Archive for the ‘buyer advice’ Category
Thursday, March 24th, 2016
Many agents and home buyers are aware of the current shortage of homes for sale in many areas. In California there is currently a 4 month supply of homes, where 6 months is the norm and heading into the Spring it usually is higher. When desirable listings do come onto the market there is a rush of activity and often a quick sale. What will happen to the normally busy Spring selling season if inventory levels do not grow?Â
With interest rates still low and inventory levels down, it is more important than ever for buyers to be as prepared as possible to write a successful offer. Before buyers even start looking at homes, it is important to make sure to do the following:
1. Get preapproved. This is essential. You need to speak with a mortgage professional and get preapproved – not just prequalified – so that you know exactly how much of a loan you can afford and what you will need for a downpayment. There are different products out there so make sure you know which loans will work best for your circumstances. Talk to a qualified mortgage professional and get the preapproval letter before you start home shopping so you are ready to make an offer.
2. Find a good real estate agent. It is great to look at homes yourself online – in fact I always encourage doing so – but to have a skilled agent on your side provides you with an edge. Local area agents often hear of listings before they hit the market, or may even have “pocket” listings (contracted upcoming listings that are not yet on the MLS) themselves. Also, when a listing is on the MLS there may be important confidential agent remarks listed (that only MLS subscribers can see) that could help you prepare in writing an offer. Finally, some third party real estate sites do not list new properties immediately because they don’t sync directly with MLSs, so you may miss out on new listings that other buyers have already seen – even a day can make a difference in a tight inventory market.
3. Write the strongest offer possible. Depending on the circumstances you need to be ready to write the best “on-paper” offer possible, especially in situations where there are multiple offers on a property. Of course, you may not be able to compete with some things (for example, if another buyer is a cash buyer or offers over asking price when you are not qualified to do so), but it is still important to make the offer look as good as it can. This is another reason to have a strong agent on your side – she or he will advise you of the best tactics after assessing the situation, the comparable sold properties, the market and speaking with the listing agent. Your offer still may not be chosen, but there is a chance the one that is chosen could fall through, so you want to be the next best.
4. Be Ready! Make sure you are accessible by phone/text and email, and that you are able to view properties as soon as possible once they list. If a property lists on a Thursday and it looks like a home that meets all your criteria, waiting until the weekend to view it may increase the competition. Even in cases where the seller wants to wait the weekend to evaluate offers, getting yours in first could put you in a better position.
5. Keep an open mind. Check out homes that you may not necessarily find appealing on line, or may not be in your preferred neighborhood. Sometimes buyers reject seeing a listed property, only to later realize that it could have been a great home for them. Pictures can be deceiving, and for the right price a home that needed something to make it “perfect” – like a little updating, could be a great home for you at the right price. The same goes for a home outside of your desired neighborhood.
Thursday, February 18th, 2016
The concept of dual agency – where a listing broker also represents the buyer in a real estate purchase transaction – has been a subject of contention for a long time. Most listing agents dream of representing both the seller and buyer, as it leads to a bigger paycheck in the end. Of course there is a lot of paperwork both sides must sign to indicated that they are aware of the dual agency – this of course is designed to protect not only the parties to the transaction but also the agents and brokerages (hint hint: to try to prevent lawsuits).
Opponents to dual agency – and I happen to be one (in most cases) – argue that the listing agent’s first duty is to the seller, and that can hurt the buyer in the long run. Here are 3 reasons why buyers really should have separate representation when purchasing a home:
1.Â Allegiance to seller first: As a representative of a seller, an agent has a duty to uphold the sellers’ best interests. A buyers’ agent has the same duty to the buyer. If one agent represents both parties, you can see how this could be a big problem for one party – and the buyer is the one who usually gets the short end of the stick. For example, let’s say the seller tells the listing agent something about their situation that will affect the price or other aspect of the sale. The buyers’ agent’s job is to get the best price for the buyer, but the listing agent’s duty to the sellers (to not disclose confidential information that could affect price or other key components of a sale) clashes with the duty to the buyers – how can you get the best price for your buyers if you cannot tell them what you know on the seller side that could help them? Someone is getting left in the cold, and it is almost always the buyer.
2.Â Negotiations: The agent is often privy to certain information that will help in negotiations on behalf of the seller, such as the sellers’ bottom line price or other information that could assist in negotiating on their behalf. As mentioned above, this could detrimentally affect the buyers’ negotiating powers because the agent’s first duty is realistically to the seller. It is imperative that buyers have a representative who looks out for their best interests exclusively.
3.Â Agent Misunderstanding. As you can see, there are big problems in representing both parties. One of the biggest of all, unfortunately, is that many agents do not understand the legal ramifications of doing so. Many brokers do not oversee these sales closely enough, and the agents are left to handle them to the best of their abilities. This can and does lead to lawsuits down the road if the agent is not careful what s/he says or does, discloses or doesn’t disclose. You can see how it is the buyer who will suffer.
While I am a proponent of separate representation for the buyer and seller in a real estate transaction, there are situations where dual agency can actually be a benefit for all parties involved (commission alone should NEVER be a reason for an exception). One example is where the seller is financing part or all of the buyer’s purchase. The dual agent can be instrumental here in figuring out details. Of course, separate agents for each party can also do this. Some other situations do make sense at times, but the bottom line is that if you are a buyer you should have someone looking out for your best interests first and foremost. When you call a listing agent about a property their goal is to sell it. With a buyer’s agent that person’s goal should be to sell you the home that best meets your needs, with the ability to represent your interests exclusively.
If you are in the market to purchase a home or income property, strive to find an experienced and informative area agent to assist you – one who has strong negotiating powers and a keen sense of the legal aspects of the sale. If you do find yourself in a dual agency situation, make sure you involve the agent’s broker so that your best interests are not jeopardized.
Thursday, January 21st, 2016
The real estate business has definitely evolved over the last few decades, with the growth of technology being the main contributor. But when it comes down to it, working with a real estate agent is not just about finding a savvy salesperson, but rather it is about finding someone who truly has your best interests at heart and is willing to work hard to find the right property or sell your home, at the right price, with the best terms. It is not so much a sales relationship as it is a trusted adviser relationship. An agent plays many roles throughout the buying and selling process – researcher, chauffeur, adviser, negotiator, paperwork coordinator, and therapist – to name a few.
As they always will, many people try to come up with ways to find and convert “leads” to clients, from advertising to cold calling to handing out cards to people all day long and asking for referrals from past clients, friends and family members. In the last year I have seen some interesting attempts to woo potential buyers and sellers, and although I am impressed with those who are trying hard, I must say I have been surprised at some of these methods:
1.Â Recorded Calls: I received my first recorded sales call from a real estate agent last year. I was surprised because the agent, who had a lot of enthusiasm, sounded like he was trying to sell me a used car. He went on and on about how he could help me buy or sell a home, and about his strengths as an agent. Now, I must say that selling real estate is not difficult – anyone can do it. BUT not everyone can do a great job at taking care of the PEOPLE, the clients. I have always said that this business is not about houses, it is about people.
2.Â Print Marketing: Marketing via mail and email has always and will continue to be a very strong way for the real estate agent to get business – s/he creates a lovely flyer or brochure and lists skills and past sales and testimonials to make her/him look amazing. S/he even uses words like “Number 1 agent” and “Top agent,” “sold more homes than anyone else.” The trick is that many agents can say these things by putting a spin on the information, and these statements can be true.
Many of these advertisements actually constitute ethical violations in my opinion (and I have been trying to get the rules changed to prevent this, but that is another story). For example, if you are a broker who oversees say 30 buying agents, and among those agents your brokerage or team sold 100 homes last year, how is it ethical for you yourself to claim you sold over 100 homes last year – you did not do that personally, your agents contributed many of those sales. But to the average homeowner who receives your marketing piece, you look like you have done more business than anyone else. Glossy marketing pieces with claims to being “the top producer” do sway the average Jane and Joe many times. Like the political arena, I think that if agents are going to make claims like this they need to explain the truth behind the claims.
3. TV Commercials and movie theater advertising: These types of marketing can also be valuable, but again the time is limited and the agent has only a few moments to convince you of how incredible they are at their job. There is no fine print – but if it gets you to remember their name and call them then the piece has achieved the goal set by the agent. Again, anyone can make a great marketing piece that makes them look like the best agent ever – and of course that is what all salespeople try to do.
4. Broker Calls to Agents About Homes “Coming Soon” to the Market: This newest method is interesting, and is aimed at local area agents. A broker has an agent make calls to other agents’ voicemails, reading from a script about a home that is not yet listed on the open MLS but soon will be – they tell the agents (it seems agents are chosen based on who sells the most in a given area – not all agents receive these calls) that they are giving them a chance to show the property to their buyers before it hits the MLS. Now, if you happen to be an agent working with a buyer and get a call describing the perfect home, this could be a win-win for your client. But if you are an agent and do not get that call, or if you are a buyer looking online and waiting for the perfect home to pop up, you are truly at a disadvantage in such a situation. So this can be a good or poor method of advertising, depending on how you look at it.
5. “Coming Soon” Listings Posted on Third Party Sites: There are some third party sites (such as Zillow and Trulia) that allow agents to post “coming soon” listings. Not all agents can do this – they must pay to become an elite member of these sites, and then they have the “privilege” of posting such properties. It’s great for the agents – they likely get at least some calls from potential buyers – but for those buyers who are not looking on those sites they get the short end of the stick if the home sells before hitting the MLS. Similarly, agents can send out e-flyers or emails about listings that are coming to the market soon, and if this is done fairly (sent to ALL agents in a county), then that is a great advertising tool. It is not fair to the potential buyer who is not working with an agent and who waits for properties to list on the MLS, but of course this is just one of the many benefits of working with an agent (we tend to hear about up and coming listings from many industry sources – agents, appraisers, lenders, sellers, etc.).
From my perspective I believe that all agents should be able to advertise and “sell” their services and skills. But I think there are 2 rules that need to always be adhered to by real estate agents and brokers: 1. Keep it classy. 2. Be honest and ethical. If the local real estate associations who govern agents and make rules set out to make the rules stricter, I think it would be beyond valuable to potential buyers and sellers.
If you are looking for a real estate agent, remember to get the full picture – what can s/he do for you that is different from other agents? Make sure you will not be just a number – some agents have teams of people working for them and they represent many clients – if you like this than great, if not you may want to look for an experienced agent who treats you like you are the only client. Everyone has different needs, so make sure you get all your questions answered and find the person who is best able to help you; shiny materials and boasts about being a “top producer” should play into your decision minimally (although you do want someone who can sell your home with strong marketing and advertising abilities), but you need to feel comfortable with the person and what s/he can offer you.
Monday, November 30th, 2015
Winter is a busy time of year for people – the holidays are here and there are so many things to accomplish before the end of the year. You may wonder how people think about real estate at such a busy time, but believe me they do! Many wonder whether it is a “good”time to buy or sell a home now, so here are some things to consider.
Buying a Home at the End of the Year
1.Â Less inventory to peruse. There is typically less inventory to see at this time of year, as busy homeowners focus on holidays and accordingly wait to sell or take their homes off the market.
2. Serious sellers could = lower prices. Those who do have their homes on the market need or want to sell, and are not deterred by the holidays and slower traffic. This is a great situation for buyers, as they may be able to negotiate better prices.
3. Less Competition. With fewer buyers out looking at homes it makes it a great time to be a buyer.
Selling a Home at the End of the Year
1.Â Less competition inventory. There are typically fewer homes on the market during the winter/holiday season, so it is a great time to market your home.
2.Â More serious buyers. Unlike summertime, when there seem to be a lot of “looky-loos,(especially if you live in a beautiful area like San Diego where there are a lot of summer tourists) ” buyers out looking at homes at this time of year tend to be more serious and ready to purchase.
Buying a Home in the Spring/Summer
Buyers who wait until Spring to start their home searches tend to encounter:
1.More inventory to choose from
2. More buyer traffic, which could mean more competition and multiple offer situations
3. Prices tend to be higher
4. Shorter market times, which means less time to really look around and make a decision.
Selling a Home in the Spring/Summer
1. More inventory on the market, thus more competition
2. Prices tend to be higher
3. A larger buyer pool
The best time for you purchase a home will depend on many things. Make sure also to check with your accountant to see if there are any benefits for you that could affect your purchase window.Â Whenever you decide to purchase, make sure you do your homework and contact an experienced agent to assist you. Happy shopping!
Thursday, November 12th, 2015
Home owner associations (also called HOAs) can become a big part of the buying decision for home buyers – some love them, some despise them. If you live in an area where there are many neighborhoods that have HOAs, or if you are thinking of moving to one, you may wonder whether they are positive or negative.
Let’s take a look at the pros and cons of HOAs, so that you can decide for yourself.
– Expenses keep the neighborhood and any common areas (streets, landscape, lighting) looking their best, which keeps property values higher. Without a governing body things could get sticky if neighbor participation is needed to fix problems.
– They protect you from having to live with unattractive decisions made by your neighbors (putting a car engine back together in the driveway, painting a garage or front door an unsightly color, dead landscape, neglected painting, siding, trim, etc.). Noise abatement, fire setback landscape maintenance rules, and other rules help keep you sane and protected
– Pet restrictions may save your hearing if your neighbors have dogs that bark a lot or use your yard as a toilet
– HOAs mediate disputes amongst neighbors. If your neighbor’s dog barking wakes you up, or if they over-water landscape and it runs into your yard – or many other types of problems that may arise – the HOA is there to reach out to the neighbor and try to resolve the issue for you. This can save your sanity and prevent strained relations with your neighbors.
– They can be expensive
– They dictate what you can and cannot do on your property (e.g landscape plans, paint choices, structural changes)
– There may be pet policies that restrict types or numbers of pets one is allowed to have on the property
– HOAs can place a lien on your property, or even force a foreclosure in some cases, if you do not pay your dues on time, which can create problems if you decide to sell your home. It can also affect your credit.
– Dues can be increased at any time, especially if there is a big ticket item that needs to be repaired (e.g. if there is a community pool and it needs to be resurfaced, or a clubhouse that needs a new roof).
The bottom line is that HOAs have both good and bad points. You have to give up some freedom to live in an HOA community, but you also can rest assured that neighbors won’t do crazy things to their properties (or at least won’t be able to get away with it) that can affect the value of your home. Also, not all HOAs are equal – some may be very good at management while others may not.
Before you consider buying a home in an HOA community you should do the following:
- Ask the neighbors how they feel about the HOA, and call them with any questions you may have.
- Make sure to read through all the HOA material you will receive from escrow, so you understand the rules and regulations you will be subject to as a homeowner – this caused one escrow to be cancelled in my years working as a real estate agent.
Thursday, September 10th, 2015
Recently I had a sale fall apart at the 11th hour, and it could have easily closed had the buyer’s agent been in constant communication with his client’s mortgage professional. It was very frustrating for my seller, who was trying to accomplish a 1031 exchange and close the sale prior to closing a purchase – she ended up canceling a sale after issuing a notice to perform and close escrow. This could have been prevented, but a few people dropped the ball, including the agent.
If you are a buyer’s agent, please read on. If you are a buyer, also please read on and make sure your agent is doing his/her part to assure you close escrow on your next home.
If you are a buyer’s agent you must stay in constant communication with your buyer’s mortgage professional. You can never sit back and assume things are going smoothly. It is NOT the listing agent’s job to chase your client’s mortgage professional.
All buyer’s agents need to do the following in every sale, even if the mortgage professional seems to be on top of things – because the minute you know there is a problem, the better chance you have of helping to remedy it.
- Call and email the mortgage person immediately upon getting an offer accepted – introduce yourself and provide all your contact information.
- Forward the contract and related documents to that person right away, including a synopsis of deadlines (I like to email this and highlight it – even though the mortgage professional will have all the information in the contract, it helps to remind them).
- Check in with the mortgage person several times a weeks to get a progress report, or let him/her know right off the bat that you would like a progress report emailed to you on Tuesday and Friday, even if there is not much to say. If you don’t get it, call or email.
- Make sure you get any further documentation to the mortgage professional right when it is requested.
If you already have a relationship with a preferred lender you know how that person works, and that will undoubtedly help you and your buyer. I know when I am working with my preferred lender, and a few others out there who have great communication skills, that I will always know what is going on with my client’s loan and there will be no surprises.
As the old adage goes, no one can do it better than you can do yourself – so buyer’s agents: please take those words to heart and make sure you are on top of your transactions. You will make your clients very happy in doing so and you will be more successful.
Tuesday, August 25th, 2015
Lately it seems the great listings are commanding multiple offers, and selling quickly. For buyers who have been searching the market for some time this can be frustrating, as a good looking listing can often sell at a higher price and the buyer is forced to compete with many others, some who may be better qualified on paper. So what is a buyer to do?
Here are some great negotiation tactics that might help your offer be accepted:
1.Â Offer the best price you can. By this I do not mean the “highest” price. The best price, in comparison, means the one that will appraise and that you feel comfortable paying. If the home is the highest priced home in the neighborhood, you need to weigh the possibilities – for example, is it probable that other homes will improve in the near future? In order to really understand the value of a particular neighborhood you need to consult with an experienced real estate agent.
But, you say, what about the other buyers, who may be willing to pay more? If a seller is only after a number than there is a chance that such a buyer may outbid you. However, keep in mind that unless that buyer is paying cash there is a chance the home will not appraise at the contracted price. That is why is is important to make a strong offer in other respects. Even if your offer is not accepted there is a chance they may come back to you if the current contract does not close.
2. Shorten up time frames. Sellers want to know as soon as possible that the sale has a high chance of closing. In California, the buyer has 17 days to investigate and remove all contingencies but the loan; the loan contingency is 21 days. I would not suggest shortening the loan contingency unless your lender says that will be absolutely possible (however, with the new lender disclosure laws it may be impossible, so speak with your agent and lender first); removing the inspection contingency in a shorter time frame can be possible, so it is something to consider. You can also let the seller know that if your loan gets approved in fewer than 21 days you are happy to remove that contingency earlier.
3. Should you write a letter to the sellers? This is a controversial topic and really is one that needs to be decided with your agent. It used to be that buyers who wrote a great “here’s who we are!” letter had a higher chance of getting an offer accepted (assuming all other aspects were equally promising), because it made the buyers real people and played on seller emotions.
4. Multiple counter offer situations: If you receive a multiple counter offer you have to be prepared to accept the terms or put your best final offer forward. Again, it is not always about just price, so have your agent find out exactly what the seller is hoping for. If the seller is selling an investment property they likely are focused on numbers; if the sellers have lived in the home for some time there may be emotions involved, in which case you can alter your response.
Today there is controversy about such letters because many say if an offer is not accepted there is a chance it could be due to prejudice – without going into a long list here you can imagine the possibilities. Regardless, this is a decision you need to make with your agent. It really depends on the situation but I still believe there are ways to write these letters to cater them more to the home and less personal.
It is important to remember that every market and each home sale may be different and present a different set of circumstances. It is important to speak with your real estate agent and lender and find out specifically what you can do to provide the best opportunity to have your offer accepted.
Monday, April 20th, 2015
One of the most challenging situations any real estate agent can face is working with a couple where each person has different ideas on what their new home should look like, where it should sit, or what amenities it must contain. Personally, I like challenges because they are like puzzles that need to be solved; once I help buyers work through them and we find a home that makes them both happy, it is extremely rewarding for me as well.
Some buyers start out excited to look at homes and quickly realize they are not on the same page; for others it takes longer – they make find a home that one loves and the other could never imagine living in. Or they may see two homes that are very different, or in different neighborhoods, and divide on which one they would like to purchase.
Most buyer couples quickly realize that they may have to compromise a bit in order to find a home that makes them both happy. Here are some great suggestions that will help these buyers find a home that meets most of what both are looking for:
1.Â Make a list. This is the good-old suggestion that I always throw out there no matter what difficult decision is facing someone – I have taught my kids to do it too and it really does put things into perspective. Ask each of your buyers to make a list of things they must have in a new home, things they would like to have, those they don’t particularly care for but could possibly live with if they had to, and those things they absolutely do not care for. The easiest way to do this is to draw columns so you can compare all these things side by side. It is important that each person who is a decision maker does this along, without the help of the other decision maker(s).
Once the lists are complete, I like to look at them myself and prepare a “report,” that finds the commonalities and the complete differences. It really helps for the decision makers to see what they actually do have in common and what they completely disagree upon. It helps to discuss this together – not to argue or get frustrated, but to understand where the partners are coming from.
2.Â Encourage an open mind. Conflicted couples know that they will likely have to compromise (whether they like it or not), but they may not know there are other options out there that neither has considered. By encouraging them both to have an open mind, I can go to work to find properties that they may not have even considered. Armed with their lists I can research, visit homes and then report back to them – hopefully getting them to agree to have a look. I have had many couples start out looking in particular neighborhoods, yet end up purchasing elsewhereÂ – somewhere they would never have considered in the beginning.
Similarly, a home that would have been overlooked at the start, let’s say because the yard was too small and both parties really wanted a larger yard, may be a possibility if changes can be made to expand the yard – this of course will take some research but if the outcome is positive it may open up possibilities for the buyers.
3.Â Decide which items each party is willing to concede. As for the items that are completely opposing in the lists that were created, the couple needs to think about which items they will each concede – in other words, where are they willing to cooperate? If one insists on hardwood flooring and the other loves a home with travertine tile flooring, can one of them live with the flooring that would not be their first choice? If one wants to be in a neighborhood that is walking distance to shops and eateries and the other wants to be more secluded, who is willing to give in and look at conceding personal desires? Of course, with a concession there is the expectation that the other party will give in as well on another point, so it is important to discuss (see number 4 below).
4.Â Be ready to compromise.Â If one person likes modern style homes and the other likes traditional, both will want to consider a compromise. Maybe they find a Craftsman home and combine interior design styles so that there are modern and traditional elements.
5. Don’t let your relationship be affected by your design tastes. Keep in mind that buying a home is a big decision, and don’t let your relationship take a toll during such an important decision-making process. It IS possible to find a home that will make you both happy, but you need to be open, willing and ready to make concessions.
Purchasing a home is definitely not an easy process, but that doesn’t mean that it should be made more difficult due to clashing personal preferences. If buyers recognize the needs of their partners and make a plan to compromise and have open minds, it IS possible to find a home that will make them both happy – I have seen this happen many times so I know it is true.
Monday, April 6th, 2015
For the last few years buyers have been able to search on their own for properties for sale in any area via third party websites – the biggest being Realtor.com, Zillow and Trulia, among thousands of others. Recently Zillow and Trulia merged (Zillow acquired Trulia), and that set in motion some big problems with MLS downloads to such sites (Realtor.com is NOT affected, as it is controlled by the National Association of Realtors).
How third party sites get listings from the many MLS sites has always been an issue, and there are even brokers who choose not to have their listings advertised on such sites (a shame though, because the consumer likely is not aware of this and may be missing out on some active listings…a very good reason why all buyers should have an agent representing them – but I digress).
One of the largest suppliers of information to the third party websites was not able to negotiate with Zillow and therefore will no longer be sharing syndicated MLS information with Zillow and Trulia starting April 7. There are other means by which brokers can have their listings shared on these sites, but they have to opt into them and many are either not aware or have not done so.
What does this mean to the millions of people who use these sites to search properties? It means that searchers may not see ALL the listings in the areas they are searching…which means that they may miss out on properties that they may have been interested in seeing and/or purchasing.
This mess might work itself out in time. But the best advice I have for anyone shopping or following the real estate market is to HIRE A LOCAL AGENT. He or she can set up a search for you directly through the corresponding MLS, so that you get listings sent to you directly from the MLS as soon as they list (which will be quicker than you would receive them via any third party site anyway). If you want to search the MLS listings yourself, make sure to use either your agent’s website (they usually sync directly from the MLS), or Realtor.com – that way you won’t miss out on seeing any listings.
Thursday, March 19th, 2015
There are many buyers out there who do not know how to read and understand recent comparable sold properties (there are also many agents in the same boat, so if you are a buyer do not feel bad). Of course, if you are working with a real estate agent who is familiar with the neighborhood(s) where you are focusing your home buying search, then that agent will be able to help you understand how to sort through the comps and come to a valid price so that you can write an offer.
The problem is that oftentimes agents may not be intimately familiar with a neighborhood (i.e. they do not themselves know why some homes have lower sales prices than others), so it is up to the agent to really do some research. Here are the steps to follow so that you know whether that asking price is in fact valid:
1.Â Print out all recent sales in the last 6 months in the area. If there are none then your agent will need to go outside the neighborhood to find similar homes – those that have amenities and other features that are comparable to the home you are thinking of purchasing. If there are still none then s/he will need to find some that may have more or less to offer, and then weigh the factors to come to a reasonable price.
2.Â Speak with the listing agent. Every agent should place a call or visit to the listing agent whenever there is a question about value. The listing agent is the one who listed the home at that price, so the best place to start is with that person. Your agent needs to ask what comps were used to decide on a list price (in cases where it is not obvious – if you are looking in a tract neighborhood and there are 5 homes that have all sold in the same range then it is usually clear). If the listing is in a neighborhood where homes have sold across a wide value range, then you need to understand why.
3.Â Call the listing agents who sold the comparable homes. You can often get even more information this way that you may never have been able to see in photos or a virtual tour. For example, I just listed a home in a neighborhood where there is a discrepancy amongst recent comparable prices. I happen to know the neighborhood well (I live there), but a potential buyer’s agent called to ask me about the comps (I had sold a few of them) and I happen to know a lot about them and why they sold at the prices they did. I drafted an analysis on all the sold properties, and this was a big help to the agent and his clients. When I am representing a buyer in that same situation I ask for the same thing – at least a verbal analysis if someone is not willing to draft one (I of course take notes and then draft it up for my clients).
4.Â Understand that “price per square foot” is not the sole focus. If you look only at price per square foot and there are comps all over the place, you may be under-or over-valuating the home you are considering. There are many factors that need to be taken into consideration – location, upgrades, condition (even upgraded homes can be poorly maintained, and vice versa), amenities, views, lot size, and negative factors (noise, high traffic areas, hazard zones, etc.) Even two identical homes in the same community can have vastly different prices depending on the factors mentioned. You really need to get more information to understand the discrepancies before progressing. Always remember that every home has it’s own resume and story to tell, so just because another model match sold for a particular price does not mean that the same price applies to the home you are considering.
5.Â Make a chart or comparison table to understand the comparable properties. You can include features that are positive and negative, and you can then compare them to the subject property (the one you are thinking about purchasing). Seeing it on paper can really help many buyers to understand differences and feel better about making an offer that will appraise (if you are getting a loan), and that makes sense in light of the other homes that have sold nearby.
In the end it is common knowledge that those who have more information are better informed to make big decisions. Since buying a home is one of those big decisions it is imperative to do your homework. Find a smart, experienced agent in the area(s) you like and use them to help you get to the point where you feel comfortable with the values in an area by heeding the above advice. That is their job. Happy house hunting!