2 Questions, 2 Answers
This email was sent to [email address suppressed].
You may instantly unsubscribe, or forward this e-note to a friend.forward this email to a friend
Homebuyer Associates March 2016 E-Note
2 Questions, 2 Answers
What is Truth?
“Things are selling quickly so you better pay asking price.”
When people make this comment I ask, “Define quickly?” What people really mean is the home sold and they didn’t get a chance to buy it. Most often this is for two reasons:
1. The homebuyer did not have a process to see the home in a timely manner. 2. The home was overpriced and someone else offered more money, that is, someone paid more than the home was worth. Two questions:
Do you have a process? Homebuyer Associates does.
Did you really lose the home if you weren’t willing to pay more than value?
The real estate industry loves to push the myth that homes sell quickly (define quickly) because it works in their interest. This isn’t limited to real estate and is reflected in many commodities where people are being sold.
Forget housing for a moment. I read the quote below in the N.Y Times Business section regarding the purchase of annuities:
“What attracts us to the annuity is the steady income. The advice we’ve had is that the stock market will implode over the next few years, and this is a way to solve that problem.”
Where did the advice come from and what data is it based on? Whether investing or buying a home, get information to make an informed decision. An uninformed decision puts your money at risk whether buying a home or investing.
Be careful of the word “quickly.”
How Are Home Prices Set?
You think it’s a rational process. It’s not. The asking price represents an “anchor” and the anchor affects what people pay for homes. For an in-depth explanation see the link to a past newsletter.
Below are the 3 most commons methods of how a seller arrives at asking price.
A. The listing agent “bought” the listing. Buying a listing is common knowledge in the real estate business. What does it mean? It means a seller invited 2 or 3 agents to prepare a market analysis for the sale of their home.
The winning listing agent – the agent who gets to put a lawn sign in front of the home – may have made a false promise to get the listing. If this happens often enough, competing agents begin to make false promises. False promises lead to artificial asking prices (the anchor). The best agents don’t buy listings but too many agents do. Agents won’t tell you this. We work for buyers. I just told you.
B. Sometimes a seller wants to price a home high to see if someone stupid will buy the home. (Said another way, to see if the agent can “sell” someone on the home.) Sometimes this works because homebuyers – absent objective information – buy based on emotion and are sold.
C. I occasionally hear that a seller has priced their home at a certain price point because they need that much money to buy their next home. Huh? Sometimes that’s the rationale.
If you’d like some truth about real estate, schedule a coffee talk with Seamus or me. It will make for a better home purchase.
If you found the information of interest please share my newsletter with your friends and family.
Thanks for reading,
Michael D. Holloway