The Real Estate Business is a Slippery Slope
It is essential that buyers and sellers trust and believe their experienced real estate agents whom they hire.
The real estate business has changed dramatically since the housing bubble burst. No longer does the real estate industry see homes go under contract within 24 hours. In most instances homes are sitting on the market for days and months before they are sold.
The value of homes in some states and communities has decreased to half the value of what they were purchased for five years ago. Many homeowners have to do a short sale, which is not short at all. A short sale is when the bank agrees to let the homeowner sell their property for the current market value.
Some owner’s homes went into foreclosure because their loan payments ballooned and they could no longer afford the mortgage. Unfortunately many people lost their homes because they lost income and were not able to make their monthly payments.
Whether your are purchasing a home to live in, rehab it to make money, realtors know the market better than buyers.
The cost of homes have dropped and many people who were not able to purchase homes during the housing boom can now afford to purchase a home, because homes are affordable and interest rates are incredibly low. Investors are currently finding some of the greatest bargains ever in real estate and are buying multiple properties. They are reeling in huge profits from either renting properties or renovating homes and re-selling them.
Sellers pricing your home correctly should begin the first day your property hits the market.
Experienced realtors know when homes are priced correctly to sell. Owners are who put their homes on the market still tend to think about the value of their home when it was appraised during the housing boom. Homes that may have appraised for $350k in 10 may only appraise for $275k in the 2015 housing market.
Sellers truly think that if a realtor market their home correctly that they can ge $350k or an offer close to it. Sellers need to understand that no matter how much time and effort a realtor put into selling your home buyers are not going to pay $350k for a home that is only worth $275k.
If a buyer writes a contract for $350k and they are getting the property financed, and the house appraises for $275k, that is all the lender will loan the buyer to purchase the property. Therefore, the owner is faced with the decision to sell at the $275k, or ask the buyers to give them $75k cash, or hold on to the property. Most owners think that they are giving their property away if they sell at $275k, but they are not if the property only appraises for $275k. The seller is selling the property at current market value.
The most common strategy is that owners want to start at the price they want to get for their home, rather than the actual market value. A lot of sellers think that buyers will offer less than their asking price and, therefore, don’t want to put their property on the market for its true market value for fear that they loose money on the sell of their home. What the average seller doesn’t know is that most buyers will not make an aggressive low offer on property that is new on the market.
A little secret I learned:
When homes are priced correctly they earn more money and are sold quicker.
Sellers think they can always lower their price later if they don’t get a contract. But what sellers don’t realize is that many opportunities are missed because buyers move on. The first week a house is on the market is when it generates the most interest. If the house is priced too high, buyers will move on to the next house. By the time the seller has priced the house correctly, many opportunities to sell have been lost and it means that the realtor has to generate new interest in a house that has sat on the market too long.
Buyers listen to your realtor’s advice.
Buyers have to trust their real estate agents when they tell them how much they should offer on a property. Real estate agents know the market and have seen much of the inventory that has been sold and what is currently for sale. Buyers tend to have the false perception that they can buy homes a lot cheaper than the asking price. Sometimes that is the case, but most times the price of the home reflects the true market value based on location, size, and the cost of repairs to the home. In these cases, buyers need to offer the asking price or a price close to asking in order to purchase the home.
There is a ton of information on the internet about purchasing a home, but each real estate market is different. The internet uses national statistics and not local statistics. Local statistics are more reliable for constructing offers. When buyers won’t listen to their agent’s advice and make a reasonable offer to the seller, they get very disappointed when their offer is rejected and the seller does not counter because the buyer’s offer was unreasonable.
Thank goodness for real estate agents.
Real estate agents aren’t right all of the time, but a good real estate agent is right most of the time. Buyers and sellers should trust and believe in the knowledge of the agents they hire to represent them