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Buyer Types - How To Recognize Them

• The Observer
• The Shopper
• The Idealist
• The Analyst
• The Investor
• Common Factors among Buyer types
• Buyer Motivation
• Qualifying Buyers

As a seller, either as a sales professional or an investor selling your own home, it is important to recognize buyer types. Buyer types should not be confused with buyer motivation; each type of buyer will be more or less motivated by their circumstances and their goals.

The Observer

The Observer is not yet ready to buy a house; she is more interested in "keeping an eye on the market", "checking out the neighborhood" and generally getting a feel for property prices.

The observer might be considering putting their property on the market and they are trying to get a feel for what their home is worth if they were to sell it. Alternatively, the observer might be considering an investment property in the area and needs to get a feel for prices before making a determination to buy.

Professional Salespeople will want to keep in touch with Observers on a monthly basis so they can be ready when they make a decision to buy or sell. For sellers selling on their own, this group of buyers might be considered a waste of their precious time; however, Observers can be influential in communicating details of your property to other buyers so they should never be discounted.

The Shopper

The Shopper has been to every Open House in the area and continues to look at houses without any real idea as to what they want. The Shopper is a highly emotional buyer; believing the right property will shout out to them when they see it.

With few preconceived ideas about their ideal home, the Shopper can be hard to please. They will fall in love with the right property but believe they need to see everything on the market first to be sure they have not made a mistake. By that time, they may miss out on the ideal home for them.

The Idealist

The Idealist is often a reformed Shopper. The Idealist knows exactly what he wants in a home, often having seen many homes and pulled together the best features of all of them into a composite model of their ideal home.

Budget is the enemy of the Idealist; all of those features typically add up to a home way over budget because the home still has to conform to basic square footage needs of the buyer.

Over time, either the Idealist raises his budget or he compromises on features to fit within his budget.

The Analyst

The Analyst knows exactly what she wants: number of rooms, square footage, bathrooms, bedrooms, yard area, neighborhood, etc, etc..

The Analyst has compared your home to every other home in the same price range before even getting in the car. The Analyst will decide to preview a home based upon it meeting the requirements on paper. Without a match on paper, your home will not get a second glance from The Analyst.

The Investor

The Investor buys, rents and sells property to generate income and create wealth. Investors do not buy on emotion (all other Buyer types buy on emotion and justify their decision with logic); they are making a business decision as to whether your property can be used to generate a return on investment.

Investors often look for homes that require some repairs to bring them up to proper saleable condition. The cost of such work and a profit margin will be factored into an offer made by The Investor. For a seller, the value of selling at a discount is often balanced against the ready availability of funds Investors bring with them.

If an investor is looking at your home, she will want to know if any  other homes in your area are being rented and how much rent they are getting.

A sub-category of Investor is the Casual Investor; people looking to invest in a second home or seasonal property for personal use. Casual Investors buy on emotion like every other buyer type.

Common Factors Among Buyer Types

Other than Investors, every Buyer will buy based upon an emotional feel for a home and then justify their decision based upon logic.

Because of this, creating an emotional impact when a buyer sees a home for the first time has an enormous effect on how fast a home will sell. Each "Touch-Point" for a buyer creates an emotional response. Examples of Touch-Points are:

• Seeing a listing online for the first time
• Seeing a photo for the first time
• Talking to an Agent about the home
• Seeing a flyer for the home
• Driving by the home
• Walking up to the door
• Stepping into the home
• Being shown the home

By focusing on the "Touch-Points" and maximizing the emotional response elicited from each one, a professional Real Estate Salesperson will actively sell a home (as opposed to passively advertising and showing it). Unfortunately, many salespeople do not fully understand the science of buying and selling, so they never learn how to tap into a buyer's emotions.

As a buyer transitions from one Touch-Point to the next, they are either reaffirming their initial emotional response to the previous Touch-Point, or they cancel it out altogether. It can be very difficult for owners to manage a buyer through each Touch-Point simply because owners have so much of their own emotion tied into the property. This is one of the reasons why most homes initially listed for sale by owners are sold by Professional Agents.

Buyer Motivation

Buyer motivation is important to understand when trying to sell a property. A buyer that is not motivated to purchase may take their time in selecting and reviewing properties. An unmotivated buyer may never actually put an offer to purchase a home on the table.

In contrast, a highly motivated buyer needs to find a home and will place an offer for the home on the market that most closely fits their needs (emotional and physical). A relocated employee is frequently a highly motivated buyer. They must find a home in order to bring their family to live with them.

A buyer with a house to sell is not as highly motivated as a buyer that has already sold their house and needs to find a house to prevent their sale from falling through.

Try to find out what is motivating your buyers.

Qualifying Buyers

You need to qualify your buyers so you can determine if they have the resources to to complete the purchase of your home. Sales Professionals should pre-qualify buyers before bringing them to see properties, thereby ensuring they only view properties they can afford.

As a property owner, it is difficult to qualify buyers; a sales professional can ask a buyer about their income and savings whereas a home owner cannot (or is not likely to be given the information if they do).

Many buyers now obtain pre-qualification letters from lenders to indicate they would qualify for a loan of a specific size, but a pre-approval letter is best. When a buyer is pre-approved, the lender has checked out the buyer's credit and run their financials to be sure they would receive approval for a loan of a specified amount.

Even with pre-approval, a buyer may need to sell a property in order to come up with the down payment on your home; so be sure to fully understand the entire financial picture when a buyer makes an offer.

Home Investor Specialists typically work with mortgage brokers that are able to offer buyers a range of loan options. This increases the ability of a buyer to qualify to buy your home.