Location is the most important factor in real estate value. While it's generally cheaper to rent than buy, location plays a big role. Listing a home at an inflated price risks buyers passing it by waiting for a lower price. Offering a set percentage below asking, like 10%, is an oversimplification - many factors go into determining a competitive offer amount. For-sale-by-owner listings typically sell for less than those with an agent and often don't sell at all, wasting the seller's time. Real estate rules of thumb don't always apply given the complexities of each local market.
2. We humans have a natural craving to simplify
the complex. This same instinct, which
explains why legends, films and fairytales from
every culture tend to boil down to heroes vs.
villains, also explains why so many buyers and
sellers desperately seek rules of thumb for
making the often scary, rarely simple decisions
they face
3. Rule of Thumb #1: Location, location, location.
Fact or Fiction: Fact.
One of the elemental truths of real estate is that
almost everything can be changed about a home -
except its location. By the same token, location is
essential to our ability to afford and enjoy living in a
place, given that it impacts everything from: where
our children go to school (and whether or not we
have to pay for it), how much time and money we
spend getting to and from work, our safety, the
beauty, quiet and convenience of our surroundings
and the recreational, shopping and cultural options
which do - or don’t - become part of our daily lives.
4. Rule of Thumb #2: It costs more to buy than to rent
your home.
Fact or Fiction: Depends on where you live.
For 37% percent of Canadian large to mid sized
cities, it's actually less expensive to buy a home
than it is to rent! Of course, the type of home
you might want to buy could be
more pricey than what you’d be
satisfied living in as a rental, and
buying a home requires an upfront
chunk of dough (i.e., down payment
and closing costs) that renters don’t
have to come up with.
5. Rule of Thumb #3: List it high, to give yourself bargaining
room.
Fact or Fiction: Fiction.
The fact of this matter is that if you are selling a home in
a strong buyer’s market, your competition is steep. The
home that presents the best value for the price is the one
that is the most likely to sell. Listing your home higher
than what you know it’s worth is a surefire way to
alienate that relatively rare specimen: a qualified buyer
with a sense of urgency who might otherwise be
interested in making an offer on your home. Smart buyers
who are ready to leap off the fence into homeownership
do their research, and may have seen dozens - even
hundreds of online listings before they make an offer. If
your home is overpriced, chances are good that they’ll
pass your home up, even if they like it, waiting for you to
get a clue and cut the price.
6. Rule of Thumb #4: Always offer 10% below the asking
price.
Fact or Fiction: 100% baloney. I mean, fiction. Few
decisions in real estate are so nerve-wracking as that of
how much to offer for a home. These days, we search
online for comparables, try to suss out their similarities
and differences between those homes and our target
property, run some more numbers - there might even be
a spreadsheet or two involved. We ask our Realtor to talk
with the listing Realtor, get a feel for the seller’s
motivation level and figure out whether there are any
other offers, then try to factor the competition level and
any credits or bank involvement into our thinking. We
touch base (again!) with our mortgage broker to
understand how rates have changed since our last
conversation and exactly what the monthly payment will
be if we offer X or Y or Z.
7. Rule of Thumb #5: Listing your home as a FSBO will save
you some dough.
Fact or Fiction: Fiction (with the occasional exception).
I know some will argue this point, but the data is
unequivocal: homes listed for sale by owner (FSBO)
simply sell for less than similar homes listed by Realtor.
From my own observations, I’d also argue that FSBO
listings often simply don’t sell at all, and many end up
listed by a Realtor wasting months and months of the
seller’s time.
8. What real estate rules of thumb have you
heard? Did any work for you, or prove to be
completely off-base? Do tell!
9. Randy Bett
Investment Realtor/Author/Investor
Real Estate Professionals Inc.
Better Group Real Estate
202-5403 Crowchild Trail NW
Calgary, AB T3B 4Z1
Phone:403-774-7464 Ext:1
Fax:403-208-0082
Toll Free fax:888-711-6801
