Watch on your mobile device >>
We have all heard the old saying about real estate that goes, “Location, location, location”, right? The idea behind that statement is that location is the most important factor in a real estate transaction. While location is a critical factor in determining whether you want to live in a particular house or not, it is not the most important criteria when it comes to choosing a home.
The Price is Right
One of the biggest mistakes that I often see buyers make is thinking that the listing price has any relationship at all to the value of a home. I even see some newer or inexperienced agents making the same mistakes as well. For instance, I get questions all the time about what “equation” a person should use when making an offer, as if there is some standard equation to use. There is not one set percentage that you should offer on a home. So, why do I say that the listing price is of little to no importance?
The Comparitive/Competitive Market Analysis
When you see a listing price on a home, it is primarily derived from the listing agent and the homeowner. Where and how they came up with this price can be very unreliable. Some agents do what they need to do in preparing a CMA (also known as a Comparitive or Competitive Market Analysis). This is where the agent will go into the MLS computer system to assess several things. These criteria include:
- How much have other comparable homes sold for in the area within the last 30-60-90 days or so? They may even look back as far as 6 months, although older information is unreliable as the market changes over time.
- What comparable homes are on the market now? In other words, who are your competitors when it comes to selling your home?
- How are the sold and active homes different from the subject property?
- What is the real estate market doing at present?
These are just some of the factors that SHOULD be taken into consideration when listing a home. However, that does not always happen.
Sometimes the seller (or even the agent) gets a price in their head that they WANT. This may not even be remotely close to the value of the home. By focusing on the listing price, buyers can waste a lot of time and money. How?
- Spending time negotiating back and forth with an unrealistic seller can cause you to miss out on other homes.- Wasting money on an appraisal only to find out that the home does not quality for financing.
- Wasting money on inspections only to learn that the home is not worth the money.
- Wasting emotional energy getting excited about a property that the seller won't negotiate on at all.
For these reasons, it is very important that you make an offer on a property based on correct information about its real value. Don't make an offer based on the list price. Your offer should always be based on a property's real VALUE. If you want more information on the best way to make an offer on your next property, call me today!
------------------------------
Choosing a Realtor That Specializes in an Area
Watch on your mobile device >>
Very often someone will know another person who is a Realtor and automatically assume that they want to work with them. Never mind whether or not they are familiar with the area that you may be considering for your new home, never mind that they may not know all the important details of the locale on a first-hand basis. What happens in those cases where the homebuyers hired Realtors from a different region? Many times these people are stuck with homes that are not entirely what they had expected. They do not get accurate pricing comparisons and they endure difficulties with contractors and vendors that could have been avoided had they used a local agent with connections. Here is what you get by selecting a real estate agent who specializes in your area:
Familiarity
This may seem overrated but it is hardly an insignificant aspect of real estate. You can work with an agent who has access to the same information that is accessible to you, but then where is the edge you get from working with an experienced Realtor? All a far-away agent can realistically do is to assist you in the formalized process associated with buying a new property. However, what will truly benefit you are the value added services that you get from a local agent who is loyal to the area.
Experience
Knowing intricate details of local ins and outs within the realm of real estate makes an important difference in the quality of deals that take place. As an example, some states may have newly introduced laws or regulations that must be contended with or possibly provide benefits to the buyer or seller.
Networking
With years of experience and community interaction, real estate agents tend to develop a solid rapport with vendors, suppliers and contractors. There is no better reference than word of mouth and hearing of proven success stories from your agent offers you peace of mind at a time when you need to focus on other aspects of your new home and the move. The preferred vendor and contractor list of most agents is usually fairly extensive, including anything from a list of General Contractors, plumbers, electricians, home inspectors, appraisers, landscapers, home stagers and more.
AccuracyAgents who know their respective areas very well have no trouble assessing the value of the home in terms of how they should price it for sale. This is also critical when it comes to negotiations and if not done accurately, can completely impact the transaction negatively. Your agent will need to be able to defend the price that has been set for the home and unless he or she has ample comparable sales data and knowledge, this can be a difficult feat. Keep in mind that usually agents are those who specialize in a specific area so your out-of-area agent might find they are going head to head with a Realtor experienced in that area, which could backfire.
~
It is critical to hire a real estate agent who not only is familiar with your area but also specializes in the vicinity. This is highly important for a multitude of reasons but the main benefit is that you will end up getting more house for less money if you are buying and you will be able to effectively sell your home, yielding the best price – given accurate valuation tools and familiarity. The ramifications of hiring an outside area agent can be great.
