Owning real estate is a tremendous way to build wealth. Not only are you providing yourself or others a place to live, but you are very likely going to experience the growth of the value of the property over time. So when most of us think about real estate value, we are thinking about what the monetary worth of the property is. This value is extremely important. It will have a major role to play in decisions to buy and to sell. It is really the top priority when value is considered. But there are two other significant factors that also have great value.
Time
Timing is really important as well. Timing plays into things like the termination of a lease, the birth of a baby, relocation for a job. Your life will create circumstances that motivate you to make decisions about buying and selling and these circumstances will move you forward.
Timing is also a super big consideration if you own a home and want to move just for simple circumstances of change. You want a bigger/smaller/one level/bigger garage/different house. How do you coordinate selling one and buying another? Everyone prefers to just move once, and everyone wants to buy the perfect next house. How do you put this together? I counsel people that you have to choose which is of greater importance, the money or the time? If you want to maximize the highest sales price and the lowest purchase price then you need to make the money the priority. You need to put your house on the market and get it under contract before you make an offer on the new house. Then you make the offer on the new house with some negotiating power because you have got your prior house in escrow. This also means that you may not find the perfect next house right away, and you may have to find interum housing while you take time to house hunt. If the idea of selling before you find your perfect house scares you, then you are prioritizing time. You can go shopping, but you have to find a way to buy without having sold. You may end up floating two mortgages if you close on one house without having sold the other. Or you may have to make a contingent offer based upon the sale of your current home. To get the person selling the house you want to buy to give you a chance to do this, you are essentially going to have to make it worth their while. You present a risk to them because your current home may not sell right away. To entice them to take this risk you will likely have to pay full price (or even more than full price) for the next house. In addition, when you finally do list your current home, you are going to need to price it to get it sold quickly. This may be a list price below what you otherwise may have wanted to try.
Good Will
Good will is the reason that I wanted to write this post today. Good will goes a long way and is very beneficial to everyone involved.
Here is the scenario. This is based upon an experience I had about a week ago. I am going to mix up the details a bit to retain people’s privacy, but you’ll get the idea.
I represented buyers who made an offer on a house that has been on the market for 2 months. We offered $9000 below the asking price and asked for the washer, dryer, and refrigerator. The seller countered agreeing to just $4000 below the list price and not including any appliances. My buyers felt that this was in fact something similar to a full price counter offer because the appliances are easily worth $4000. They countered back agreeing that no appliances would be included, but wanting a price $6000 under the list price. We were now just $2000 apart. Then we waited for 2 full days. When we finally got a response, the seller had countered again at $4000 under the list price with no appliances. She had not budged. My clients agreed to these terms and we also realized that this home owner was pretty much tough as nails. Then we had the home inspection. It did not go well. The 9-year-old roof is leaking in multiple places, the furnace needs to be replaced, and the house has aluminum wiring. Each one of these items is expensive. My guess is $25,000 or so in needed repairs. We just didn’t want to negotiate these items with this seller. She agonized over her refrigerator and a couple thousand dollars. We just knew she’d want to nit pic the needed repairs. My buyers walked away. I honestly believe that if they felt like they had gotten more of a win in the negotiation of the offer they would have been motivated to at least attempt to negotiate the repairs.
I want to also say that nobody is out to “get” the other party. Everyone in the sale is wanting the best for themselves, but it goes so much more smoothly when everyone approaches the sale with compassion. So I want to put it out there that good will is important and should be taken into consideration. Be good to one another and set a tone of cooperation. Everyone will win when this happens.
Thanks for reading,
Dianne
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