Your REALTOR®’s Advice Is Worth Every Penny

We have all been there: hiring a REALTOR® to represent us in a real estate transaction. As REALTOR®, my best advice to you is to… follow the advice of your REALTOR®. This is key to success in real estate.

Two cases in point.

CASE #1. Jim places a cash bid on a REO property priced in the low $60,000’s. After a few days Jim’s REALTOR® shares that there are six competitive offers on the property. Jim asks his REALTOR® what he needs to do in order to secure the property. REALTOR®’s advice is to go $8,000 – or about 12.7% – above asking price. Jim has to tap into his 401k in order to find the extra funds, and knows that the property will additionally require approximately $7,500 in repairs. Nevertheless, Jim OK’s his REALTOR®’s advice with no hesitation. Jim wins the bid and secures the property. Jim rents out the property at $1,000/month. Three years later Jim’s property is worth about $130,000.

Let’s do some quick math:

  • $72,500 (purchase price) + $7,500 (repairs) + $1,550 (tax penalty for early 401k withdrawal) = $81,550 (total investment)
  • $12,000 (yearly gross rent) x 3 years = $36,000 (gross rent)
  • $130,000 (property current value) – $81,550 (total investment) + $36,000 (gross rent) = $84,450 (Jim’s gain)

In short, Jim’s agent’s advice was potentially worth $84,450.

CASE #2. Louisa hires a REALTOR® to purchase a residential property. This is Louisa’s first time buying a home and she has never worked with a REALTOR® before. Upon finding the perfect property, REALTOR® advises Louisa that due to market conditions and in order to win a multiple-bid situation, she’ll have to offer about $10,000 – or about 6.7% – above the $150,0000 asking price. Property could potentially be worth $190,000 after three years. Although Louisa has the ability to write a higher offer, she chooses to play prudently, and against her REALTOR®’s advice: $5,000 above asking price but not more. Louisa is outbid and she loses her dream property.

Let’s do some quick math:

  • $155,000 (purchase price) + being outbid = $0 (total investment)
  • $190,000 (property current value) – $160,000 (potential winning bid) = $30,000 (lost equity)

These two cases are similar. In both instances a REALTOR® recommended an offer above purchase price. The former yielded a 100% return over three years, the latter a 0% over the same time span.

Your REALTOR® is working for you, and your best interest is her/his goal. Your REALTOR®’s judgement and experience are worth every penny!

Happy house hunting everyone!

GL

Market Updates – March 2019

Time to look at the housing market behavior.

Generally speaking, inventory in the GRAR area has further decreased, and likewise sales, while in the last month listings have seen an uptick. Residential new listings have been in line with the same level of last year (833 in January 2019, vs. 835 in January 2018) multi-units have dropped by 34.4%. Vacant land instead has witnessed a sharp increase, from 82 new listings in January 2018 to 143 last month.

Closed sales have dropped by 8.4%, both compared to last year and year to date. However total volume has increased by 6.7%. The good news for homeowners is that property values have increased on average by 16.6%.

The average home now sells at $230,545 based on closed deals, while the pending suggests an even higher value, at $235,281.

No matter at how we see the market, it is going to be another hot season. Snow is melting, buyers are very active, competition abounds. My personal experience suggests multiple offers – up to 24 already! – over $20,000+ above asking price, and more properties sold before broadcast.

Sellers, time to make your move. Waiting won’t give you an advantage: low inventory is driving prices up. Buyers do not sit on the fence. You’ll probably have to go through a few biddings before securing your dream home. And if you are planning to buy contingent to marketing your house, do so with confidence. Your own property will sell in a matter of days, if not hours!

Happy realestating everyone!

GL