The Hybrid Buyer

By
Real Estate Broker/Owner with Mike Farmer Realty

During the hot years of real estate there was a shift in motive when it came to buying a home. I started hearing the stories around 2000 - "Hey, you know that home Elbert bought in Big Oaks subdivision? I heard he sold a year later and walked away with $70,000! All he did was paint it and put on a new roof."

Then, the talk spread like a rumor of infidelity at a coffee klatch.  Everybody was knocking down big bucks in real estate. The late night investment programs showed you how to buy and sell real estate so you, too, could own a yacht, a Rolex and a villa south of France.

At some point a hybrid buyer was created, one who was buying a home to live in, but also had visions of money plums dancing in his head. What I found in my business was the hybrid buyers were usually single, newly married with no children or buyers who were only staying in town for a few years (military, contract workers, etc), although it eventually affected a broader range of buyers.

It was a good strategy: buy a home that needed a little work, add value through sweat equity, live in it a few years, stick a sign in the yard, and, Poof, money, money, and more money. Or buy the first home in a new subdivision and watch each phase rise until the build-out and cash-out. Some people, as we now too painfully know, didn't wait for the final sale, they refinanced and used home appreciation as a way of giving themselves a yearly bonus. Some people did well and escaped richer than they began, others didn't.

So, what now? Is the hybrid buyer gone from the market? Perhaps not  - not in all areas. The hybrid buyer  has to be more steely and savvy, for sure, but not-too-risky deals can be found. I think the timeframe has changed. It's highly unlikely a buyer is going to see double-digit appreciation for awhile; however, there are areas being affected by the national downturn that have good fundamentals and strong backed-up demand. Once the national housing market and financial situation improve, these areas should see a surge in home buying that will give them good appreciation. Perhaps now the timeframe is 3, 4, maybe 5 years, rather than six months or a year.

When all is said and done I imagine I will hear - "Hey, you know that house Elbert bought for a steal during the worst of the downturn three years ago? I heard he just sold it and walked away with a cool 100 grand!"

Mike from Savannah

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