How Much is Too Much?

I know, I know – TV isn’t real, but I can’t stand when I flip to a channel showing a real estate agent showing homes to a client. After some exploration, they find “the house” and go forth with submitting an offer…Say for argument sake, it’s listed at $300,000.00. The agent drafts the documents with close attention to details, invites the clients in with a freshly perked pot of coffee, sits them down and puts the offer in front of them and says “So…what do you want to offer?” At this point, the clients, a little dumbfounded turn to one another with a blank look, take a deep breath and say “Well, we thought $290,000”

STOP RIGHT THERE, if you are ever faced with this situation in real life – RUN (but take the free coffee) . If you aren’t presented with facts and market data, how do you know what you are offering is appropriate. What if the house is $35,000 overpriced?

I’m going to teach you what to say next time, and why you have an agent acting for you, it should go like this!

…At this point, the clients, a little dumbfounded turn to one another with a blank look, take a deep breath and confidently say, “Well, we thought we could come in and sit down with you and review similar homes that have sold in the last six months to a maximum of one year (notwithstanding any significant economic up or down turn), in addition to reviewing what only the most similar homes on the market are listed at. This way, we can come up with an educated price range that would be acceptable to pay for the home we are considering. If you as our agent have learned anything about the Seller’s motivation that you would like to legally disclose to us as part of our agency relationship, then we’d be very happy to consider that information as well!”

By now your thinking “What kind of client would come up with that?”, and your right, not many! That is however what a great real estate agent will do so that you can feel safe knowing that you’ve paid an appropriate amount for a home, and should be able to sell it if your circumstances change in the not so long term.

In my professional opinion, I believe the bulk of the profit someone will ultimately have when selling real estate, is most often not during the sale process! Most buyers and sellers ‘make’ their money when they purchase the home! Why you ask? It’s really quite simple: no matter how nice your home is, and how many incredible upgrades you’ve done – you simply have no control over the local market, economy, etc. and if you had to sell during less than favorable times you probably stand to take a bit of a hit (or not get as much as you could have in a ‘better market’). Alternatively, when you are buying, you are almost always in the driver’s seat! There is no reason worth overpaying, and almost always, if you’ve done the proper leg work, you’ll know right away that you got a deal!

Buy smart, always ask questions (and then some more)!