WRITTEN BY PJ WADE
What you don’t know about real estate, real estate professionals do. PJ Wade identifies significant knowledge gaps for buyers and sellers and reveals how professionals fill those gaps—when asked.
It’s what you don’t know about real estate that could cost you when buying or selling.
• First-time buyers usually haven’t seen enough houses or condominium units to fully understand where real estate value lies.
They may not have been caretaker of a house and, therefore, don’t notice subtle signs of damage, sloppy construction, poor maintenance, or worn-out elements. Those who have visited friends’ houses will rarely have toured the properties with an eye to determining value. First-time-buyer naivety is often preyed on with the latest buzz words, staging, hot shiny appliances, and a coat of fresh paint.
• First-time-in-a-longtime buyers may not realize that they are out of touch with advances in materials, modern design approaches, or evolving lifestyle essentials.
This can lead them to under- or over-value new houses or condominium units. For example, quartz kitchen counters have gained popularity over marble and granite for several reasons. Open-concept design is preferred by those with small children or those who live to entertain, but not by those who are untidy, relish quiet spaces, or are energy conscious. Residential elevators are increasingly common features in multi-story and age-in-place homes, but they may seem out of place to those not in touch with housing trends. Misevaluation of factors like these may mean missed real estate opportunity.
• First-time sellers who base resale value on their total cost of acquiring and maintaining real estate ownership, plus expected profit, have missed the point.
Emotions, including pride of ownership, can get in the way and prove expensive. Sellers may believe that their cost of buying and transforming the property into their home, plus money spent on maintenance and upgrades, plus profit and the cost of selling, including commission, add up to their actual “bottom line” for resale value. Problems arise for sellers when this must-have sale price is not in line with market value, which is value determined by the real estate market – current buyers and previous sales. When the seller expects more than market value, this “over-priced listing” may take longer to sell, may eventually sell for less, or may fail to find a buyer. First-time sellers may lack experience evaluating how their property compares with local property values and appraising their property from the perspective of current active buyers.
Value determination and marketing – or communicating action-enticing value to potential buyers – represent two different professional real estate selling-skill sets, neither of which are usually possessed by sellers.
• Empty-nester and downsizing sellers may decide, in theory, that smaller and cheaper are the characteristics they desire in their next property, but some discover it’s a different story in practice.
When faced with the actual move to a smaller house in a cheaper location, they may find the mental leap too great. Downsizing is often wrongly considered merely moving into a smaller property. In reality, this less-space move usually involves adopting a different lifestyle, living in a different neighborhood, adjusting to different status, dealing with different interior finishes, and the list can go on.
Many faced with wanting a change find they lack the real estate knowledge and planning expertise to make the shift gracefully acceptable and financially successfully.
• Newbie real estate investors may believe that crunching numbers to determine how much profit they want and what it will cost to achieve this profit is all it takes.
Creating an offer to purchase, which entices a property owner to sell for the buyer’s desired price, requires special professional expertise. Then, offering the property for profit-generating rent that will attract qualified prospective renters involves a different set of professional skills. Many new investors possess neither skill set, which are both common in real estate professionals.
The emotional element regarding what sellers will sell for and what renters will pay to live in the resulting investment property can influence financial gain and bottom-line projections. Skill and experience is essential to investors taking all this into account to create profit.
What you don’t know about property ownership and real estate transactions can cost you when buying or selling, wherever you fit in on the list of buyers and sellers above. Do you have experience with contracts, financing, interior design, renovation, conflict resolution…? Then, there’s marketing – both using it to persuade others and personally fending off its effects when you’re making decisions.
What you don’t know about real estate, real estate professionals do. They are committed to studying and keeping up to date on what matters. Most have spent years on the job perfecting their expertise and learning local markets.
Would you surgically operate on yourself or drill your own teeth? It’s that extreme an issue when you don’t engage available professional skill and knowledge to work for and with you.
Concentrate on learning what the right real estate professional can help you achieve.
Not the least of which is discovering what you don’t know about buying and selling. When you think, my goal is “buy my dream home” or “sell at my dream price,” understand what will have to happen and what you must do to achieve the desired outcome.
If you don’t know where to start, no problem.
Real estate professionals are trained to know what needs to be done for prospects and clients every day, every offer, every transaction…. Do you know what you’ll gain with professional help? How determined are you to achieve real estate goals and exceed your expectations, as quickly and hassle-free as possible?