Whether you are a buyer or seller, it is important to understand how to set expectations for real estate in Mexico.
Setting Seller Expectations in a Buyer’s Market
Every sellers thinks his/her home is unique and desirable. This is a very human response, but how the market looks at the home may be the same or very different. A buyer’s market exists when there is more inventory for sale than buyers to buy. It is hard for most sellers to accept the amount of competition they may have and how much this affects what price they can expect to receive.
In a buyer’s market for real estate in Mexico, the sellers need to be very motivated and realistic or it is a waste of time and effort for everyone involved to put the property up for sale. Here are a few things to remember when dealing with expectations in a buyer’s market:
- Accurate MLS statistics and reports can focus the agent and the seller on the reality of the market. Facts and data should prevail over emotions in the long-term. It’s important to keep the price evaluation professional and realistic.
- Staging is important for sellers. Sellers have one chance to make a first impression. An agent can help his/her seller understand the importance of staging the property. With inventory competing for a buyer’s attention, it’s the property that is in show-home condition that will stand out.
- Pricing that is realistic when the property first comes on the market is just as important as how the home looks. Buyers are looking for the best value for their money and, with so many homes to choose from, they can simply move on if their first impression is the real estate is overpriced.
- A home priced right tells buyers and other agents that the seller is serious about selling. Sellers who set a high price initially and then drop the price later risk sending the wrong message.
- Sellers who price high and then consider a price reduction later are gambling with their time and money. Their property may be on the market longer. It is important to send the right message to the right buyers from the very beginning.
Setting Buyer Expectations in Either Market
Research confirms that buyers undervalue properties more than not. Bringing a sense of reality to buyers’ wish lists is a good place to start.
- ¨Shock therapy” can be used by showing the buyer exactly what properties are at the price he/she wants to pay.
- Honesty about the market is better than saying anytime is a good time to buy. This statement is simply not true.
- Agents and buyers need to be realistic. When investors are heavily involved in a market, it’s a tough time for a less experienced buyer.
- Seller psychology is important to understand. Insulting a seller closes more doors than it opens. Lowball offers or excessive requests for concessions and repairs to the wrong seller will kill a deal.
- Buyers deserve to know what kind of market they are entering and whether low offers will be accepted or denied. The buyer´s price expectations need to be as realistic as sellers.
- Some sellers can be emotionally attached to their homes and to improvements they’ve made. Coming in ridiculously lower than the list price may be taken as an insult, and no counter will be forthcoming.
- There are times to lowball, but this has to be carefully thought out by the agent and his/her buyer first.
- Buyer budgets need to be respected. High-end amenities and beachfront or ocean view raise the price. A long list of granite countertops, expensive appliances or a private pool may not be in the buyer´s budget.
- If a buyer does not want to do any repairs or upgrades, make sure he/she realizes that paint and cleaning may make a world of a difference and be cheaper to do than he/she thinks.
This article is based upon legal opinions, current practices, and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend each potential buyer or seller of Mexican real estate conduct his/her own due diligence and review.