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I Bought a Car Last Week

I bought a car last week…

1. “It’s a great car”

2. “Don’t you love the color?”

 3. “That’s the best price we can do.”

….and I thought about real estate.

The negotiation began and the salesperson’s pitch played to my emotions. My goal was to remain objective.

Having identified the car, I researched price using 3 online sites. The goal? Find the car’s range of value. If I could buy in the range of value, I’d have a car. If I couldn’t, I’d have my old car.

And real estate? The similarities between auto sales and home sales are strikingly similar.

First, the sales person wanted to bond. (I wasn’t that interested in bonding as I’d probably never see the salesperson again.)

Next I was being sold on the wonderfulness of the car. (It’s a car so “wonderful” did not enter the equation.)

Finally, it came to price. The dealer’s price was not in the range of value and the salesperson was selling to my emotion. Fair enough. To counter that, I had my research showing range of value. It wasn’t a debate as much as a matter of fact statement:

“I want to buy a car. You want to sell a car and are entitled to make money. My research shows the car has “X” range of value so I’ll pay the top of the range. Absent that I’ll just keep my car.

What the dealer wanted was not material. The research showing range of value was.

In real estate we often tell our clients that a home seller can ask whatever they want. It’s America. I don’t care what the asking price is; I care what the data shows the range of value to be.

After 7 days we arrived at a price. Going in I understood the dealer’s ploy to play to emotion. Understanding that, remaining patient and having done research up front saved me 20% from the asking price. My approach allowed me to buy within range of value.

In real estate the listing agent will tell you what a great house it is (#1 above), how lovely the kitchen is (#2) and that the price is fair (#3). Homebuyer Associates approach? Find local data that dictates the range of value.

Negotiate from the perspective of value, not based on what aseller wants.

With real estate, there are many steps to arrive at range of value. An agent may call a report a market analysis, but what if the agent uses the analysis to justify the asking price? It happens.

I’ll write specifically about each step in my next newsletter. Our market analysis process is a process is designed to buy a home at a fair price, not the price the seller or real estate agent wants.

In the meantime, if you are not using Homebuyer Associates and you hear the words, “You can’t lose on this home” or “You better move quickly” or “That offer might offend the seller” think about the car salesperson and the attempt to play to my emotions. Real estate agents are trained to do the same. If you don’t use: caveat emptor.

Remaining objective got me the car and saved me a large sum of money. You’ll do even better with that approach when buying a home because the dollars are larger. Of course the starting point is an agent who actually works for you full time.

That’s Homebuyer Associates

Thanks for reading,
Michael D. Holloway

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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129