographics of buyers, but a specific “type” of buyer.
To find buyers for every real estate deal, you simply need to figure out which of the 5 types of real estate buyers your house most appeals:
#1. Rehabbers (Fix and Flip Investor Buyers)
These will typically be full time real estate investors that are looking for a great return on their investment in a relatively short period of time. Consequently, you need to have deals that have a lot of equity… deals like major fixer uppers that they can pick up at substantial discounts. We’re talking 20 and 30 cents on the dollar in many cases (especially in a soft market).
If you’re looking to sell properties to these types of buyers, consider farming for probate, absentee owners, abandoned properties, free and clear owners, evictions, REOs, and in some cases, short sales.
#2. Landlords (Buy and hold Investor Buyers)
Landlords may be full time investors or they may be part time investors that are simply look for a safe place to put their money for long term wealth. Generally, these types of buyers are not interested in selling the property immediately. Cashflow is going to be the deciding factor and they generally don’t want to tie up tens of thousands of dollars in renovations. Mild rehabs may be okay depending on the buyer, but ultimately, you’ve got to have a property that cash flows for this type of buyer.
#3. “Hybrid” Buyers
Hybrid buyers may well be the golden type of buyers for real estate deals in this market. They are NOT full time investors. They’re people that have been waiting for the real estate market to fall – or the bubble to burst. They often have 100% cash or a large down payment and good credit. These types of buyers tend to be more “emotional” than a professional investor. They will often shy away from major rehabs as they want to pick up a good deal, put a tenant in, and have enough cash coming in to cover the mortgage and provide a small return on investment. These buyers DON’T require huge amounts of equity, and they are often quite liquid.
#4. Lease Option Buyers
Lease option buyer are people that don’t have good enough credit to qualify to buy a home through conventional means or they don’t have enough money for the down payment, now that the lending criteria have tightened up. The properties are generally going to be in good condition, with little to no work needed. Minor cosmetics are probably okay, but all major systems should be in working order and good condition.
Properties that are good for this type of buyer often include “rehabbed” properties, expired listings, out of state owners, owners that have relocated for work, etc.
#5. “Retail” Buyers
Retail buyers are the “average” home buyer. They are moving in now and are able to obtain conventional financing and/or have the cash to buy out right. For the most part, these buyers will, however, need financing. As a result, they will be unable to buy houses that need a lot of work. In addition, they typically can’t see “past” the cosmetics, so you’ll get the best prices if the houses are clean and in good condition.
Ultimately, when it comes to finding real estate buyers for your deals, you’ve got to think a little bit about the deal that you have and then target the right kind of buyer. Certainly, there could be some crossover between some, but if you focus on the primary characteristics of buyers associated with each type of property, you’ll have a much easier time finding buyers for your deals.
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