Lessons learned over 25 years
Originally appeared in Hills Publications, Dec. 10, 2004 and ANG Newspapers, Dec. 4, 2004
In the quarter century I have been a Realtor®, I continually see too many buyers and sellers who think they understand the basics of purchasing or selling a home when they do not. Some may have read real estate books, taken courses, or been involved in past transactions, yet unknown gaps in their knowledge put them at great risk.
“How hard can it be?”
Regardless of intelligence or educational level, an astonishingly large percentage of buyers spend less mental energy determining what is involved in buying a house than finding a good restaurant. Although this is also true for sellers, rising prices in our area have come to their rescue.
Often, those who are successful in business assume they do not need much help and that what they know will somehow translate into a sort of natural real estate acumen. A small, but rising, number even attempt to buy or sell without professional assistance, sometimes with success, other times with disastrous results.
Control vs. submissiveness
Certain personalities must always be in control, whether this is to their detriment or not. Those who want to control everything often thwart their Realtor’s efforts to work in their best interests.
The opposite extreme is the submissive client who, for lack of time, interest, or both, is totally passive and leaves everything to the agent. Absence of involvement can be as destructive as overinvolvement. The most sensible approach is a cooperative one that involves mutual trust and full communication between the agent and client.
Emotions affect everything
No matter how businesslike your approach to real estate may be, an emotional bond to the property you are buying or selling will likely cloud your perspective. As human beings, we tend to react more from feelings than fact. This may lead to poor decision making that can cause you to pay too much on a purchase or cost you lost profit on a sale. Among other variables, pay attention to how your emotions dictate what you do or do not do regarding location, style, condition and pricing.
The importance of location in real estate is common knowledge. Despite this, in a speedy market, buyers may find themselves disregarding the fact that a house they are attracted to is in a less than desirable area. Sellers, on the other hand, out of attachment, sometimes do not realistically assess the location of their home.
Each area has its attributes and a general ranking in comparison to other locations. In addition, even chic sections have more and less popular streets. This information is critical to your buying or pricing choices. Work with an experienced local agent who truly knows the nuances of neighborhoods and will use that knowledge to benefit you.
Style and charm
People respond viscerally to visual stimuli. They buy with their hearts more often than their heads. For this reason, smaller houses with charm usually sell for substantially more than less appealing styles with more space. Staging appeals to emotions. The right agent will help you sort out your feelings and explain how much extra the charm will cost you and if it is worth it.
In their desire to own a home, and especially after having lost in competition, it is easy for buyers to underestimate the expense and aggravation associated with serious problems. Considering the fact that a majority of properties are marketed without comprehensive, pre-sale inspections, this is understandable. Sadly, the importance of condition receives less recognition today than it did years ago.
Selling a house is like solving a detective mystery. Clues become red flags to the knowledgeable professional. They mean little to the inexperienced buyer or seller, or to the untrained or uncaring salesperson.
For example, an Oakland agent recently represented a buyer on an expensive Montclair home that had a $27,500 termite report, supplied by the seller. After he read it, he surmised this bid was not even close to a realistic figure. A big clue was that the area of greatest damage was the driveway, a potentially high cost issue in the hills. Further arousing his suspicion were the numerous items that called for “possible additional cost upon further inspection.” The latter notation is code for “this will cost a lot more when further inspections have been completed.”
After consultations with both a respected local engineer and a contractor, it was determined that the true cost was in the range of $100,000. With this knowledge, the price was renegotiated and the sale closed. If the buyer had been working with a less astute Realtor, he might have accepted the seller’s report and would have been very unhappy later.
After sufficient exposure to the market, buyers get the idea that an acceptable house will probably cost more than they originally hoped. Over time, they can be worn down to the point where they are willing to pay almost anything they qualify for if they can only complete a purchase. Feeling this way can leave a buyer vulnerable to overpaying.
Too often, buyers are encouraged only to “give it your best shot,” a strategy that could cost thousands or tens of thousands more than is necessary. Buyers and sellers commonly do not put enough emphasis on hiring someone skilled at pricing. In a market that still has multiple offers on the most wanted homes, working with an agent who can explain the possibilities is imperative.
Buying or selling a home is, in most instances, an emotional and complicated process. Accepting this fact and choosing a highly competent Realtor will help you function more rationally.
An agent is supposed to act in your best interests. Make sure to find one who knows and cares enough to do that.
Condition is Critical
It Is Not How Much Business We Do, But How We Do Business