General Real Estate FAQ



(Q)

Why should I use a real estate salesperson?

(A)

A real estate salesperson is more than just a "sales person." They act on your behalf as your agent, providing you with advice and guidance and doing a job - helping you buy or sell a home. While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell - - such as Certified Public Accountants and Attorneys.

The Internet has opened up a world of information that wasn't previously available to homebuyers and seller. The data on listings available for sale is almost current - but not quite. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.

If you're selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service. Only a licensed real estate agent who is a member of your local MLS can get you listed there - which then gets you automatically listed on some of the major real estate web sites. If you're buying or selling a home, the MLS is your agent's best tool.

However, the role of an agent has changed in the last couple of years. In the past, agents were the only way home buyers and sellers could access information. Now agents are evolving. Because today's home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.

The real estate agent is becoming more of a "guide" than a "salesperson" - - your personal representative in buying or selling a home.

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Choosing a Property

(Q)

I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?

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(A)
If your goal is to buy a home for it's resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part)

Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don't "overpay" because of the recent improvements.

Remember that you also buy a home for it's value to you as a "home," and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?

(Q)

When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.

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(A)

A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.

For the most part, upgrades are high- profit items for builders. They aren't designed to enhance the value of the house, but make you happier with the house you do buy.

If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.

One rule of thumb is to always upgrade the carpet and padding.

(Q)

I need to buy a house with a good resale value. How do I determine if my house will increase in value within the next five years so that we can upgrade? I can buy a smaller house in a great location or get twice as much house in a good location. Which is a wiser decision?

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(A)

It's like buying stocks. How do you really know which ones will increase most in value over the next five years? As with any investment, there are risks.

The most often quoted rule is that location is the most important factor. You want to make sure that the house does not back to busy streets and is as close to the interior of the tract as possible. Avoid corners and intersections. Choose the middle of the block or a cul de sac. You'll want to be sure it has at least two bathrooms (if you are buying in an older area).

Sometimes it is just timing that works out best for you. For example, if you buy a home before a major surge in local prices.

Value

(Q)

How can I find out how much my house is worth? There are no comparable homes in my area.

(A)

This may be a bad sign for you, especially if you think your house is worth more than other houses in your neighborhood. Homes maintain their value better if the neighboring properties are fairly similar.

In your situation, you may actually have to talk to several Realtors, get their opinions, and come up with some sort of consensus. Without knowing why there are no comparable properties in your area it is difficult to give another suggestion. If your lot or home is over- improved for the area, that means the value will most not likely be what you think it is. If your home is much larger, you might not get the same cost per square foot as other homes in the area.

So I would talk to a bunch of Realtors and get their opinions. I would not recommend hiring an appraiser, however, even though a lot of books recommend this. Appraisers are better at "justifying" a price than in determining market value.

(Q)

Where can I get information about the asking prices of properties that have sold during the last six months? I have found information on the selling prices, and would like to compare them to the asking prices.

(A)

The only place I can think of where you can obtain that information is the Multiple Listing Service. For that, you need to be a member, but you could ask an agent to obtain the information for you. I cannot think of any reason why an agent would not be willing to give you that information, so just ask one.

There really is not a concrete value in knowing the asking prices. There are different strategies in developing an asking price, plus a lot of properties start out over- priced to begin with. Comparing properly priced houses to over- priced houses, then lumping them together in some sort of analysis would skew your figures.

I can see how you could intend to use such knowledge for the purposes of negotiation, but with an informed listing agent, it should be a fairly ineffective strategy.

For example, recently I saw a web site where the agent was hawking his ability as a listing agent. He said the average home in his area sold for 93% of asking price, but his average listing sold for 97% of asking price. The implication was that he got more money for his sellers.

The truth is probably just that he priced his homes correctly to begin with.

(Q)

How do you know whether the price of a home per square foot is reasonable or if you are about to make a bad decision?

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(A)

Though this seems like an easy question, it is not



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