General Real Estate Concepts February 16, 2023

The importance of perspective when buying and selling real estate

I have a favorite saying:  “When all you have is a hammer, all the word’s a nail.”  Over the years, I think I’ve used it to mean several things, but most of all, it’s about perspective.  We always tend to conform our world view to serve their beliefs, abilities, needs, and wishes.

In real estate, this can be a dangerous and limiting habit.  Seemingly negative conditions may have an upside, and even the best market will have things you need to look out for.  It’s important to avoid letting our preconceptions, worries, or even optimistic wishes block us from seeing the whole picture and getting the clarity we need to make a well-informed decision.

 

 

Here are a few examples to help show what I mean:

Condition: High interest rates

First reaction: Finding an affordable home will be more difficult.  Selling a home will be harder because buyers spending power is reduced by high interest.

People often forget: As a buyer, it may be better to buy a home at a reasonable price with a high interest rate than to dramatically over-pay for a home with a low interest mortgage.  Sure, your initial payments will be higher than you’d like, but you’ll likely have a  future opportunity to re-finance when interest rates move downward.  Interest rates are temporary, offering $25,000 over the asking price is forever.

Condition: It’s the middle of winter, but you need to sell your house

First reaction: It will be hard to find a buyer and my property will sit on the market until the weather improves.

People often forget: While it’s true that many buyers will wait to start their home search until the warmer weather, there are always those buyers who can’t wait.  If someone comes to see your house in a snowstorm on January 2nd, they are probably highly motivated!  On the other hand, sellers who can afford to wait will often keep their house off the market until conditions are better.  This means those motivated buyers will have less homes to choose from, and your chances for success may be better than you think!

Condition: Inventory is low and you’re ready to sell your house.

First reaction: With lots of buyers and not many homes to choose from, selling your house will be a breeze.

People often forget: When the conditions are the excellent, expectations are the highest, and it takes hard work to be in position for the best results.  Just putting a sign in the front of the house will probably work to get offers and sell the house fast, but in a strong seller’s market, you’re looking for more.  Proper staging, communication, and marketing are needed to make sure you get top dollar and put more money to the bottom line.

Pricing strategy is also very important in a seller’s market.  Pricing your home aggressively high may seem like a safe thing to do when there are buyers lined up to write offers, but what if you crossed the line?  Buyers in a sellers’ market fear one thing: all the other buyers.  It’s common for buyers to see a house  they think is overpriced, but think, “Even though I think it’s too much, there is someone out there who will pay that price.”  If enough people think this, you could end up sitting on the market for a week or two.  By then, buyers are thinking “What’s wrong with that house?  Nobody wants it!”  Now they’re looking for a discount.

Condition: Your friends all talk at cocktail parties about how their house sold for 10% over the asking price.

First reaction: It’s natural to expect the same for my own home.

People often forget:  People rarely brag about selling for less.  Las Vegas has been cashing in on this dynamic for decades.  When you win big, all your friends know about it.  When you lose at the craps table, you keep it to yourself.  Don’t be automatically biased by what you hear and think hard about what you may not be hearing.  Sellers who want to brag about their sale will rarely remember to tell you that they gave their buyer a $5,000 closing cost credit, or that they had to agree to $10,000 in repairs.  Again, to get the best results, we have to do the work and put ourselves into the best position for success, not just rely on anecdotes and “good timing”.

We can all admit that there seem to be a LOT of Realtors.  Just like most professions, there is a wide range of talent and commitment out there.  Most consumers need a professional to help them see the whole picture.  If your Realtor isn’t offering a well rounded approach to their advice, you may need to ask “What’s the flip side?” or “Is there anything I’m missing?”  It’s fair to have high expectations of your agent.  Most Realtors will be part of more home sales in one year than you will see in a lifetime.  It’s our job to offer that experience, perspective, and knowledge to you.

 

This sometimes means having the tough conversations with our clients.  When a family of first-time home buyers has hopes and dreams bigger than their budget, unfortunately it’s our duty to help them re-set their expectations, or even decide to wait until their nest egg grows a little more.  When a retiring couple wants to sell their home for top dollar, but they haven’t done any updates to the property in years, it’s tough, but we have to offer a list of opportunities for improvement if they want to match the price their neighbors got last month.

 

So- if you’re hiring a Realtor, or an auto mechanic, or a lawyer, it makes sense to find someone with the broadest perspective, deepest experience, and a generous willingness to share them both.  If someone tells you only what you want to hear, or worse, what THEY want you to hear, you’re not being served, cared for,  or respected.  Find someone with a full toolbox.  You’ll be glad you did.

Looking for a team of committed, experienced Realtors to help you with your real estate needs?  We’ve got the hammer, the screwdriver and a couple of saws!  Give us a call and see if you feel we’re a good fit!