Should Price Be The Only Factor When Shopping For a Home?

Good article below that speaks to the overwhelming approach by buyers who are simply shopping for places based on price or putting offers in on properties with a much lower number in mind because they hear the market is 'soft' and 'deals' are meant to be had out there. Realistically, buyers should be considering much more than just price.

The 'price discount approach' worked initially when the market started to go down and sellers were still trying to hold onto what they felt was 'justified' equity. That's been more than two years now and sellers in many areas have realized this approach simply will not get their home sold so more and more have taken the advice of their agents to be more realistic about pricing their homes. Those who sell quickly usually are on track or ahead of the curve but many are still 'shielding' themselves against that 'potential' buyer who is going to come in and still offer low.

This approach does work too but the listing number has to be realistic and agents representing 'buyer's' need to do their homework too when going out and doing a market analysis to make sure they're representing to their clients solid numbers and not be afraid to coach clients away from making unrealistic offers. Sometimes agents forget that they are the experts here and simply asking the question 'how would you respond to an offer like that if it was your house you were selling?' can help a buyer realize that being realistic is important and considering other things than just price is also very important.
 
Sure some still say 'well, I'm not the one selling, they are so if they want to sell then they'll have deal with the offer that is given to them'. It's hard to navigate around this approach but it's still possible to set expectations of what the rest of the 'offer' process looks like so that a buyer doesn't simply walk away from a property that prob'ly really meets their needs because they didn't get the number they were looking for.

By Marilyn Kennedy Melia of Bankrate.com
 
Today's buyer has a one-track mind when it comes to shopping for a home: price, but it might lead him in the wrong direction.

Home shoppers' overriding goal, according to real estate agents, is to scoop up a bargain.
"There are certain expectations now," says Raylene Lewis, an agent with Century 21 Beal in College Station, Texas. "People think, 'In this economy, I should be able to get X home at Y price.'"

There's nothing wrong with a bargain, except that experts agree that obsessively focusing on price can divert you from other key considerations, like whether a home suits your particular needs.

Here's, advice on putting prices in perspective:

Beware the seller's number

William Poundstone, author of the recent book "Priceless," has a radical suggestion: Don't enter a home knowing the list price. Instead, ask an agent to show you properties within your affordability range. Judge the homes on their respective merits, and then ask the agent for help determining a reasonable purchase price.

 However, Poundstone acknowledges this approach isn't realistic, saying, "It's hard to disregard the list price."

But, he would like home shoppers to at least be aware that a home price can play tricks on their minds, influencing how they judge the worth of a property.

In his book, Poundstone outlines a study whereby subjects estimated a higher reasonable purchase figure for a home when they were given a higher listing price. Correspondingly, subjects given a lower listing figure on the same property pegged their reasonable bid lower.

Right now, listing figures can be particularly confusing, says John Sullivan, past president of the National Association of Exclusive Buyer Agents.

For one thing, some "vanity" listing numbers are too high, because agents are assuaging sellers' insistence that their home is worth a certain amount, says Sullivan.

On the other hand, sometimes list prices are realistic, something buyers have a hard time accepting, notes Ellen Klein, of Century 21 Christel Rockaway, N.J. "Buyers today feel that sellers should give their house away," she says.

The takeaway: A higher home price tag doesn't translate into a "better" home. Judge properties on what suits your needs, advises Poundstone. Then, determine a fair purchase figure through a vigorous analysis of the most recent sales and sales contract prices on similar properties in the area. Read the rest of the article here.

Contact Me if you need help pricing a property properly or need advice on how to make a 'solid' offer.