Archive for the ‘Market’ Category

The Perfect Listing Price

Wednesday, June 16th, 2010


As every real estate agent knows, the most difficult part of getting that new listing is establishing the right listing price.  If there was not a human side to every listing price, arriving at the fair market value is relatively simple.

 

Well, there is a human side to the listing price.  And, that component needs to be addressed.  Once in a rare while, the listing agent meets a seller who wants professional advice and truly acknowledges the fair market value.  However, those sellers are few and far between.

 

More often, the seller is aware of certain homes that have sold in he neighborhood and can build a street-savvy, hearsay case for their own selling price.  Rarely, is the seller’s idea of a listing price on the mark. 

 

The agent must now walk a delicate balance taking into account the fair market value and the personal feelings of their client, friend and seller.  That is the tricky part, isn’t it? 

 

At the same time, the agent must be professional, courteous, filled with integrity and accurate.  We all know that, historically, we have been surprised.  Sometimes, listings have sold for more than our data suggested.  Far more often, and especially in the current marketplace, listings have sold for less than was merited and below market value.

 

While there is no question that this is a buyer’s market, houses are selling.  And, properly priced homes sell for market value.  Brokers and their agents know that it is a buyer’s market and, don’t kid yourself, so do your sellers.

 

Even though a property’s fair market value may be less than your seller hopes, the agent’s responsibility is to provide an accurate fair market value analysis and a well-designed marketing plan that will accomplish that goal.  These two components go hand-in-hand and experienced agents know that one without the other does not work.

 

Yes, agents do take certain listings at above market value prices, but they have upheld their integrity and the integrity of their firm by advising the seller of the true market value.  If the seller chooses to disregard the recommended asking price and fair market value, the agent then has to make a decision. 

 

Many times, the agent will take the listing above market value with the agreement that a reduction will occur within a certain time frame.  We dislike admitting it, but we all know that happens.  This can actually be a strategy certain brokers and agents employ.  Yet, even that strategy will only work if the true market value has been discussed and substantiated.

 

 

  

 

 

Understanding your Local Market

Monday, June 22nd, 2009

No matter what niche of the real estate market you find yourself in, there is nothing more important than understanding your local market.  First and foremost, you must understand the real estate trends in your local community.  This is crucial for several reasons.  Neighborhoods within a community vary greatly in respect to value.  If you do not keep up with which areas are appreciating in value and which ones are depreciating, you can easily find yourself making risky investments.  Regardless of the national headlines and the poor economic outlook, there are always isolated communities that do not follow the trends.  Your job is to find them.

Secondly, the value of properties is constantly changing, especially in today’s market.  Keeping abreast of the local property values in your market is the key to turning a good profit.  Home values fluctuate by the thousands, even tens of thousands of dollars in a given month and if you are trying to sell a property, timing the sale during the “up” times is imperative.

Creating positive cash flow is the bottom line in real estate investing.  Let’s say you want to rent one of your properties for $800 per month with a $200 positive cash flow.  Now, let’s say that you haven’t done your research and do not know with any certainty that you can rent it for $800.  When all is said and done, your local market will only bear $600 per month.  Now you are flat even with no positive cash flow and potentially could be in the whole if your expenses ever increase, and eventually they will.  This is not the situation you want to be in.  If you want to be a real estate millionaire and profit from real estate right now, you will have to educate yourself so that you can think like one.