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9 Questions. 9 Answers. Better Value.

9 Questions + 9 Answers

Price is commonly thought of as the result of supply and demand. This must be true. Economists have said it over and over. In real estate, price is often a result of a determination of perceived value and the emotional state of the parties involved. But ask yourself:

What information is the perception based on?

How are your emotions being managed and by whom?

Who provided the information to create the perception and emotional state?

If the information came from a real estate agent or firm whose job it is to sell homes, (even if the claim is they are “buyer agents”) question the objectiveness of the information. In traditional real estate, it’s possible your emotion will be “managed” to benefit the seller. The problem? You’re the buyer.

Recently a client was looking at a home with an asking price of $163,000. Some of the information we gathered on behalf of our client is below. We use the same approach on $200,000, $500,000 and 1.5 million homes.

1. Home asking price.

2. Assessed value.

3. Number of days on Market.

4. Homes for sale in a 6 – block radius.

5. Median asking price within radius.

6. What have 3 comparable homes sold for in the past year?

7. Low/average/median/high sale price of homes in past year within radius.

8. The percentage of ask price to sell price within radius.

9. Location questions.

We found that the home had a shared alley (common in Milwaukee) and backed up to student housing on the opposite side of the alley. Students are not bad – I used to be one – but I’d not necessarily want to live near who I was back then.

In our final analysis, this home had a range of value of $147,000 – $150,000. Our client did not purchase the home. We continued with our daily search for homes on market, found a better home in a better location, which was purchased at market value.

I value the approach I outlined. It’s far better than the “let’s offer 15% less than asking price” or the “give them a low ball price” approach. I don’t see the data in either approach to make an informed decision.

By the way, the home referenced sold for $157,000 after 224 days on market or roughly $10,000 more than our data showed the value to be. Maybe we were wrong in our valuation or maybe the perceived value and emotion involved were managed well by the agents who sold the home – to the benefit of the seller – not the buyer.

Sometimes people ask how Homebuyer Associates’ approach to buying real estate is different from other real estate firms. Well, for starters, we don’t sell into perceived value and emotion. What does that mean? You decide, but I think it means with data comes the opportunity to manage perception and emotion.

If you don’t use Homebuyer Associates at least raise the 9 questions to get the 9 answers (and question the answers) to get better value before buying a home. Coffee anyone?

Thanks for reading,
Michael D. Holloway

Homebuyer Associates
Michael D. Holloway / Seamus Holloway

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