Archive for the ‘Real Estate Articles’ Category

Webster defines Science as “a branch of knowledge requiring systematic study and method.”

Five years ago, pricing for a home was determined by a different method. Those days, it was more throw a price out there and wait to see how many offers it attracted. Sellers wanted to list above what their neighbors sold for, buyers were afraid they wouldn’t get the house they wanted so they were writing escalator clauses. Many houses sold for more than the list price. Those days are gone and we probably won’t see them again anytime soon.

Today, list price strategy and offer price strategy are more systematic and back to the old tried and true methods. Comparable sales, location, size, layout and condition are the key elements that we work with. Read the rest of this entry »

Continuing with the Art of the Deal, let’s explore some examples of negotiating techniques that work and those that don’t. The last few years have been seen buyers in the driver’s seat. If a seller wanted or needed to sell, they felt lucky if someone was interested their home over the others available. Buyers felt great power to name their price because if this house didn’t work out, there were so many others to choose from. This kind of “Win-Loose” strategy doesn’t work out in the long run. Buyers came in with unreasonably low numbers, sellers got insulted and an adversarial relationship was set up. If the buyers came closer to the seller’s price, the inspection response would come back with work requests that were closer to what the buyer wanted to pay and the deal usually fell apart. That wasted time and energy on both parts and nothing worthwhile would come from it. As an example, we had a listing that was priced at $875,000 in a desirable neighborhood with a great house on a great lot. A buyer offered $800,000 in a written offer. We are obliged to present any written offer to a seller. The seller countered with a reasonable counter offer to express interest in selling, but the buyer wasn’t interested in negotiating. The buyer was interested in getting a great house at a price that would qualify for the tax credit, which capped at $800,000. This strategy was a waste of time and energy on everyone’s part.

A better strategy is to have a “Win-Win” attitude where a buyer gets a great home at a great price and the seller can move on with their life. We recently had a listing that had been on the market for a considerable amount of time. Two buyers made offers on the property and both were contingent. The seller picked one buyer that had a property that we all thought would sell faster than the other property. Well, the buyer that lost out sold their property in a week and came back to make another offer on our listing. In the end, the buyer got the property they wanted, the seller got a fair price based on the current market and we had happy clients on both sides. Now, when the buyers have a question about the property, they can easily speak to the seller and live happily ever after. THE END
Next month… The Science of Real Estate

This is the first in a series of articles that talks about key elements surrounding real estate transactions, as we see them.  In order to understand something like real estate investing (which is what you do when you buy a home), you must break it down to some simple elements, see how they fit together and develop a plan that helps you come out ahead when you sell down the road. We believe that successful real estate investing is part Art, part Science and part Timing.  You can also think of it as a three legged stool.

Let’s explore the Art of real estate.  There are two main elements are: ‘beauty is in the eye of the beholder’ and ‘the art of the deal.’  What a home looks like when a buyer drives up is critical.  If they are a typical buyer, they have too much to do in their lives to do lots of fixing.  They want to drive up to a home that is nicely landscaped and they can see if it is easily maintained by themselves or a landscaper.  The other kind of buyer is happy when the house looks shabby because they feel that they can build instant equity by fixing it up.  These days, there are fewer of these buyers around. Except for more wealthy clients, most people need two incomes to purchase a home, their free time is important to them and they don’t want to spend all their time working in the yard.

On the inside of a home, how it looks is also critical.  If it is neat and tidy, the buyer automatically assumes that it is well maintained. If the paint is poorly done, the cabinet doors are scarred or it isn’t very clean, a buyer gets suspicious about maintenance and what they can’t see.  If there are stains on the ceiling, the roof may leak and if a seller hasn’t addressed it with a repair or new ceiling paint, the buyer gets a negative message about maintenance.  On the other hand, this is what an “investor” is looking for. An investor can see the difference between cosmetic problems and structural problems and make an offer accordingly. 

The moral of this story is, make your home as attractive as possible in this market.  Buyers have lots of houses to choose from, you want the majority of buyers to want your house and pay the highest price the market will support.  Next week – the Art of the Deal. How win-win is the best strategy for getting the house you want at the price that will work.