Why Do I Need an Agent to Buy a Home -- Part 1

A few weeks ago, I wrote about whether sellers really need an agent to sell their home.  It got me thinking about the other half of a real estate transaction--the buyers.

There are two common home purchase scenarios--either the sellers have an agent, or they are DIY sellers.  Regardless of who is representing a seller, a buyer's agent is, in my opinion, a must.  This is a pretty big topic, so I'm going to break it into two posts. Today we'll focus on FSBO (For Sale By Owner) scenarios.

Just a quick conversation between friends, right?

A home is likely to be the biggest purchase you will ever make, so it's natural to be a little afraid and a little excited when you finally find that perfect home.  When it's time to make the offer, if you don't have a buyer's agent, and the home is FSBO, you will have to call the owners directly to make your offer.  It's just a phone call, it isn't that hard, right?





Have you ever seen those Facebook yard sale groups?  Plenty of "for sale" posts devolve into arguments over how much something costs new vs. how much the seller actually paid vs. how much the items cost on eBay.  Someone always comes along and asks "What's the lowest you will go?" The sellers get frustrated, everyone argues, the post disappears, and the bystanders all tell their friends about the drama that was on Facebook today.

Seems fair.

All for a $50 wagon.

Now make that call to negotiate a $150,000 home.

Without the involvement of a professional, the sellers are asking a price that is their "best guess"--and it includes their emotional attachment to the home.  Buyers without an agent may have even met the sellers to view the home, and have heard all about that emotional attachment and how wonderful the home is...all of which go in to the buyers making their "best guess" as to what is a fair offer.

Easy-peasy.

What could go wrong?


Aside from the potential negotiations disaster, there are still the formalities and legalities to navigate.  Offer contracts, title companies, inspections, home warranties, and the final purchase contract are all things an experienced real estate agent can--and should--help with.



If some of the paperwork isn't done properly, it's a mistake that could cost thousands of dollars when it finally comes to light.  Can you imagine finding out years after the fact that the largest purchase of your life may have been made with legal mistakes or missing paperwork?  An experienced professional really is a must to minimize your risk.





Next week we'll cover buyer's agents when there is also a seller's agent.  Meanwhile, stop by our YouTube channel and check out our ongoing "Why Cheyenne?" video series--you might even see a few familiar faces!

Until next time,

Steve

Comparative Market Analysis--huh?

Raise your hand if you watch a lot of HGTV.  If you’re reading a real estate blog and don’t have your hand up, then you are probably reading the wrong blog….

OK maybe not everyone has 10 hours of Property Brothers on their DVR, but if you’ve watched even just a few home shows, you’ve probably heard the word “comps” while someone is holding a stack of info sheets about other houses.  They throw out some prices of these “comps” and everyone (usually) agrees and the show moves on.  What are these powerful, mysterious comps, and what do they have to do with your house?

“Comp” is just a more fun way to say “comparative market analysis,” or CMA. A CMA is usually performed by a real estate agent and/or appraiser, and is best done by someone familiar with the area.  CMAs look at a lot of things, but especially location.  While most agents know that a house with a direct view of a power plant is likely to be worth less than the exact same home in a gated community with a lake view, local agents will also know things like the reputation of the area schools and whether there are new developments in the works for your area of town.

So what happens when someone “pulls comps” or performs a CMA?  They need to see your home, of course, so they can assess the overall condition, see the lot/property, and check out any upgrades you’ve made.

They’ll also look at current listings, and see which ones are most similar to your home.  “Similar” can mean a lot of things, but in general, what counts is location, number of bedrooms and bathrooms, similar condition, and square footage.  So while the ranch style home 2 miles away might not look like your mediterranean style home, it’s possible it will count as a “comp”—or maybe it won’t, but there’s only one way to know, and that’s to look at all the data that’s available!

At least real estate agents get pictures.

So what’s available besides current listings?  While the rules can vary from state to state, agents and appraisers can generally use pending listings (homes that are currently under contract), canceled or expired listings, and sold listings.  

Here’s where it can get tricky—all those paper numbers are great, but what we do with them is what really counts.  No two properties are going to be exactly the same, so we have to make adjustments for differences.  A few hundred square feet may not mean much for very larger homes, but for smaller homes, it can mean a huge change. 

Is that structural damage or just cosmetic?

And what if most of the comp homes are overpriced and have been sitting on the market for months?  Should you overprice your home because you want “top dollar,” or so people don’t think it must be priced lower because something is wrong?

A great agent is not only going to know these things and how to point them out, but is also going to know that “top dollar” doesn’t mean overpricing a listing.  It means selling your home for true market value.

So, are you ready for your own CMA?

www.cheyennehomevalue.com

Until next time, 

Steve