Volume 82 - The Keys to the Castle!

There was a time ( before the introduction of  The Multiple Listing Service) when Realtors held the keys to the castle - quite literally. As the gatekeepers for the majority of sale transactions in any given neighborhood, Real Estate Brokers and Realtors controlled and released the appropriate information on an "as need to know" basis.
 
Today's immediate access to Internet sites such as Zillow, Trulia, Realtor.com  and the still closely guarded Multiple Listing Service (MLS) makes every prospective buyer or seller an instant expert - and herein lies the danger:  with public records as close as a click, prospective buyers can quickly and easily ascertain tax records, assessed value and  purchase price for any given home and begin to form an opinion of value based on information that isn't exactly accurate, specifically relevant or in some cases, even true.
 
While it's good practice to understand the recent market activity surrounding a listing, the geographical demand and the larger economic picture, the price the current owners paid may or may not be relevant to the resale value  in today's marketplace.   

So let's begin by analyzing what is, what isn't and what may be relevant to a prospective purchase offer:  

• Seller/Buyer motivation is relevant - Understanding the reasons why the Seller or Buyer is moving  sets the agenda.  
• Terms are relevant - How quickly would the Sellers like to close? How soon do the Buyers need to move? When can inspections take place? And are the Buyers pre-approved through a reputable lender? Write a contract without ascertaining these answers and you are sure to be missing important key components. 
• Price and condition are relevant - Whether it's a dilapidated "fixer" or a pristine estate, the price must accurately reflect the condition of, and the demand for, the property. Grossly overpriced homes don't sell in any market while conversely, aggressively priced homes do! Ultimately, it is the market that determines the value of a home. 
• The previous purchase price isn't relevant (except in cases of a "short sale" - one where the outstanding loan is higher than the list price of the house. Sellers in these cases have very little room to move.)    
• What a Seller wants or needs isn't relevant - Buyers don't care about what you want or what you need, no more than Sellers care about what Buyers can afford. Once again, it is the market that determines the value of a home. 
  
• Outstanding loans/liens may be relevant.  Understanding how much money is owed on the note may give you valuable insight and inform your purchase offer.  On the other hand, don't expect a "steal" just because the owner bought 40 years ago and now owns the house outright.
•  Days on Market  (DOM) may be relevant -but only if the MLS  is reporting them accurately.  Agents have been known to manipulate the reported DOM by removing listings for a few weeks and then placing them back on so that they remain "fresh." When accurately reported, DOM may indeed signal a buying opportunity.  

Finally, are Real Estate Websites relevant?  - Tread carefully! "Zestimates" don't see the improvements an owner has made to a home or the number of offers the property down the street received in a recent sale.  They don't personally visit a home so how can they accurately assess value?  

More often than not, homes values on Internet sites are merely a matter of averages. Compare that to your personal home-shopping experience where many homes (especially those in competition) are far above average, while some are well below! Get caught up in this kind of faulty information, and you are sure to form opinions that work against a successful outcome.   

When crafting an offer, I work to collect, organize and analyze as many facts as possible, but truth be told, decisions by Buyers and Sellers regarding Real Estate often have less to do with stats and more to do with feelings than anything else. While empirical evidence would make my job much easier, at the end of the day, there's a certain amount of leg work, gut instinct, subjective opinion and well-honed intuition that comes into play on every successful transaction.   

​That's when working with an experienced local Realtor pays off in spades!  Find one and be open to his/her experience and you are sure to obtain a set of keys to your very own castle in the near future!