According to the National Association of Realtors® Profile of Home Buyers and Sellers 2017, 52% of sellers traded up and purchased a home that was larger in size than what they previously owned.
Let’s call this segment of sellers “Move-Up Sellers” — and in this blog post, I’ll show you how to take advantage of the huge opportunity they present.
In fact, these sellers present more than one opportunity because oftentimes, you’re lucky enough to serve as both their listing and buyer’s agent.
NAR® data show that sellers typically live in their homes for 10 years before selling — the most commonly cited reason for selling a home was that it was too small.
Knowing this information, these leads are pretty easy to track down.
How to Find “Move Up” Sellers
I used a data collection site called Melissa Data to collect leads in this niche.
To the right of the page, click the link that says “Create an account now.” Create a free account, and verify your account with the confirmation email they send you.
Once you’re registered, you can sign in and begin putting together your list.
Under the “Products” tab, select the option that says “Sales Leads & Mailing Lists.”
On the next page, select the option for “Property Owners.”
Then, click the link that says “Build List Now.”
On the next page, click the blue button that says “Create a New Property Owner List.”
As I built my list, I used the following options:
- Zip Code: 80920
- Property Type: Single Family Residence; Condominium; Apartment; Duplex/Triplex/Quadplex
- Bedroom + Bathroom: 1-3 beds, 1-2 baths
- Square Footage: Max 2,000 square feet
- Last Sale Date: From 1/1/2008 to 1/1/2011
- Absentee/Owner Type
- Absentee/Owner Occupied: Owner Occupied
- Household age: 25-34 years old; 35-44 years old
- Household age: 25-34 years old; 35-44 years old
After each of the above selections, be sure to click the button that says “Add filter.” This applies your selections to your final list criteria.
For this particular zip code, I was able to collect 89 records. You can also expand your search area by searching for a particular radius or a full county.
Once you’ve made all of your specifications, name your list and click the yellow box that says “Purchase” under the green section to the right that says “Job Summary.”
This will take you to the final confirmation and payment page. This particular list cost me $12.02. (There is a minimum order of $50, so you may want to expand your search area or collect other leads at this time.)
You can choose to download your list in a number of formats — I chose an Excel spreadsheet.
Once I finalized my transaction, I was immediately given a link to download my data. You’ll also receive an email to download your data within about 20 minutes.
If you want to verify the ages of the property owners you’ve pulled, you can enter their names into Intelius.com. You can also search Trulia.com to see when the home they own was last sold, and for how much.
Why did I choose these specs?
Because we know that sellers typically live in their homes for 10 years before selling, I chose a range of 7-10 years from the last sale date. You can adjust this range depending on your area and your previous experiences working with Move-Up Buyers or Sellers.
I also chose the household age as between 25-44 because this is the most likely group of sellers to be upsizing. Yes, most of the younger people in this range will have just bought their first homes, but filtering the last sale date between 7-10 years ago, you should eliminate the youngest sellers.
According to NAR®, buyers ages 35 to 44 bought the most expensive trade-ups this year. They usually traded up to a home that was $90,000 more expensive than the home they sold. Buyers 44 years and younger also typically purchased a home 600 square feet larger than their previous residence.
Why Bigger is Better
Chances are, when you reach out to these leads, they’ve already considered, possibly on more than one occasion, the thought of moving to a bigger home. And, if they haven’t, you can show them why they should.
Let’s break down the possible selling points of owning a larger home, as well as the possible objections you’ll get from potential sellers (and how to counter those objections).
Selling Point: Bigger homes have more storage.
One of the most irritating things about owning a small home is the lack of storage space. “Stuff” can accumulate pretty quickly over time, especially in homes with children.
Small homes often lack adequate cabinet and closet storage, which means homeowners constantly have to clean out their homes, or even rent storage spaces to keep everything they don’t want to part with.
Selling Point: More space means kids don’t have to share rooms.
Expanding families need more rooms — it’s a simple fact.
If a family of 5 is living in a 3-bedroom home, that means two of the siblings have to share a room. And while this might work fine for some families, it often means more sibling disputes and a lack of space for each of those children to keep clothes and personal items.
Depending on the size of their upgrade, some families may even get enough bedrooms to have a guest space.
Selling Point: Bigger homes include bonus spaces.
Most starter homes include just the standard rooms almost every home has: bedrooms, bathrooms, kitchen, dining room, living room.
When you upsize your home, not only do the room sizes grow, but you often get additional spaces and features you didn’t have in your smaller home.
Some of those features include:
- Finished basements
- Office spaces
- Walk-in closets
- Master bathrooms
- Screened-in porches
- Mud rooms
- Extra garage space
If your leads are currently doubling a living room as a playroom, chances are, they’ll be ecstatic at the idea of having two separate defined spaces.
Objection: I can’t afford a bigger home.
This is the big one, and the hardest objection to overcome. Sometimes, people simply can’t afford to upsize their homes, no matter how much they may want to do so. Your job is to help them realize the financial leap doesn’t have to be as major as they think.
1. Show them how much money they can receive for their current home if they put it on the market.
If they bought their starter home 10 years ago, chances are, they don’t know exactly how much it’s worth today. Come ready with a Comparative Market Analysis of their home, and you may just convince them the extra money they pocket can make their dream home affordable.
2. Break down the price of the new home into mortgage payments.
Presuming current rates of 4.5% on a 30-year mortgage, a monthly payment per $10,000 is about $50. So a $20,000 difference in purchase price is going to drive a difference of about $100 a month in mortgage payments.
Sometimes, when buyers see a big sticker price, they automatically think they can’t afford it. But if someone selling a $250,000 house wants to purchase a $300,000 home, their mortgage payment will only increase by about $250 per month. An increase of $250 a month seems a lot less daunting than $50,000 overall.
3. Show them larger homes currently on the market at a variety of price points.
No, they may not be able to afford a move-in ready mansion with a theater room and heated pool, but they may be able to afford a larger 4-bedroom house that needs just a little TLC.
If you have larger listings on the market with other clients, this is a great opportunity to sell your leads on your own inventory.
4. In many cases, the Move-Up Sellers are selling in a seller’s market and buying in a buyer’s market. In other words, the market for starter homes is hot in just about every part of the country. But, in many areas, the Move-Up market is soft. These sellers get the best of both worlds on their sale and purchase.
Objection: More space means more work.
Many people assume that owning a larger home means more time spent cleaning and maintaining it. But this isn’t necessarily true. Smaller homes have less room to store all of the items that people accumulate over the years.
So where does that stuff inevitably end up?
It ends up in junk drawers, in piles on countertops, in random storage containers, or in closets they can no longer open without everything falling out.
Bigger homes might come with more space overall, but they also come with more space for smart storage, keeping the clutter hidden and out of the way.
Seal the Deal
If you’re unsure how to approach these leads, the best technique we know is warm calling.
What is warm calling?
It involves giving potential clients something of value ahead of time — like a book — that solidifies you in their minds before you ever call them. Books hold an inherent value, and published authors hold a certain esteem in the industry they represent.
When you give potential sellers a book with your name and picture on the front, they aren’t likely to throw it away. Whether they look at it right away or come back to it when you follow up, you’ve already established a strong impression in their minds.
Your membership includes:
- License to use 14 real estate books as your own.
- Author website that ranks in Google.
- Your own blog with 100+ pre-written articles.
- Social media marketing templates.
- Home value website for capturing leads.
- Training strategies on how to use your books to get business.
Joe Nickelson is a real estate professional dedicated to helping home buyers and sellers achieve their dreams of owning property, and helping real estate agents stop using the sometimes-vicious tactics that weigh on their consciences. He believes that the Smart Agents books will, quite literally, change people’s lives for the better. Check out his full bio here!