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There are thousands and thousands of homes out there. Does your buyer want to inspect them all personally? Of course not, but an MLS computer search will let you consider them all. So view your search as a process of elimination during which you are “homing in” (no groans please, you’re getting more than you paid for) on the best abode available. You must now develop an initial set of specifications in order to address your MLS (Multiple Listing Service) computer in a meaningful and efficient manner. Work with your buyer to define and modify his home specifications until the output list includes a reasonable number of homes, more than 20 and less than 60. You will not have to see all these homes. Upon reviewing the information on each home, many will be eliminated from consideration without the need for a visit. Careful consideration of alternatives and important features at this point, will save lots of time and, by eliminating obviously unsuitable homes, will lead you more directly to your buyer’s new home with a minimum of confusion. Recognize that if the home specifications are too easily satisfied, you will have hundreds of homes to see. Rather than attempt this, tighten the specifications by adding requirements or constraints to shrink the list to manageable proportions. On the other hand, if your buyer is dreaming the impossible dream, the computer will bring him brutally back into the real world when it finds not even one home for sale that meets the criteria. Then of course, he must loosen the specifications perhaps by considering smaller lots, higher prices, and by widening the geographic horizons. Every MLS home search includes geographic boundaries. Remember something about location, location, and location? While proximity to friends, relatives, schools, shopping, and recreation might be considered, the single most important location factor is frequently the length of the commute to and from your buyer’s place of employment. This should be measured in minutes rather than miles. Of course, there are three facets to the concept of location. First and most important is the concept of geographic location mentioned above, which should be addressed at this time. The other two equally important facets of location will be discussed in subsequent issues. Every MLS search also includes a price constraint. Start with the information you developed in defining your buyer’s maximum price limit. If most buyers are negotiating a discount from asking prices, you can safely search for homes priced a bit above your buyer’s limit. The selling-price-to-asking-price ratio provides some indication of how much can be negotiated off the average asking price. If the average selling-price-to-asking-price ratio is about 95% then it is safe to consider properties about 5% above your buyer’s limit. Be sure to verify the average selling-price-to-asking-price ratio or to determine what it is currently, for your segment of the market. Remember that each seller is an individual, not an average, and might demand full price or might sell for a 20% discount or more. You will not have any idea until your buyer makes an offer. Keep your buyer’s expectations within a reasonable range so that time is not wasted viewing properties your buyer cannot afford. Resist the temptation to show homes that are priced too far over his price limit. If you create the impossible dream, it will become your possible nightmare. If price is truly your buyer’s most important consideration and he does not mind severely limiting the choices, search only for vacant properties. Some of these will be bank foreclosures, relocation company owned homes resulting from employee transfers, and properties owned by someone who has moved out and would like to shed the mortgage payment. Many of these properties will be priced attractively, be very negotiable, or both. But do not expect a gift. These sellers still want to get the highest price possible. They differ from the typical seller because they often cannot afford for the property to sit on the market unsold, and they probably have little emotional attachment to the home. You will find it is most efficient to search the MLS database for homes priced in a range near your buyer’s upper limit. The lower boundary of the search range should be about 10% to 15% below the upper limit. For example, if the upper limit is $200,000 the lower limit should be $170,000 or $180,000. This approach is broad enough to include the rare bargain that might be out there. A price difference of about 5% is noticeable in the market, and there is no need to see homes priced so low that they obviously are unsuitable and can never compete with the homes priced nearer your buyer’s upper limit. If you get on the road and see a dozen homes, finding they are all much more than your buyer needs, he might ask you to search in a lower price range. You might guess that buyers rarely need to make this request. A minimum number of bedrooms and bathrooms are frequently used constraints in a MLS database search. A home’s age is also a frequent search criterion. Some buyers desire the features and established look of a home 25 years old or more. Others will consider only brand new or newer homes with large gourmet kitchens, master suites with luxury Roman bathrooms, skylights, and vaulted ceilings. A home for every buyer and a buyer for every home: They find each other eventually. Perhaps the idea of a brand new home is overwhelmingly attractive to your buyer. New homes have been very popular in many areas. Where do all those new homebuyers come from? Remind your buyer that when he eventually sells, a once new home will be a resale no matter what. Is a brand new home an economically attractive purchase in your area or is there a new-home price premium, with one-year-old resale homes selling for less than when they were new? The current rate of home price appreciation that exists in your local market can be a mitigating factor. There are many factors that can best be evaluated only by visiting a home: Whether it is in good condition and nicely decorated, or whether the next door neighbor is running an automobile junkyard on his front lawn. Without a visit it is even hard to tell if a home is unacceptably close to a major highway or if it is on a wooded lot. What is the definition of “wooded” anyway? Just take your buyer, have a look, and decide for yourselves. (Note that the definition of is, is beyond the scope of this discussion.) Review the description of each home, including the home’s location. Sort out the homes that are clearly unsuitable, and plan to see the rest. In the meantime, do not let your buyer get too attached, sight unseen, to the home that has the perfect description (you should be so lucky). Become proficient at putting the homes to be seen into geographic order for an efficient tour. Now it’s time to hit the road. |
