Thursday, July 14, 2011

Listen to your realtor

If you listen to the "news" channels and national reports you'd think the real estate market is still in the toilet. But as a realtor I routinely remind people that national real estate conditions do not necessarily reflect local conditions. Real estate markets are very regional.

National real estate statistics will lump the entire nation's data. Perhaps that's interesting to some people, but its not really relevant to what's going on in your community. If you are buying or selling in San Francisco, do you really care what the market is like in Detroit?

Some cities/markets have a high rate of foreclosures causing the prices to decrease. Other cities/markets have a shortage of inventory. The law of supply and demand says that when supply is low, prices are higher.

To make sound real estate decisions you need to be aware of what's going on in the market where you are buying or selling, not necessarily what's going on nation-wide. A licensed real estate agent can provide you with data regarding how many homes have sold in your area, how many days on the market, and for how much of the asking price. Isn't that what you really need to know?

A few months ago I worked with a client who was very specific about the style and location of the home he wanted. To back up my first hand knowledge I also researched the multiple listing service (MLS) and advised him that the supply of that style home in that particular location was very low. After a few homes that were 'close, but no cigar' a new home popped up on my hot sheet that was practically perfect. I notified him and he made arrangements to return to the area to see the home. As I expected, he loved it. We spent an hour and 45 minutes touring the bungalow and yard, talking about furniture placement and possible future updates to the home. I provided him with the sellers disclosure and comparable home sales in the community. He wanted to sleep on it, and I advised him not to wait too long. This was the only home that met all his criteria and there was no guarantee another would turn up. A week or so later I notified him that the house was under contract. He seemed genuinely disappointed and it took all I had not to shout "I told you so!" He should have listened to his realtor.

Recently I worked with a couple relocating here from another state. They were not very familiar with the area so I spent some extra time orienting them and sharing the pros and cons of the communities in which we toured homes. They expected this to be the 1st of 2 or 3 visits to the area before finding a home they liked enough to buy, but after touring 10 homes in 2 days, they were interested enough to make an offer on 1. I learned that another buyer was also submitting an offer so I advised my clients not to start out with a low price with the idea that they'd negotiate up to an acceptable price. When multiple buyers are submitting offers, the best strategy is to go in with your best sale price and contract terms. My clients could not seem to get out of the mindset of a price that was lower than what they were willing to pay, despite my warning that they may not get an opportunity to negotiate the price if the seller accepted the other offer. They didn't listen to their realtor and offered less than they were actually willing to pay for the home. The seller accepted the other offer.

Human nature often causes people to feel responsible for getting the best deal they can, when in reality they should look to their realtor for advice on submitting the best offer they can. Realtors are not there just to unlock doors! We're there to share community and market info and strategies that will help buyers make informed real estate decisions.

A strong offer is not just about the highest price. Contract terms and financing can be important factors too. Being flexible with the settlement and possession date can be important to families who are trying to move before or after the school year starts or ends. A buyer putting down at least 20% is often more attractive than a buyer putting down less than 20% because there is less chance that the loan won't be approved when the buyer is borrowing less money. Price is just 1 component of a strong offer.

Obviously not every realtor is a good one, just like not every doctor or lawyer is a good one. But realtors are licensed and are ethically bound to represent their clients' best interests, so do yourself a favor and listen to your realtor.


Ron said...

I agree with you 100% Mark, listen to your realtor! As you know, before I moved to Delaware I contracted with a realtor to sell my house in PA. I didn't listen to the advice of my realtor and I almost went into financial disaster when I refused the first best offer (which my realtor told me would probably happen) and then I took ELEVEN MONTHS to sell at $140,000 LESS than the offer I got four days after I put my house on the market! Folks, LISTEN TO YOUR REALTOR! By the way, my neighbor (here in Delaware) has a similar Tale of Woe. He also refused his first best offer and it took months before he finally sold his house at a much lower price. Sometimes lessons are painful. Keep giving the good advice!

Homes by the Woods said...

How many houses have you sold?