Urban Legends and Real Estate
I am often struck by the fact that everyone and I mean everyone thinks this real estate thing is simpler than it is…
There was the PHD that got her real estate license a couple of years ago and joined our office. She went around to every solitary soul and asked what the system was that produced the money for her to make. The answer over and over again was the same… hard work and persistence, know your business and share what you know with people that want to know it. She didn’t buy it, she was convinced that there was some magic bullet that would just make the money appear in her bank account. “I’m a Physicist” she’d say “everything is systematized.” Needless to say, she went back to academia after about 6 months.
Then there are the clients I work with that have the “rule of thumb.” Either they ask me “how much less than asking could I get a house for?” Or they share their homespun wisdom. “My Aunt Maud says that you should always offer $10,000 or 10% less than the asking price.”
The $10k or 10% is interchangeable; it mostly depends on the price range. Either way, it could be completely disastrous.
Let me dispel the myths right now. And let me do it while I still have the picture in my mind of the couple I just had in my office tonight. They have a very nice home, are very motivated to sell it, and were offering it at a “break even” price… well below market value. And Aunt Maud just helped write the offer I had to present to them tonight.
Here it is straight and simple. Sometimes, a good deal is a good deal. Offer prices are a subjective thing that should be handled on a case by case basis. What a savvy buyer should do is have their buyer’s agent, find out and share with them what similar homes are selling for in the area. You might even call it a Market Analysis. The result will be, you will know if it is a good deal or not.
For example:
The house of your dreams is listed for $200,000. Your agent does a Market Analysis on it and finds out that other homes like it have sold recently for $150,000. Aunt Maud just lost you 30 or 40 Thousand Dollars, depending on whether she is a percent or a dollars aunt.
Example 2:
The house of your dreams is listed for $200,000. Your agent does a Market Analysis on it and finds out that other home like it have sold recently for $250,000. You listen to Aunt Maud and the seller tells you to get lost, and sells the house to another bidder for full price. Aunt Maud cost you the house of your dreams and a whole boatload of instant equity.
I know these are extreme examples, but I am trying to make a point here. The point is this. There is only one rule of thumb when you are buying a home. Get a good, competent, honest buyer’s agent to work with you and verify value when you are ready to make an offer. There is no shortcut, there is no magic formula. Just smart shopping and good representation.
There was the PHD that got her real estate license a couple of years ago and joined our office. She went around to every solitary soul and asked what the system was that produced the money for her to make. The answer over and over again was the same… hard work and persistence, know your business and share what you know with people that want to know it. She didn’t buy it, she was convinced that there was some magic bullet that would just make the money appear in her bank account. “I’m a Physicist” she’d say “everything is systematized.” Needless to say, she went back to academia after about 6 months.
Then there are the clients I work with that have the “rule of thumb.” Either they ask me “how much less than asking could I get a house for?” Or they share their homespun wisdom. “My Aunt Maud says that you should always offer $10,000 or 10% less than the asking price.”
The $10k or 10% is interchangeable; it mostly depends on the price range. Either way, it could be completely disastrous.
Let me dispel the myths right now. And let me do it while I still have the picture in my mind of the couple I just had in my office tonight. They have a very nice home, are very motivated to sell it, and were offering it at a “break even” price… well below market value. And Aunt Maud just helped write the offer I had to present to them tonight.
Here it is straight and simple. Sometimes, a good deal is a good deal. Offer prices are a subjective thing that should be handled on a case by case basis. What a savvy buyer should do is have their buyer’s agent, find out and share with them what similar homes are selling for in the area. You might even call it a Market Analysis. The result will be, you will know if it is a good deal or not.
For example:
The house of your dreams is listed for $200,000. Your agent does a Market Analysis on it and finds out that other homes like it have sold recently for $150,000. Aunt Maud just lost you 30 or 40 Thousand Dollars, depending on whether she is a percent or a dollars aunt.
Example 2:
The house of your dreams is listed for $200,000. Your agent does a Market Analysis on it and finds out that other home like it have sold recently for $250,000. You listen to Aunt Maud and the seller tells you to get lost, and sells the house to another bidder for full price. Aunt Maud cost you the house of your dreams and a whole boatload of instant equity.
I know these are extreme examples, but I am trying to make a point here. The point is this. There is only one rule of thumb when you are buying a home. Get a good, competent, honest buyer’s agent to work with you and verify value when you are ready to make an offer. There is no shortcut, there is no magic formula. Just smart shopping and good representation.
posted by Tim Hall | Tuesday, September 19, 2006
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