Welcome back to the #KTQuickTips blog where Milton Real Estate Agents, Ariel Kormendy and Adrian Trott of The Kormendy Trott Team provide tips and tricks to buying and selling real estate.
Today we want to discuss the common phenomenon, Sticker Shock, experienced by many buyers! Sticker Shock, a term we’re literally just making up as we go, refers to the mentality of refusing to spend over the listed price of a home. This is most often experienced when in multiple offers and competing to buy a house.
We’ve dealt with buyers in the past that wanted to steal a house, or get an amazing deal and purchase one for well under market value. Usually they base their information off of what the asking price is.
This poses two problems.
PROBLEM #1
In a hot market, you’re not going to steal a house. Period.
PROBLEM #2
We’ve seen these same people take six months or more to find that amazing deal. All the while during this time, market value inflates about 5%, and they can no longer afford the house they originally wanted.
What we’re saying is, don’t get caught up on the list price. It may be very accurate, it may be high or it could be low. It’s often one person’s opinion of value, or, an arbitrary number pulled out of a hat.
Here’s why you shouldn’t pay too much attention to it: If the home’s market value is $500,000, and the home is listed for $450,000, and ultimately, sells for $475,000, does sold over asking have any substance? I remember visiting one home in particular where the home was listed below market value and after walking through the property, I said that it should sell for $80,000 more. Low-and-behold, it sold for exactly $80,000 over asking … or, fair market value. You can bet your pants that the listing Real Estate Agent sent out marketing saying “SOLD FOR $80,000 OVER ASKING” because “Sold for Market Value” doesn’t sound as nice?
Once you’ve found the home you want, have your Realtor do a market analysis to figure out what the actual market value of the home is. This number has anything to do with what the asking price. Based on the results, you can make an informed decision on how to present an offer. Sometimes it means offering more than asking, sometimes less.
Make sure your realtor knows the market and, ultimately, you need to put your trust in that person. If you have any more questions, or require assistance buying or selling a home, shoot us a DM on social or text – Adrian Trott 416-707-8401 & Ariel 647-464-0957.
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