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In order for you to find the right house at the right price, there are several things that you, the buyer, should know before you begin the buying process. Read the below tips for more information.
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In order for you to find the right house at the right price, there are several things that you, the buyer, should know before you begin the buying process:
1. Know exactly what you can afford vs. what you want to spend.
One of the very first things you need to do is sit down with a good mortgage broker and determine exactly what you can afford to spend. Once you have a figure you can comfortably afford, then you can work with a buyers agent to determine what kind of house falls in your budget. It is critical that you establish realistic expectations from the beginning. In almost every situation, however, some compromise is necessary.
2. Know your short (3-5 yr.) and long term (5-10 yr.) goals.
You need to discuss your short-term and long-term goals with your agent before the buying process begins. How long will you want to live in the house? Will you be having children? What about schools? These sorts of questions can have a very large impact on what you buy.
For example, if you plan to move in the next three to five years, then what you pay for you home becomes even more important than if you planned to stay there for 25 years. Selling costs are about 9 percent of the selling price, so you better not overpay for the property. Styles of homes, parts of neighborhoods, and other factors give you better resale value.
3. Know the current market conditions.
Somewhat like the stock market, the Pinehurst real estate market changes throughout the year and sometimes even throughout the month. Some months are better for sellers and some are better for buyers. For this reason, it is in the buyer's best interest to work with a Moore County Buyers Agent who has long-term familiarity with the Pinehurst real estate market and its history, plus a proven tract record.
Pricing is key in this market. Homes that are overpriced -- and there are a lot of them right now -- will not sell when the buyer is working with an inexperienced agent, or one that is not from the Pinehurst market. It's rare that a home will sell for full price today as well, but that does still happen on really special homes that are priced correctly.
Will escalating property values ever stop? Will the housing downturn across the county affect Pinehurst's real estate market over the long run? These are questions best answered by someone who can speak with knowledge on the subject. Doing your own research on market trends is no fun, but can really affect your buying decision. This is why working with an experienced buying agent, like Gloria Sectish, who has Pinehurst market experience is so important.
4. Know how the listing prices are determined
How do sellers and real estate agents determine what the listing price of a home will be? Good question. I often ask myself, "How did they come up with that price?" Often, the sellers themselves determine the price, and most real estate agents just go along with it. Other times the agent does a CMA (comparative market analysis) to determine value. Agents generally look at what sold in the last six months in the same neighborhood. They then base their price on these comparisons.
Sometimes this comparison can be very difficult and misleading. What if a so-called comparable home recently sold for $50,000 too much because several buyers got into a bidding war? Typically, with bidding wars, ego is the driving force, and ego really doesn't have any valid impact on home values.
This is a real danger for buyers today in the Pinehurst real estate market. If you walk into any real estate office and ask five agents to price a property you will most likely get five different prices, and they may vary as much as $100,000. On the other hand, there are agents who really know their business and how to price property and are very accurate in determining market values. However, these agents may run into resistance from the seller and may have to compromise the listing price for two weeks or a month before the seller is willing to lower the price to what it should be. I have been in that situation and, while I've advised my client what the price should be, I sometimes had to put the house on the market for a higher price to satisfy the client. Over priced homes usually end up being a better deal for buyers if they are willing to wait. The longer it stays on the market, the lower the price will go.
5. Know how to deal with the listing agent
The listing agent, whether good, ho-hum, or bad, represents only the seller and tries to get the highest possible price for the seller. The listing agent generally gets a commission of 6 percent of the selling price and it is split 50/50 between the selling agent and the listing agent. So the listing agent has an agreement with the seller that he will get paid 3 percent of the sales price when the house sells and closes. If a buyer walks into an open house and asks the listing agent if the home is priced correctly, even if it's $100,000 over priced, what do you think the listing agent will say? "It's a great house and priced really well," is a typical response. And if the buyer wants to work with the listing agent, then he may be able to give up some of his commission to help the deal go together and save the buyer some money.
This is a false economy and here's why. If the selling price of the house is $300,000 and the commission is 6 percent, the total commission is $18,000. The listing agent will get $9,000 and the selling agent will get $9,000. The listing agent knows that he will receive $9,000 when this house sells. Now the unsuspecting buyer walks in and uses the listing agent to write up the offer. The listing agent says he will give up $4000 of his commission so the buyer can get the house for $4000 less. So the seller gets $296,000, the listing agent gets his $9,000 for the listing side and $5,000 from the selling side, for a total of $14,000. The buyer saves $4000, the seller gets his full price because the listing agent gives up $4000 in commission, and so the seller's net is the same as if they sold it for $300,000. Every one wins...right! Wrong! The buyer in these situations usually pays too much for the house. The buyer has NO REPRESENTATION. The listing agent becomes a Consensual Dual Agent and says that he will represent both parties, but that is just like going into court and telling the judge that you represent both the plaintiff and the defendant...it just doesn't work! The buyer has no one advising him or her whether the house is priced correctly. The buyer has nobody working for him or her during the entire process. The listing agent makes $14,000 -- not $9,000. That's $5,000 more then he thought when he listed the property - who do you think he represents? The sellers make everything they wanted to. And the buyer...well the buyer may have paid $20,000, $30,000, perhaps $40,000 too much for the house.So I strongly suggest: Never ever use the listing agent to write up your offer.
6. Know your options
Every situation is different. That is what I like about this business, but everyone should be aware of all of his or her options. Your first option is that you don't really have to do anything. Or you can choose to do it all yourself. But to be a well-informed buyer, you should analyze your own situation and analyze all your options.