iBuyer Companies: Are They Really Cheaper Than a Real Estate Agent?

Odds are, if you’ve been thinking of listing or buying a home these days, you’ve heard of iBuyer real estate companies. These are companies such as opendoor.com that promise to sell your home for significantly cheaper than your average Real Estate company. However, are these companies actually all they’re cracked up to be, or do their costs end up being just as much as a real estate agent, if not more, when it’s all said and done?

Check out this article we found by Teke Wiggin with inman.com titled “iBuyers Cost Sellers Up to 15% of a Home’s Value, Study Finds,” which takes a hard look at the actual costs of using these “cheaper” options when selling your home:

Market analytics firm Collateral Analytics puts hard numbers on the much-debated costs of using iBuyers.

Offering ammunition to agents who argue that iBuyers are often deceptively expensive, a new study by real estate data analyst Collateral Analytics has determined that the typical cost of using an iBuyer ranges between 13 and 15 percent.

Entitled “iBuyers: A new choice for home sellers but at what cost?” the study conflicts with claims made by some iBuyers on just how expensive such services wind up costing homeowners. Opendoor, for example, represents its service as more affordable than a real estate agent. But if the new research is correct, using an iBuyer would generally cost consumers two to three times more money than if they simply used a traditional agent.

“In all, the typical cost to a seller appears to be in the range of 13% to 15% depending on the iBuyer vendor,” write the authors of the report, Collateral CEO Dr. Michael Sklarz and Dr. Norman Miller, senior vice president of research and development with the firm. “For some sellers, needing to move or requiring quick extraction of equity, this is certainly worthwhile, but what percentage of the market will want this service remains to be seen. ”

The analysis adds to a growing debate over the value of iBuyers. Some agents argue these startups often bilk homeowners while others contend iBuyers are a reasonable option for their clients.

The divergent views came into sharp relief during two Inman Connect panels last month in which agents shared their experiences with iBuyers.

The report was not framed as an indictment of iBuyers. It describes the service as “a welcome alternative to traditional brokerage” for a portion of motivated homesellers. However, its most notable contribution to a nascent body of research on iBuyers involves its cost estimate of the service.

The report noted iBuyers charge sellers a convenience fee ranging from 6 percent to 9.5 percent, with some also docking the seller “for fees typically paid by buyers at closing, adding another 1 percent or more.” IBuyers tend to ask for “generous” repairs based on the results of a home inspection while some, such as Offerpad, pay for moving costs, write the authors of the study.

This all means that the total direct cost of an iBuyer “ignoring repair credits” is between 7 and 10 percent, versus the “typical 5 to 9 percent combined seller and buyer costs with a traditional broker,” according to the study. “Yet, that is not the end of the story or the comparison,” the authors write.

Due to costs and risks of holding and reselling their acquisitions, iBuyers must make “conservative” offers, according to the report.

“The more unique the home, the worse the season for selling, or the more competing inventory is present in the local market, the more conservative will be the offer price,” the study asserts.

To pinpoint the typical discount that iBuyers pay for homes, the report’s authors compared purchase prices of two unidentified iBuyers with home value estimates generated by Collateral Analytics’ automated valuation model (AVM) — a model that report claims “correlates very well with actual market values.”

The analysis used a sample of 6,000 transactions that took place across four markets — Phoenix, Atlanta, Charlotte, and Las Vegas — from January 2016 to February 2019. The report did not identify the two iBuyers, but a source familiar with the study confirmed they were Opendoor and Offerpad.

Offerpad spokeswoman Cortney Read said Offerpad’s average service fee is 7 percent and that some homes require only minor repair costs. She also added that Offerpad believes the report “does not accurately compare the mentioned fees,” focusing only on commission for real estate agents, while including other costs for iBuyers that “should be also reflected in the traditional real estate agent percentage amount.”

Opendoor didn’t immediately respond to a request for comment.

According to the study, one iBuyer bought homes at a median discount (the median discount off market value that the iBuyer purchased homes at) of 4.5 to 6.9 percent. The other iBuyer paid a median discount of 2 to 3.3 percent.

These discounts reportedly have declined modestly over the years. In 2016, for example, one iBuyer’s discount was about 7 percent, while the other’s was around 3.5 percent. By 2019, those numbers stood closer to 2 and 4.5 percent, respectively.

The authors theorized that “pressure to deploy capital” may have “reduced the spread [between how much iBuyers pay for homes and how much they’re worth] as the iBuyer market matures.” Some of that pressure has likely come from Zillow Offers and other ventures that are trying to take a bite out of the growing iBuyer market.

“Ultimately, the spread [the discount paid by iBuyers] will be at an appropriate level to compensate the iBuyers for liquidity risks and capital costs,” they said.

Thus, the study’s “preliminary empirical results” suggest that sellers are paying “not just the difference in fees of 2 to 5 percent more than with traditional” agents, and a generous repair allowance, but also an additional 3 to 5 percent more to “compensate the iBuyer for liquidity risks and carrying costs.”

Taking all of this into account, the authors conclude the typical cost of using an iBuyer ranges from 13 to 15 percent depending on the company.

This cost estimate is in line with estimates from some agents that spoke about iBuyers at Inman Connect Las Vegas, but a bit higher than an estimate published by Market Watch: 11 percent.

The cost makes sense from a business perspective, the report notes. IBuyers must cover carrying expenses and deal with a number of risks including home burglaries, price declines and “adverse selection.”

The last risk refers to the risk that sellers who know about hard-to-discover negative characteristics of their home will be more likely to sell their homes to iBuyers at prices that iBuyers would not pay were they aware of those flaws.

“Not all sellers are better informed than the iBuyers,” they write. “Still, there is some risk of informed sellers taking advantage of relatively high offers.”

Home Chores for the Summer

With the warmer weather comes more opportunities to do the outdoor chores you haven’t been able to do, or haven’t needed to do, because of winter. Whether it be you doing the chores yourself, or maybe taking advantage Summer vacation and assigning your kids more household chores, here are some summer chore ideas to keep your whole family busy and get the house in tip-top shape and ready to be used:

Mow the lawn:  Since you laid down your summer grass seed a few months ago (right?), it’s time to mow it and enjoy the fruits of your labor. Get that grass cut and take a blanket out on the lawn for a picnic with the family, or to lay in the sun and read a book. Don’t forget to make sure it’s getting adequate watering, though hopefully monsoons will hit soon and do that job for you!

Trim the yard plants: This is one chore that – done properly – can really make a difference in the appearance of both your front and back yard. Whether you just want your home to have a clean-cut look, or you’re throwing a backyard BBQ, trimming the bushes and trees in your yards make your house look amazing and show that you take pride in taking care of your home. This is also very beneficial for your plants, as it gets rid of dead or excess branches, and helps them to grow healthier.

Do some landscaping projects: Always wanted to add a gardening bead for flowers or fruits, or vegetables? Why not this summer? Or maybe you’d like to make an easy path to and from somewhere? Some large pavers surrounded by mulch is an easy and cheap way to accomplish this clean look. Another idea would be building your very own firepit to enjoy the summer night skies and family time over s’mores. There are dozens of tutorials online of how to do this well and how to do this on a budget!

Pull some weeds: This one seems like a no-brainer considering the weeds are EVERYWHERE, but it is also a chore that easily gets put off for “next weekend” almost every weekend. If you aren’t careful though, those weeds will seed and spread, making next years weeds even worse! So, put on your gloves and grab your hula hoe, and go get those weeds! This simple chore will make your home look so much better and well cared for!

Wash the car: Now that we’re in that middle season between winter rains and monsoons, it’s a good idea to get your car washed. Get off the dirt and grime from weather and use, and get your car looking shiny and new. There are plenty of car wash business in the Prescott and Prescott Valley area if you just don’t have the time, or you could do this yourself or with the kids as a fun way to cool off while also accomplishing some work.

Clean outdoor items: This could include outdoor furniture like benches, tables, or hammocks, or maybe toys you’ll be using this summer such as boats, ATVs, or campers. Either way, we’re sure they could use a good spruce up after a long winter of not being used. Dusting, getting rid of cobwebs, and just a general overall cleaning are probably in order here. This will make that outdoor furniture ready to use and enjoy in the warm weather and will also make you ready to take those summer vacations or day trips where you’ll be using your recreational toys.

Spraying the house for bugs: This chore is probably best left to the adults rather than the kids, but if you live in Arizona, you know it is a must! Now is the time where all those not so missed creepy crawlies start making their long legged and winged return. Spiders such as wolf, daddy long leg, and even black widows can be common. Aunts, centipedes, and scorpions also make the list of bugs trying to call your home their home. Spray both the inside and outside of your home, getting every edge, door jam, windowsill, and point of access you can think. Of course, the bugs will be inevitable, but this will drastically reduce the amount of them you see in your house.

Mouse traps: Lastly, don’t forget to set up your mouse traps (gasp!). Yes, we have mice here in Prescott, Arizona. Field mice, pack rats, and more… you better get used to it if you plan to stay here. For the occasional mouse, setting up a few traps should do the trick, however, if you are having a real problem with them, it might be a good idea to call the exterminator. Make sure to be checking those traps and replacing them as needed.

Making Your Bedroom Feel Luxurious on a Budget!

For most of us, our bedroom is little more than a place to sleep and hold our belongings. However, just because it has always been that way doesn’t mean that it has to stay that way. You don’t have to settle for drab and dreary when what you really want is a bedroom that feels welcoming and relaxing the moment you walk into it. You don’t have to settle for a bedroom that’s just for sleeping when it can be so easy to jazz it up and make it your own!

One home trend that we’ve seen to be gaining some steam these days is converting your current bedroom into a luxury suite, or something comparable, no matter its size. If you want to live like royalty rather than just feel like you’re renting a cheap room for the night, then you’ll want to follow these tips.

 

Compartmentalize Your Activities

Organizing your bedroom and getting rid of the clutter will not only make it a more relaxing place to be, but it will also make it feel larger and will open up more space for new additions to make it more functional. These things could include adding a gorgeous desk for doing work or perhaps craft projects. Or, maybe you could even add a TV area for entertainment, providing a good way for you to use your bedroom for rest and relaxation.

 

Make it Chic

Choose a color palette that is both luxurious and classy. Silver and gold can seem tacky, so choose muted shades that complement each other. These types of color schemes are shown to make one feel more calm and relaxed, not to mention they go with just about anything and make it far easier to design your ideal space.

Another chic addition you could do that would make a statement is getting a brilliant and commanding headboard. This can instantly upgrade the look of your room without any other changes and also become a beautiful focal point in your room. Little tweaks and additions like these come at minimal cost with a great reward.

 

Light it Properly

Make sure that you have the right light to show off your designs. If you don’t have many windows, you’ll want to use more brilliant lightening to make up for the lack of light. However, if it’s too washed out or yellow, then it will look drab and run down. Switch to brilliant LEDs and see the difference.

 

Choose Your Accents Wisely

We already mentioned a headboard, but some elegant drapes can also make your room feel more royal. Hang them high and wide to make your windows appear grander. Being strategic with your furniture accessories is key for keeping you under budget, helping you avoid doing too much with the space, and putting minimal effort into the project while still seeing a huge difference.

Are you ready to make your bedroom more luxurious? If you tweak just the few small things mentioned above, you’ll be impressed by the results. The feeling of decadence and truly making a space your own will make you more confident in your surroundings, and also help you to fully relax in your very own bedroom.

Is it Time to Upsize Your Home?

As we and our families grow throughout the years, unfortunately, our homes don’t tend to grow with us. A house that may have initially worked fine for a single person, a young couple’s starter home, or perhaps even a family with a newborn, can quickly become too small as your family grows. Add in pets, more children, multiple generations living under roof, and before you know it, you are all on top of one another with no space to breath.

BUYING A NEW HOME VS. ADDING ON TO YOUR HOME

For those who really love their homes (the style, the location, the layout, etc), simply remodeling and adding to their home is the best option. That way they get to remain in their beloved home while making it even more their own and making it something that suites all their needs. However, not everyone can afford this option as it can be costly, and there may also be things about your property that would prohibit such a project such as the size of your land or any HOA’s that may be in place. This is when moving to a bigger home becomes the best solution, and really only, solution.

WHERE DO YOU NEED MORE SPACE?

The first and most practical thought when considering upsizing your home is to simply consider square footage, bedrooms, and bathrooms. This seems logical right? Well, maybe it is when considering your immediate needs, but it may not be the best approach in the long run. It’s important to take a more critical approach when looking at new homes and to consider how each space will actually be used. If you have younger children (or possibly more on the way), then focusing on bedrooms and bathrooms makes sense. But if your children are closer to heading off to college or starting their own families, it may be better to prioritize group spaces like the kitchen, dining room, living room, and outdoor space. This will pay off during times when you are having big group gatherings, parties, and things of the like. It might also be a good idea to consider holidays or summer vacations, when everyone is coming to visit. If this will happen often or your family is close and you will be having to accommodate a lot of people, you may need more rooms AND bigger group spaces.

MOVING OUTWARD

If you need more space but can’t necessarily afford a more expensive home – or maybe you just don’t want one (an affordable mortgage is so nice!) – something to consider might be moving out of town. Depending on where you live, you can probably get a lot more house for your money if you move a little further from a city center. This might be hard to think about – leaving the walkability and short commutes of a dense neighborhood or condo, and the “city life” you love – but this is where knowing what you truly need comes in again. What is more important to you: living in the city with walking distance to stores and short commutes, or having a bigger home that can accommodate your family, allow you to host Holidays, and give you space to throw barbecues and birthday parties? Neither answer is wrong, it all just depends on what is most important to you and your living needs. If the latter situation has become priority, sacrificing city life and getting a more spacious home in the suburbs makes the most sense.

Whether you’re looking to possibly sell your home and move on to something bigger, want some referrals of good contractors, or just need some advice on what the best option for your family might be, give us a call at 928-771-1111. We would love to connect with you and help in any way we can!

 

What Should I Repair Before I List?

As realtors who’ve been in the business for fifteen years, we have been asked this question a lot.

When you’re getting ready to list your home, it’s of the upmost importance to ensure you are showing it in the best light. First impressions make a big impact on buyers looking to call your home their own and you don’t want something scaring them away that could have been easily fixed before you listed. Taking time to repair or spruce up some of your homes weaknesses – and in doing so, highlighting some of its strengths – can make a big difference in how fast it will sell. Here are our top five recommended repairs to make before selling your home.

Repaint walls.

Unless you’ve recently repainted, or the colors of your walls are in good shape and are colors that are trendy at the time, giving your home a fresh coat of paint is one of the most cost-effective ways to spruce up your home. It makes everything fell clean and new, and generally it can be a do-it-yourself project. Repainting helps to cover up any scratches or chips on the walls, as well as the any other kinds of normal wear and tear walls sustain due to daily living.

Repair floors.

Hardwood floors are a very desirable feature in a home, but walking into a room with scuffed and dull floors won’t make the good first impression you’re seeking. You want to ensure your floors look their best by fixing scratches or dull areas by getting the floors cleaned or buffed out. Likewise, if your carpet is worn or stained, consider paying a company to come shampoo them, or even replacing them altogether depending on how bad they are. And don’t forget the tile in your kitchen or bathrooms. Cleaning off that brown grout that didn’t start out brown, or even completely re-grouting can go a long way in making dingy tile work look brand new!

Refresh the landscaping.

We all love that amazing curb appeal don’t we? It’s the first thing you notice when you pull up to a house and the thing that has buyers saying “OH!” in either glee, or disappointment. Show buyers your home is the full package by dressing up the outside as well as the inside. Clean your walkways and driveways, plant seasonal flowers and plants, trim hedges and trees, install outdoor décor pieces, and fill in mulch and gravel. These things not only make your home look great from the outside, but they also show potential buyers that your home was well loved and taken care of.

Fix your fixtures.

Leaky faucet? Rusted drains? Loose drawer handle? Making these small and simple fixes can make a big difference to potential buyers with detailed-orientated minds. The great thing with these too is that all it takes is a little TLC and elbow grease to remedy the issues, and minimal cost on your part. Minor work for a great reward. Installing new faucets and sinks may also be worth the investment depending how dated or in disrepair they are.

Remember that you don’t need to go too crazy in getting your home ready to be listed and show well for buyers, but listen to your real estate agent who ultimately just wants to help you sell your home, and maybe take a few of the above tips into consideration.

If you have any more questions, you can call us at 928-771-111, or leave a comment below.

Negotiating Tactics That Will Kill A Sale

Bargaining is a subtle art in real estate and the way you handle the back and forth that happens during contract negotiations can make or break a sale. Skilled negotiators can usually find some common ground that satisfies all parties and helps close a home smoothly, but if you’re not careful, a wrong move could cause a deal to crumble for the seller or buyer.

Here are some negotiation tactics buyers and real estate professionals should avoid:

  1. Lowball offers: Going far below market value when you make an offer damages your credibility as a buyer and can be insulting to the seller. The seller has a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, they won’t even consider the offer.  This can leave a bad taste in their mouths in regards to you as a buyer and cause them to not want to accept any other offers you may make. Keep this in mind when you want to make a low ball offer and your agent advises otherwise. They have seen the downfalls of this tactic many times and are just looking out for you best interest.
  2. Incremental negotiations: Don’t continue to go back to the seller with small increases in your offer ($1,000 or less). Fighting over a small dollar amount makes you look bad and makes the seller think you will be a difficult buyer to work with. The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities.
  3. “Take it or leave it”: Try not to draw a line in the sand with your initial offer. The seller can get defensive and consider other offers if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it. People do not like to be given ultimatums and will not feel happy if they feel you are painting them into a corner.
  4. Nitpicking after inspection: Obviously if the inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate. Buyers must understand that unless they are buying a newly built home, every house has it’s little quirks of wear and tear from years of use. Combing the house with a magnifying glass and demanding it be in perfect condition could lead to the seller refusing to do ANY repairs, therefore leaving you as the buyer to do them all yourself, or walk away from the home that you possibly really like.
  5. Asking for more, more, more: Some buyers will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. Try to avoid giving the seller a reason to build up resentment and think that you’re being greedy. There should be realistic give and take on both sides of the contract to help foster a good relationship during your escrow, and help make everything go smoothly.

These are just a few things you want to avoid while negotiating a contract in order to not kill the sale. Remember that if your agent advises against these tactics, they are speaking from experience and out of their best interest for you.

Why Should You Use a Real Estate Agent to Buy or Sell?

With websites around today such as Realtor.com, Trulia, and Zillow, many buyers and sellers tend to think, “Who needs a real estate agent?” The answer is everyone!

Even though these websites are extremely user friendly and can make the whole real estate process seem like a piece of cake, the truth is there is so much more that goes into a real estate transaction other than finding a home, or selling your home.

While it might seem like we are being a little biased on the topic, hear us out! This is probably the biggest financial decision/investment you will ever make. That’s a big deal! Here are some reasons why we believe it is so important to use an agent rather than try to venture the industry of real estate alone.

Real estate Agents have a ton of experience: “Want to check the MLS for a 4B/2B with an EIK and a W/D? Real estate has its own language, full of acronyms and semi-arcane jargon, and your Realtor is trained to speak that language fluently,” notes Realtor.com. This isn’t exactly an end all reason to use an agent, but wouldn’t it be nice to be working with someone who knows what they’re doing rather than scratching your head in confusion and having to look things up at every turn? What if you miss something, or overlook something? Well, an agent is paid to avoid exactly that! They are also very familiar with the dozens of lengthy contract forms you will be required to sign both as a buyer and a seller, and help you navigate those wordy jungles so you fully understand what it is you’re signing exactly. Any mistake could end up costing you financially, legally, and emotionally. Real estate agents work hard to prevent that.

They have access to all the best home searches: With websites like those mentioned above, realtors and the public alike have access to them, and there are so many places to look for homes on the internet. However, realtors have even more! They have access to the MLS (Multiple Listing Service), which every home has to be listed on except FSBO (For Sale By Owner) – see what we mean about the acronyms? Realtors also often have some homes not yet on the market they could show you, giving you a jumpstart on any new listings. Good local realtors also know their areas better than anyone and will be your best resource for finding a home in the neighborhood and price range you want.

They’re master negotiators: When looking to buy or sell a home, you better believe there will be some negotiating involved in today’s real estate market. Depending on the home, there could be a lot of competition, all cash offers, bidding wars, and more. Do you want to try to traverse these waters alone, or would you rather have a knowledgeable and experienced agent at your side that has dealt with these types of situations before? Your realtor will always have your back, fight for you, and look out for your best interest to make your transaction as smooth as possible.

They know everyone: After years in the real estate business, real estate agents know the best people when it comes to buying and selling homes. Mortgage companies, real estate attorneys, Escrow companies, home inspectors, and the list could go on and on. Real estate agents will know who’s the best, who they’ve had trouble with in the past, and everything in between. This expertise is priceless considering a bad home inspection could cause a home to fall out of contract, or a mortgage company that isn’t on the ball could delay closings.

They have to stick to a strict code of ethics: Not every licensed real estate agent is a Realtor. A Realtor is an agent that also belongs to the National Association of Realtors (NAR), which is the largest trade group in the country. To be a Realtor with NAR, you have to adhere to a strict code of ethics that not only protects the agents, but also protects the buyer and sellers from any agents looking to take advantage.

They wear a lot of different hats: A Realtor is a parental voice, data analyst, therapist, expert, and so much more. They do a lot of work to earn their commission even though it might not always look like it. They are constantly looking for new homes for their buyers and using their own money to market their seller’s homes. They drive around neighborhoods and towns with you to make sure you find exactly what you are looking for. They do a comparative market analysis (CMA) on your home to see what you could possibly sell it for to make sure you are getting the most out of your investment. They are texting, calling, and e-mailing at all hours of the day. This is not a 9-5, Monday-Friday job. It is 24/7 all week long job because your real estate agent wants to be there for you!

We hope some of these reasons make sense and that in your next real estate transaction, you’ll consider using an agent.

If you’re looking for an agent’s assistance now, or have any questions about what it looks like to use an agent, give us a call. We’d love to help! 928-771-1111.

Most Essential Home Features for Buyers

Last week we talked about older homes and renovation loans. In conjunction with that topic, we thought it would be interesting to take a look at what home features new home buyers and future home buyers would consider the most essential in their house hunts.

When you’re looking to renovate your home, or perhaps are getting a renovation loan to remodel the new home you’re buying, it is always important to not only think of what you like and want, but what other buyers might like and want when you go to re-sell your home someday. You may not believe this is applicable to you if you plan to stay in your home for the rest of your life, but you never know what life will throw at you and it is always best to be prepared. Perhaps you will get a sudden job relocation and have to move, or decide to move to be closer to your family and grandchildren? Whatever the case, never say never.

With that in mind, here are some of the high-priority home features The National Association of Realtors (NAR) found that buyers today have on their checklists when looking for a new home:

  1. Laundry Room
  2. Energy Star Windows
  3. Patio
  4. Energy Star Appliances
  5. Ceiling Fans
  6. Garage Storage
  7. Exterior Lighting
  8. Walk-in Pantry
  9. Hardwood Flooring
  10. Double Kitchen Sink
  11. Energy-Star in the whole house

As you can see, most of the home features on this list might not be ones we would think of first. While having things such as an updated kitchen and bathrooms, new flooring, and fresh coats of paint are nice, they weren’t in the top ten high-priority features among buyers. What buyers really seem to care about are things that help them save money on utility costs, give them extra storage in the home, and help make the outdoor living of the home better.

Talking about utility costs, NAR states, “While consumers may rank certain energy-saving features highly, they may not be motivated to pay more for them. Sixty-eight percent of consumers said they are concerned about the environment and would like an environment friendly home, but they were not willing to pay extra for one. However, when asked if they would pay more for a home to save $1,000 a year in utilities, the responses changed. Forty-six percent of respondents said they’d pay an average of $1,000 to $9,999 more for a home to save $1,000 per year on their utility bills; 37 percent would pay $10,000 or more.”

This is definitely something to keep in mind if replacing your appliances is on your list of things to do or to budget for in your home renovation.

Other features that ranked high among buyers in this survey included:

  1. An open layout where kitchen and dining room are open
  2. Wash and dryer on first floor
  3. 9-foot ceilings on first floor
  4. Want 2 – 2 ½ bathrooms

In conclusion, if you are thinking about renovating your home or getting a renovation loan in your new home purchase, you might want to consider these features. These are what other buyers find desirable and would perhaps pay more money for, which would maximize on your investment when you sell one day. We aren’t saying spend all of your renovation money on these things – you have to make your home your own and do the things that you want as well – but keep them in mind when considering what’s really important and where perhaps a portion of your budget should go.

Why Buyers and Sellers Shouldn’t Trust Online Real Estate Price Estimates

Whether you’re looking to buy or sell a home, chances are you’ve looked at a few real estate websites to see what the market is like out there right now. A lot of these sites, while very helpful in other ways, can tend to be a bit misleading when it comes to prices.

If you’re a buyer, these sites take the price the home is listed for and then break it down to give you an estimate of what your monthly mortgage might be. While sites like Zillow and Trulia state that these numbers are just estimates, a lot of times people see them and believe that is truly what they will have to pay monthly, and have hope they would be able to afford the home they’re looking at. These mortgage estimate numbers can be wrong because it doesn’t take into account how much of a down payment you will be paying, which can vary depending on your loan and loan program you’re using, or how much you can afford. Some loan programs are as low as 0% down payment, while others require the 20% customary down payment. Another reason these numbers might not be accurate is that money such as taxes and Escrow payments that get tacked onto your monthly mortgage may vary greatly depending on when you buy.

So then, what should you do if you are a buyer trying to figure out what you can afford? We recommend first speaking to a lender and getting prequalified to buy. This will not cost you anything and it will give you an accurate dollar amount of what you can afford in a home and in a monthly mortgage payment.

If you’re a soon to be seller, you go on these sites to look at what they’re predicting your home might be worth. Sites like Trulia, Zillow, and Realtor will have an estimate of what a home is worth when you look up the address, and this may be a number you look at to help you determine what your home is worth. The problem with these numbers is often times they are derived from automated valuation models and can be very inaccurate. What your home is worth depends entirely on what kind of real estate market you are in (because it varies from town to town), what your home looks like compared to other homes, the amount of land you have, upgrades done, and so much more!

What we suggest for people looking to sell their home is calling a real estate agency. Most agencies will do a CMA for free. A CMA is a Comparative Market Analysis, which compares your home to others like it that have sold in the area with similar criteria (area, year built, number of bedrooms, upgrades, etc). This will hopefully give you a very accurate idea of what your home is worth and what you can list it for rather than just having a guesstimate.

We don’t want to shoot down the real estate sites we love, we are just saying to read what even they say on their websites… that those numbers are estimates and can be inaccurate and not precise depending on your home, your situation, and so many things. For more accurate numbers, follow our tips above about seeing a lender or contacting an agency.

If you need help with either of those things, we would love to assist! You can call our office today at 928-771-111 to speak to an agent about helping you get pre-qualified or creating a CMA for your home to find out how much it could be worth.

Frequently Asked Questions by Sellers

When it comes time to put your home on the market, there are many things sellers begin to ask themselves. We’re going to take a look at some of the most frequently asked questions by sellers and give you some advice from what we’ve found to be true in our collective years of real estate experience.

What do I need to do to my house before I list it?

The answer to this question is really on a case by case basis, but for the most part, sellers do not need to do a ton of work to their homes before they list. While many sellers can get very anxious and worried about all the things they imagine they’ll need to do to their home, most only require a good cleaning and perhaps a little staging, but that’s it. There is no need to drop a lot of money into your home in order to get it ready because that is money you may not get back when you sell. Unless otherwise advised by your real estate agent, the preparation to list is minimal.

How much is my home worth?

This is a question no good real estate agent should answer without first seeing your home and running what we call a comparative market analysis. A comparative market analysis, or “CMA” as we call it, looks at houses that have sold in your area that are similar to your own in order to generate a good price point for your home. This price will depend on many factors including the home’s size, neighborhood, location, amenities, upgrades, and so much more. Many sellers believe there home is the best home on the block, which it may very well be, but prepare yourself to be realistic about how nice your home is compared to others because you don’t want to overprice it. If you price your home too high, then it will likely sit on the market for far longer than you expected. However, if you price your home too low, then you aren’t maximizing on your investment the way you could be. Therefore, make sure you speak with an agent and listen to their advice so you can collectively land on a good price for your home.

How long will it take to sell my home?

According to Realtor.com, homes in the United States are spending an average of eighty-three days on the market. However, again, the answer to this question will vary greatly depending on the home. Some areas that are nicer sell far quicker than others, likewise, certain price points, no matter the home, will sell quicker than others. There are far too many factors here to have a cut and dry answer, so we would urge you again to speak to your real estate agent to make sure you are at the best price possible to make good on your investment, but to also sell relatively quickly.

Should I be present for showings of my home?

Most real estate agents would agree on this one when we say, “No.” When buyers go looking at homes, it can be either a very fun experience, or a very stressful one, either way, having the owner of the home at the house will only make the buyers feel uncomfortable. With the seller there, the buyers don’t feel free to be themselves, ask questions about the property to their agent, or voice any concerns they have as they view the property. The last thing you want is to scare off any potential buyers and their offers on your home with them, so it’s best to stay away.

How much do I pay my real estate agent?

This is something that can vary depending on the agency and town, but that will be something you and your agent discuss and agree upon before listing your home. A common commission is typically 6% of the home’s sales price, which is then shared with the buyer’s agent, giving each side of the transaction a 3% commission of the sale’s price. That may seem like a lot, but you have to keep in mind that agents don’t get paid by the hour, they get paid from sales. So, they don’t make money unless they sell your home. They are spending a lot of time and money networking, and advertising your home so it is seen by as many potential buyers as possible. However, not all agents are created equal, so make sure you find the right agent for you who will truly seek your best interest and do whatever they can to help you sell your home.

 

In all of your real estate adventures, remember to breath and take it easy. Find yourself a good agent who will make your transaction smooth and stress free, and not one full of fear and anxiety.

If you’re looking to list your home, you could call our office today for a free Comparative Market Analysis! Our number is 928-771-1111. We would love to help you sell your home!