Six Unshakeable Codes of Real Estate
Murphy’s Law, The Secret, Laws of Gravity, Attraction, Thermodynamics, and the Law of Conservation of Energy. What do these all have in common? They are immutable laws meant for us to understand the secrets behind life’s uncontrollable forces. With this said, there must also be a code governing how the real estate industry works. There sure is!
First Code of Real Estate
The agency you sell your home with doesn't matter
30 years ago someone in a huge agency must have said, “Go to the client and sell our company's reach. Say that the company has an international market, the company has 130 offices, 650 agents nationwide, they auction homes in America, China and Singapore, so of course, they are going to sell your home too.”
I’m sorry, but the agency a salesperson works for has nothing to do with how well your home will sell. The salesperson's approach, the way they structure your price, presentation and promotion, will sell your home, and a great salesperson will definitely sell your home for top dollar regardless of what agency they represent.
Think about it… there are many traits of a good salesperson: how many of those traits are individual traits vs company traits? Negotiation skills? - Individual. Personality? - Individual. Personal connections? - Individual. Market research? - Individual.
Second Code of Real Estate:
The neighbours’ sale price doesn’t matter
Best way to waste real estate energy? Allowing yourself to get caught up in what the Smiths' home sold for last year. Home prices fluctuate more than the daily Canterbury temperature, and holding your breath for a sale price similar to the neighbours is unrealistic.
Along those same lines, assuming that a registered valuation has a permanent bearing of your home's sale price… also a waste of time. RVs are logical; calculated solely on size, age of your home and what the homes on the same street are selling for, whereas buyers purchase emotionally. Two homes can have the exact same RV, floor size and land size. But property A is perfectly suited for a new family, property B barely has zero line of sight from the kitchen to the kids playing in the backyard…
Third Code of Real Estate:
A home is worth what a ready, willing and able buyer will (and can)pay for it.
We enunciate “can”, as the bank's answer for the constant changes in home loan regulations. Changing LVR rules can have a huge impact on what your home is worth, as even if a buyer WANTS to pay $850,000 for your house, the reality is they can only borrow $700,000. An extreme example, but that idea rings true nationwide.
No one can dictate the worth of a home. Not you, a real estate agent, valuer, appraiser, council.. no one. And your value will change this month, compared to two months ago, and two months from now.
It’s not a simple calculation of, “I spent X in renovations so it must have increased the same X”. Or, “I built it for A and bought the land for B, I add those together and the home is worth C.” The reality your home is worth C, plus or minus a whole lot of emotion and bank funding. That isn’t an equation a mathematician finds captivating. Finding a lucky buyer (and I use luck very purposefully), to pay top dollar for your home is generally part of a larger timing game you are forced to play.
In short, it doesn’t matter what the homeowners think their home is worth. And it certainly doesn’t matter what any agent or owner wishes the home was worth. What matters is what a buyer thinks it’s worth — and in the case of a financed transaction, whether a lender will approve a loan at that amount.
Fourth Code of real estate:
General Maintenance, even Large Renovations, do not calculate dollar for dollar as increased home value.
In fact, general maintenance adds zero value – do not expect to replace the hot water cylinder and get your money back…
Spend $50,000 on a landscape architect to guide you to a perfectly planted and irrigated section, and a home’s value is not automatically increased by $50,000. Depending on the usefulness of the newly planted gardens, the colour scheme involved, the amount of bird friendly trees, and the direction the prevailing wind blows, your $50,000 landscape plan might add $15,000 or $20,000 to the value of the home. Or it might, in fact, add nothing. If a buyer isn’t impressed, you’ve gained zero value.
Some kitchen and bathroom improvements (home renovations), assuming you’ve stayed away from a poor DIY job, tend to have higher rates of payback than others. But rare is the improvement that adds equal or more value to a home than what it cost.
The same goes for large scale maintenance – New cladding, new roof, rewiring.. these of course are appealing to a buyer and might be the final bump it takes for someone to offer on your home over another, however when buyers are in a competitive market, they EXPECT you’ve done these improvements. It’s not extra, it’s assumed.
Fifth code of real estate:
Your agent is away on holiday? GREAT. The odds of selling your home has just increased exponentially.
Send your listing agent on a holiday, and given some unseen and completely irrational code, you will soon find yourself in a multi-offer situation.
We’re not joking. Ask any seller (or buyer) what happens in their real estate life when their agent goes away to a conference or is sitting on a beach in Bali. All of a sudden your home is plated in gold and buyers run to the banks asking for more money. Murphy’s Law at its finest.
Sixth code of real estate:
(And the most important!)
Never underestimate the “Three P” approach – Price, Presentation, Promotion
When you do get around to selling, it's vital to turn your focus to the “Three P” approach. Essentially, your home will never sell for its top dollar if you don’t put energy into all three of these aspects.
Example: if you have put energy into beautifully presenting your home, and promoting it with an impressive online reach, but you haven’t included a logical price guide.. You’ve missed the mark.
A logical price guide to bring buyers through the door, being attentive to your presentation through maintenance, landscaping, property styling and professional photography, and an investment into boosted online and social media advertisements never fail to attract a competitive buying market. It’s this competition, this tension around the home, that pushes your home's price well above the market value.