Taken From: “5 Immutable Laws of Real Estate,” by Jay Thompson (Inman 2/13/19)
There are various truths among society, e.g., Murphy’s Law, Newton’s Laws of Motion, Law of Supply and Demand. There are also some tenets real estate agents are especially keen to.
First law of real estate: It doesn’t matter what the neighbors’ home sold for in the past.
Home prices are dynamic. They rise and fall, wax and wane, and they can change daily, seemingly on a whim. What a home was worth five years ago, last month, or yesterday has no bearing on what it is worth today. This can be a difficult pill for homeowners to swallow.
It doesn’t matter what the homeowner thinks their home is worth. And it certainly doesn’t matter what the agent or owner wishes the home was worth. What matters is what a buyer thinks it’s worth — and in the case of a financed transaction, whether a lender will approve a loan at that amount.
Second law of real estate: A home is worth what a ready, willing and able buyer will pay for it.
In today’s market, “able” is usually the limiting factor.
A realtor can’t dictate what a home is worth. A Comparative Market Analysis (CMA) certainly cannot tell you what a home is worth. A home appraiser can’t even tell you, although the bank will listen to an appraiser and not loan you more than what they claim the home is worth. However, an agent can provide a general idea of what a home might sell for. Some can get remarkably close; others, not so much.
Third law of real estate: Home improvements will not make a home value increase in an amount equal to or greater than what was paid for the improvements
Money spent on maintaining a home adds nothing to a home’s value. Some improvements, especially kitchen and bathroom improvements, tend to have higher rates of payback than others. But rare is the improvement that adds equal or more value to a home than what it cost.
The fact the water heater, air conditioner and roof are fairly new will likely appeal to some buyers. That just might be what triggers their decision to buy your home versus another one, but it doesn’t make the home more valuable.
If fundamental repairs are needed, the owner is just going to have to fix them and not expect to recoup any of that money — or be prepared to discount the list price to compensate.
Fourth law of real estate: The odds of getting an offer on a listing increase exponentially if the listing agent goes out of town.
Ask any agent what happens to their business when they go to a conference. Or on a vacation — whatever that means. They’ll tell you that business invariably increases when they leave town.
Usually in direct proportion to the level of inconvenience it requires to respond to offers, buyer inquiries, etc. So if you really want to get an offer on a listing, have your seller send you on a trip to Hawaii. It may cost them less than a price reduction, and it’ll work every time.
Fifth law of real estate: The amount of time spent de-cluttering, cleaning,and staging your house positively affects your bottom line.
According to the National Association of Realtors’ 2017 Staging Stats report, 49% of buyers’ agents believe that home staging has an effect on how a buyer views the home, with 77% saying that it makes it easier for buyers to visualize the property as their own.
On the sellers’ agent side, 21% report that home staging increases the value of a home between 6% and 10%, and 39% note that it greatly decreases the total amount of time a home is on the market.
For a consultation on staging or selling your home, Call Premiere Stagers and Realty at 608-345-9396.