Imagine that you met two prospects for apartment viewings during a typical workday. The first prospect, Maria, viewed city-centre apartments around the train station. She inquired about the monthly rental of other units in the same building, residents’ characteristics, and future developments in the vicinity. In contrast, the second prospect, Joseph, shortlisted apartments in a residential area surrounded by parks and sports grounds, yet still within commuting distance from the office district. Unlike Maria, he was curious about the neighbourhood and the prices of similar properties nearby.
Clearly, both were looking for apartments for two different purposes: investing and living.
Investors, like Maria, invest in properties and make a profit from renting out or reselling. They consider the general needs and preferences of future buyers while paying attention to financial and developmental metrics that can influence profitability.
On the other hand, resident buyers, like Joseph, look for properties for themselves and their families to reside in. They tend to prioritize budget, neighbourhood, transportation, and personal needs rather than profit potential or possible tenancy profiles. Comparable property prices are the main numerical consideration. This helps them ensure that they are getting a good deal and a reasonably priced property compared to similar listings in the area.
Although resident buyers are less complicated financially, their characteristics are more diverse than investors. Knowing buyers’ segmentation helps you understand their expectations and determine which group of buyers are right for your listings and vice versa.
From a residential market perspective, there are three common types of investors and five common types of resident buyers. Let’s find out who they are!
Investors
1. Long-term investors
Long-term real estate investment is a classic buy-wait-sell business that requires capital and patience. This group of investors expects real estate prices to appreciate over time as the area continues to develop. A new train station, shopping mall, or school campus can attract more people and economic activities into the area, resulting in a surge in property values.
In many cases, insider information plays a significant role, as buyers want to invest before announcements that improve property prices take place.
What they look for: houses, apartments, and land in areas where urbanization or significant developments are believed to take place.
How to prepare: Understand expected future supply, local zoning regulations, planned developments or redevelopments, demographics, and tenancy trends.
2. Fix-and-flip investors
While long-term investors have to wait for years, fix-and-flip investors seek short-term profit from properties. They purchase undervalued houses and apartments, renovate, and immediately put the property for sale. This investor’s profit mainly comes from improved property conditions rather than changes in external macro factors.
These buyers tend to have insights on what features their target end-users will love and have trusted, as well as go-to architects and construction contractors. With these advantages, they are willing to handle the renovation process that inexperienced people usually find too painful and time-consuming.
What they look for: Comparatively low prices come first, as renovation costs add to the total investment amount. Houses or apartments that appeal to a large portion of the market and are located in convenient areas are ideal due to increased liquidity.
How to prepare: Ensure you have accurate sales comparables, building plans, previous property inspection or contractor reports, and recent area buyer statistics to prove marketability. Play it right, and you might be able to represent both the acquisition and the sale of the property when working with these investors!
3. Buy-to-let investors
Buy-to-let is a popular model for many investors because of the potential for a stable, passive monthly income covering the mortgage payments. In fact, many developers advertise their new residential projects as investment-worthy and attractive to tenants in order to attract these investors.
These investors need to ensure that the expected monthly rent exceeds expenses such as tax, mortgage payments, tenant management, and occasional renovations.
What they look for: properties with high yield, stable tenants or potential tenants, existing infrastructure, in areas with a positive long-term outlook.
How to prepare: prepare and be ready to show comparable and estimate yield numbers, tenant demographics and long-term trends, proof of price stability, and favorable government policies.
Resident buyers
4. First-time buyers
Buying a house is a financial goal for a lot of people. Many countries have favourable mortgage or tax policies for first-time buyers to sponsor their initial foray into homeownership.
Although first-time buyers are not necessarily naïve given the amount of information available online, they lack direct experience and do appreciate expert advice from agents. Being their trusted advisor is a great way to build relationships and progress towards the deal.
What they look for: usually small to medium properties in a reasonable price range, as they are just getting on the property ladder. Also, transportation to the city center or business district is usually a large factor as these buyers tend to be in the early to mid-stage of their careers.
How to prepare: be ready with information regarding government incentives, possible mortgage providers, price trends, local repair company information, and anything else that will make the new buyer feel more at ease.
5. Relocating professionals
New role, new chapter, new house! Individuals or couples who look for a property because of a near-future relocation are great prospects. With specific moving timelines and location requirements, the property search is narrowed down and efficient.
Relocation is exciting and busy at the same time. Apart from looking for a house, relocating professionals must sort out paperwork, possibly study a new culture, and in many cases, find a job for the trailing spouse and a school for their children. These buyers will want to see property options in an efficient and timely manner so they can make a decision and cross “look for a house” off the list.
What they look for: properties within commuting distance to office areas and school options in some cases. Depending on the level of the company’s support, relocating prospects may be open for additional services around settling in the new city, too.
How to prepare: ensure a complete understanding of the reasons behind the buyer’s relocation and their lifestyle. These buyers can have widely varying needs that require different approaches and options; be prepared to be flexible.
6. Affluents
House seekers with a comfortable budget can be of any age and anywhere. While the definition of luxury can vary, qualities that these buyers are generally willing to pay a premium for can include space, location/view, privacy, design, amenities, and sustainability. Despite the prospect of impressive ticket size, these deals may consume a great deal of your time.
What they look for: space is the top priority for house seekers in the pandemic era, but it means more than just extra bedrooms for affluent buyers. Amenities that accommodate luxury lifestyles and privacy are essential.
How to prepare: understand your client’s lifestyle preferences as much as possible. These buyers can afford to be picky, which means the ability to maintain their lavish lifestyle quirks could be make-it or break-it factors in a deal.
7. Upsizers
Upsizing buyers are usually new families who need more bedrooms or successful professionals who have achieved a significant pay rise and decided to step up the property ladder. However, check if they will need to sell their current house before buying a new one. If yes, the purchase timeline will depend on when they can sell the current property, too.
What they look for: new families usually prefer three or more bedrooms to accommodate new (future) members, a spacious kitchen, and outdoor space. Schools in the neighbourhood are also a factor. For successful professionals, they tend to look for a house or an apartment in convenient locations near the business area, with comfortable space and design.
How to prepare: have a good understanding of the timelines of all parties and any possible mortgage details. These factors could hold up and eventually cause a deal to fall through.
8. Downsizers
Yes, people can move up or down the property ladder. For individuals or couples in a stage of life where career is no longer a factor and children have left the nest, the big space or urban location near schools and offices may not seem as important anymore. Instead, these buyers look to enjoy their regained flexibility in a smaller, quieter space that fits their future lifestyle more.
Downsizers obviously enjoy financial benefits: mortgage, insurance, utilities, repairs, and ongoing expenses are much less. However, do check if they will need to sell their current house before buying the new one, as this may impact the purchase timeline.
What they look for: a humble house that is spacious enough for daily activities and has easy access to public facilities such as parks, food shops, healthcare, etc. Elderly-friendly design is a great value-added feature, as the downsizing buyers tend to look for a place for retirement, too.
How to prepare: focus on aspects of the property that will help the buyer’s lifestyle in the coming 10 years. Neighborhood safety, proximity to services, and demographics are also necessary to have on hand.
Know your prospects and match them with the right property!
Property Raptor is an AI-powered CRM system that lets you match the right clients with the right properties at lightning speed. Maximize productivity and increase conversion rates faster by knowing what your customers want. Our lead management module provides full lead visibility, lead scoring, and real-time segmentation. Book a tour to discover more!
