Market Evaluations – Not Just For Home Sellers
You have seen them advertised on bus benches. You get inundated with flyers offering them. That’s right….. “Free market evaluations.” Between you and me, I never really understood why real estate agents offered them in their marketing. I mean let’s be honest. The term free is kind of gimmicky. I will let you in on a little secret. MARKET EVALUATIONS ARE ALWAYS FREE!!!
There is something that I have come across far too often this year. Let me paint you a picture of what I mean.
I get contacted by someone who wants to sell their home. As always, I head over there and meet with them and go through their home with them. After our initial meeting I will head back to the office and do two things. First I send them a list of all the things I think we need to do to get the home looking its best before it hits the market. For those of you who are familiar with me, you know I take a very active role in helping my clients fix up their homes. The next thing I do is a market evaluation to try and determine what their home is worth. As part of the market evaluation I will check the history of the home and find out how much the current owners paid for the home.
A few times this year I have seen how much they have paid for the home and realized they paid well above what the value of the home was worth. And I’m not talking just a little bit over the market value; I am talking significantly over the market value.
When I ask them about how and why they paid what they did for the home I almost always get one of four responses. 1) We bought it from a friend/family member and they told us that was what it was worth. Or 2) we got caught up in a bidding war as there were several other offers on the table. Or 3) we paid what the homeowner was asking for the home and our agent said it was a good price. Or 4) we bought it from the listing agent that had it for sale. I can tell you one thing for sure. When I come across people that have drastically overpaid for their home, none of them had a market evaluation done on the home before they put in an offer.
Look, I am not saying you should never over pay for a home. After 22 years in the business I realize that it sometimes happens. But if you are going to over pay you should a) at least know you are overpaying and be fine with it, and b) know that you won’t need to sell your home for a very very long time.
It doesn’t happen often, but a few times in my career I have sold homes for much more than they were worth. Just a quick sideline story. A few years back I had a client that wanted to buy a home in Wildwood Park. She loved the home. The problem was that she was competing with 3 other offers on the home. I went to meet her to write up the offer. I had prepared a market evaluation on the home to show her what the home was worth. The price she was wanting to pay for the home was waaaaay too high. I am talking ridiculous. I remember explaining to her that she was young and single and likely her life circumstances would change and she would need to sell the home in the not too distant future. She insisted that she should pay the amount she was willing to offer because she would be in that home forever. I pleaded with her. In fact, I told her I couldn’t in good conscience write an offer for the amount she was wanting to pay. I told her to think about it for the day and get back to me. Later that night she called me and said she wanted to pay the amount she initially told me and that if I didn’t write it up, she would ask another agent to help her. So I wrote the offer up for her with a price that was $40,000 above what the market evaluation showed it was worth.
Eighteen months later, her life drastically changes. She needs to sell her house. She decides not to use my services as she is too embarrassed to call me. She calls another agent. In the end she ended up losing over $40,000 in 18 months. But at least she knew about it. So many people honestly have no clue they are overpaying for a home. They get caught up in the emotions of a bidding war, or they aren’t getting proper advice from their agent.
Sorry to go off on a tangent. The point of all this is that when you are buying a home, beyond a shadow of a doubt, the most important thing your Realtor should provide you before you put in an offer is a comprehensive market evaluation on that home. I know most of us think that market evaluations are only for home sellers. Well they aren’t!! In fact, I would argue that they are every bit if not more important to home buyers. Your agent needs to show you the value range of the home you want to purchase.
With the odd exception, the value of the majority of homes in Winnipeg are very easy to determine. You simply look at similar homes that have recently sold in the same area. There may need to be some minor adjustments made for what a particular home may or may not have, but getting a specific value range on the home is very easy.
To conclude, I can’t emphasize enough that before you put in an offer on any home, make sure your Winnipeg Realtor does a comprehensive market evaluation to justify the value of that home. In fact, I would go so far as to say that your Realtor should do an evaluation on any home that interests you during your house hunting process. I know this is a service I provide for my buyers. Information and education is the most important thing your Realtor should be providing. That way you won’t be like a few home sellers I have come across this year scratching their heads and deciding whether it’s worth selling their home because of the amount of money they will end up losing.
Are you thinking of buying a home? Give me a call at (204) 999-6493. I would love the opportunity to talk with you.