Cosmo and Real Estate
The media is constantly talking about real estate, sometimes doing much more harm than good. I've written about this many times. Here we are with the media again, delving into the area of real estate. Their wise editors dispensing invaluable tidbits of advice that the masses absorb like manna from the sky...
I'm in my doctors office the other day, and before she comes in I read a short blurb about real estate in Cosmo. That's right, good old Cosmopolitan magazine and their experts on real estate have truly contributed. The article was aimed, I would presume, at first time homebuyers because the title was something like "should you buy a home by yourself". We are seeing increasing numbers of singles investing in homes, so the article was certainly timely. The wisdom that they shared was along three main themes:
1. Don't get too excited in front of the agent, it would lead to a higher sales price.
Instead of dispensing the wisdom of getting a Buyers Agent, they are basically leading the potential buyer to distrust everyone in the transaction. Don't let the listing agent show you the property if you want to avoid this downfall and interview and trust the Buyers Agent that you pick. As a Buyers Agent I enjoy seeing your enthusiasm for the home. BUT it doesn't come into play when I negotiate the house price for you. As a matter of fact I feel like it's my role to take your rose colored glasses off and point out potential resale problems and maintenance issues. Typically the more excited you, the client, gets, the more I do this to ensure that you are making a wise decision.
2. Don't let an agent pressure you into making a decision on a house right away. Walk away if this happens.
In general I can see the wisdom of this advice. What they arent' taking into account, however, is that our first time homebuyers (their presumed audience) are in the lower price brackets as a whole. With my first time buyers I'm typically helping them with homes under 120K. This is the price range that we have the most buyers in and the fewest homes. Excellent homes in great condition are sold within hours sometimes. I typically tell my buyers on the good homes that they might want to make a decision, otherwise the decision will be made for them. As long as they realise that the house that this is a risk I'm OK. I just don't like those phone calls two days later that say "we've decided" and having to explain that the house is no longer available. I've also seen times when being the first to offer really pays off. Not too long ago I representated a buyer who put an offer on a house within a day of it being listed. The weather was awful during that time and I think that kept other potentials away. Our offer was negotiated and we got $2000 off list price. The listing agent later told me that she had four other agents want to bring her offers afterwards. (I knew two agents that tried to bring offers, so I don't doubt it!). If they would have waited it would have escalated into a bidding war and my client would have paid more for the house. BTW, if we're looking at 300K homes, I would have a completely different attidude!
3. If the home has been on the market 6 months or longer offer 10% less than asking at a minimum.
Again, here we have a generalization. Absolutely, if the house has been on the market for 6 months we have more negotiation room. We have to factor in several details though... Has the house had improvements in the recent month or two? If they were putting off adding new carpet, replacing old fixtures, adding ceramic tile and then they made the improvements this doesn't apply. Has the house had price reductions since it was listed, and how recent were those? If the price was originally $160K and they are down to $140K then we might find the 140K value to be good.
A far better strategy is to find out about the house first. What do the tax records say is the appraised value? Around here that tends to be running at around 90% of sales value so this might give us an indication. Pull comps and find out what other homes have been selling for in the area price per square foot. Make sure you are comparing apples to apples, look for square footage simularities, simularities in condition, finish out and age of the home as well. You might actually find that only offering them 10% less than asking could be overpaying, or that you are getting a fantastic deal in the first place because they stubbornly refused to paint that front bedroom and nobody liked the shade of purple they used.
Generalizations don't belong in real estate as a whole. My genuine belief is that Cosmo doesn't belong in it either!