If you’ve been a regular reader of my weekly column as well as other periodicals, you should be well aware by now of how low our housing inventory has been and probably will continue to decrease further (and the many reasons why) as long as the demand and historic low-interest rates continue on the path that they have taken. Even with the current pandemic and overwhelming spiking infection rates in 41 states, the strong desire of the smartest and financially capable purchasers is to continue looking. They have realized the opportunity at this special moment in time in searching out and finding their next place to call home.
More important, seeking the assistance of a top-notch Realtor, who will be there to help and guide you while answering all your pertinent questions as well as going through a checklist of your specific needs and wants will go a long way in your search for that elusive home. However, with fewer choices available than ever before, your broker or agent should discuss which trade-offs you might be willing to forego while looking at homes and narrowing down your wish list to comfortably stay as much as possible within a specified budget without going overboard. We all have a certain amount of money in mind and are qualified for what we want to spend while seeking out the best possible deal we can.
Since it is still a seller’s market, however, with prices still edging higher, one must be very realistic and have the clearest possible vision of what will satisfy the equation in order to consummate a purchase. But even in this low inventory market, overpricing by sellers still does occur, because sometimes they feel that the market will pay their price and there are occasions when a buyer comes along and has to have that home and they might pay a higher price than most. However, this isn’t the norm and seller feelings generally are not relevant to market value.
A buyer should always ask for comparable sales of similar properties for the previous six months before making an offer to ascertain a certain base price of where homes have sold. If a broker is representing a buyer as a buyer’s agent and after comparables are provided, the buyers can ask their opinion when determining an offer as to whether the offer is low or a good starting point — unless in certain situations, the offer given is at full asking. If the selling prices are within a certain percentage of asking prices, then that would provide an accurate insight as to where the selling price could be, but there is never a guarantee.
Sellers would like to get the highest price they can and if priced correctly (sometimes just a speck below market value) it will create greater activity leading to a potential bidding war for that particular home. I have experienced this method of pricing. Generally, the more days on the market (D.O.M) the greater the possibility that the property was and currently is overpriced. We all can be a little greedy, but overpricing becomes more detrimental to the seller in the long run, since the longer the listing stays on the market without a price adjustment, the greater the chance that it will sell below market value.
There are a multitude of factors that go into the listing and selling price. The overall condition of the interior and exterior is tantamount in figuring a selling price. If a home is in mint condition, then comparables should be as close to mint or diamond as possible. If it is in excellent, good, or fair condition, then one must have similar properties to compare it to. My suggestion is always to find a house that needs work on a very good block for those that are open to this concept. Analyzing what has to be fixed or upgraded with a qualified and licensed contractor will give you a better idea on what your total cost will be as well as what your offer should be on that house. Turning an “ugly duckling” into a “gorgeous swan” can enable you to potentially build appreciation into your home from the start.
As I mentioned, you need to go through trade-offs as to what you are willing to give up in becoming a homeowner. Focus on the schools, towns, and surrounding houses in the area. Notice how the neighbors take care of their properties and drive around a few streets to get a good feel of the area. If you lived in an apartment environment and never owned a home before and are really not familiar with the purchasing process, I would suggest that educating yourself as much in advance as possible will enable you to have a better understanding of what to look for when buying. There is so much more to know today than ever before and the process is more complicated and the competition for the ever fewer choices of homes available makes it more crucial to be at the top of your game!
Using Google and gaining valuable information as the first time or even a move-up purchaser will eliminate costly mistakes. More important, engaging an experienced, expert, and knowledgeable broker with your best interest in mind will save you a lot of time and aggravation, especially today when you cannot afford to lose that first home that you fall in love with because of being unprepared. Remember, you can always upgrade and fix a home but you can never change its location
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). Just email or snail mail (regular mail) him with your ideas and suggestions on future columns with your name, email, and cell number and he will call or email you back. For a consultation, he can be reached by cell: (516) 647-4289 or by email: Phil@TurnKeyRealEstate.Com to answer any of your questions or concerns.