Valuing Homes for Buyers

[photopress:dartboard.jpg,thumb,alignright]To some extent buyers, especially first time buyers, encourage receiving inaccurate information with regard to value and other home details, by asking the right questions at the wrong time.

Sellers understand that it takes time to work on a valuation. Rarely does a seller call and say, “I live at 123 Great Street, what is the value of my house?”. I’d venture to say that no seller expects an agent to know the value of their house on the spot, nor would they want a two second answer. Consequently, valuing the home properly for a seller, within the framework of the seller’s expectations of the time it takes to give an accurate answer, produces fairly good results most of the time.

Buyers on the other hand encourage shoot from the hip responses fairly continuously. The normal process should be that the buyer view the properties selected by both them and the agent. The buyer should select one or more that they might like to purchase, and then ask the agent to take some time to evaluate and value those properties that they like best.

But that is not normally how a buyer operates. Often they ask all kinds of questions, as if an agent knows every property they are showing in great detail and with a large degree of accuracy. Certainly the agent can, and will if you encourage it properly, do all of the work necessary to know every property. But buyers seem to expect an agent to spend this kind of time on every property being shown before the agent shows the property and before the agent knows if the buyer is even interested in the property. By and large an agent is not going to study every single property he shows in great detail, as it would be a waste of time, especially for the ones the buyer hates at first glance.

When you first look at property, you should simply be advising the agent if you like it or do not like it. Then you should ask the agent to dig into only the properties you like and might buy, and find out as much as possible about those and also value only those. For as long as I can remember, many buyers will go from house to house asking questions like, what do you think of the price? Is it worth it? What is the age of the house, have they had any offers, etc… By asking a lot of questions about every single house, even the houses you hate, you encourage the agent to answer off the top of his head. This starts the whole relationship off on a bad foot. The agent doesn’t want to say I don’t know to all of these questions, but it is not reasonable to expect an agent to know a lot about every single property being shown. Next thing you know the agent is giving sloppy and often inaccurate answers to avoid saying I don’t know to all of the questions.

Asking your agent if the asking price is reasonable, is of course a very good question. But just as the seller gives the agent hours and sometimes days to come up with that answer, don’t expect an answer on the spot for every single house you are shown whether you like it or not. If you do ask the question, and the agent answers immediately without taking at least an hour or two to research the answer to that question, don’t be surprised if the answer you do get on the spot is a knee jerk, inaccurate answer.

By encouraging the agent to answer inaccurately, you set up a relationship where the agent continues to give you shoot from the hip responses even on the property you eventually purchase. Look at property from your perspective. Do you like it or not. Then ask the agent to research the properties you like. This will insure a more accurate valuation and more accurate facts. First the agent calls the listing agent to see if he has any offers and if so, what time are the offers being presented. If you have a few hours to get your offer in, and you usually do, set an appointment for a couple of hours later and ask the agent to research the properties in detail before you sit down to discuss the price and terms of the offer.

Often it is not a good idea to ask ALL of your questions before making an offer. If the buyer’s agent calls the listing agent and asks tons of questions like How old is the roof, Did they ever have water in the basement, etc., that buyer will not be given good consideration if there are multiple offers. Many questions, especially negative toned questions, should be asked after you “tie up the property” and most of them should be asked of the home inspector during the home inspection.

Sorry, I seem to have covered two topics in one there. Just following the normal sequence of errors buyers often make when viewing property and prior to making an offer. Often the seller is more negotiable with a buyer who loves their house, than one who is “kicking tires” from the getgo. Timing is everything. You should ask your agent all of the questions you may have and he should answer all of the questions including the ones you didn’t ask. Leaving the agent room to apply proper timing to obtain the correct answers, without alarming the seller or seller’s agent at the wrong time, can make a huge difference in whether you get the property and how much you pay for it. Once deemed a “difficult or squirrely” buyer by the listing agent, you will often have to jump through more hoops to get the property, if you can get it at all. Give your buyer’s agent enough room to play everything to your best advantage and don’t look at him like he is stupid, if he doesn’t know every answer to every one of your questions “off the top of his head”.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

6 thoughts on “Valuing Homes for Buyers

  1. I don’t know how to do a trackback (still green in the blogging thingy) but I just wanted to let you know that I linked to this article for my readers. Your post screams clear communication between the client and the representative, I love that.

  2. I don’t know how to do a track back like Jim and Merv do. I only know how to do a link. Maybe Dustin can give us both a how to on that.

    Is that what makes the text show up in blue background?

    I went to a 3 clock hour class on technology and learned nothing new except playing with the mortgage guy’s phone and bluetooth.

  3. 🙂

    If using the right platform, then a trackback require no work on the blogger’s part… WordPress, TypePad, and other platforms automatically ping the appropriate servers that cause trackbacks to show up just like they were a comment. For some reason, Google has neglected to build this technology into Blogger, so Todd you’re pretty much out of luck. (Ardell, you have the same problem on your personal blog because you are using Internet Crusaders blog and they don’t have this technology figured out yet either.) Todd, I did notice that people can trackback to your blog because you’re using the haloscan plugin for blogger, but that won’t help you leave a trackback on RCG.

  4. I take valuation very seriously and you’re right Ardell, it takes a few hours to do. I usually follow your approach, not doing it until I’m sure we’re getting ready for structure an offer. I’ve had a few buyers give me some grief over this, but having wasted precious energy doing that work for properties the other buyers wasn’t serious about, I’ve learned to push back a bit when a buyer asks too early in the process.

    Sometimes saying no can work wonders.

  5. Christine,

    I’ve never seen the admin panel from typepad, but I know I’ve had lots of people send me trackbacks from that system, so it must be possible.

    For simplicy, I didn’t discuss the manual way to add a trackback in the previous comment, but here goes. This will be for WordPress, but I can only imagine that TypePad will have similar functionality. When I’m preparing a post, there is a field called trackback. In order to manually send a trackback, you can search for a trackback link that is often provided for a post.

    To complicate things, the theme that I’m using here on RCG doesn’t provide a trackback link and I’ve never bothered to include it. Nonetheless, it is possible to leave a trackback to a post on RCG by simply adding the word “trackback” to the end of the post URL.

    For example, if you wanted to leave a trackback to this post, here is what you would do.
    1) Provide a link to this post in your text (this is a requirement or the trackback won’t get processed)
    2) In the trackback field of your post, paste the following URL:
    3) Publish your post.

    Again, for most blogging platforms, this is all done automatically and behind the scenes. Also, because trackbacks have been sooooo heavily abused by spammers, many people have simply turned trackbacks off, so don’t expect trackbacks to work on all blogs.

    I hope this helps!

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