Half the advice I receive is bad
(I just know know which half)
Times change. How we do things change. What was true thirty years ago or even ten years ago is not always going to be true today. I’m well into my second decade as a realtor now and how I do my job is almost completely different than how I did it when I first started. Maybe this is true for your job too?
With that in mind, I am a little dubious of some of the advice that I hear my clients have received from parents and family members, colleagues who may have experienced buying or selling a house sometime in the past. To be be fair, the market is always changing and the advice I gave home buyers last year when the market was white hot is different than the advice I am giving them this month as the market is, let’s say ‘changeable’.
A recent article in realtor.com got me thinking about what’s true and what is not. In my book – 365 Rules About Real Estate, my first rule is that ‘rules are made to be broken’. What I mean by that is that there are no absolutes. We can always find examples to refute was is normally the case – the rule of thumb – so advice should always be taken with a grain of salt
Here is some advice that we have all heard.
Always buy the worst house on the best block
There is nothing wrong with buying an inexpensive house in an expensive neighbourhood. For example, currently the Reflections at Laurelwood is selling Phase 2 — condo apartment units in Waterloo’s top rated high school area. When I was over there earlier this week, I commented with the listing realtor that I though it was a great way to buy into a neighbourhood with great schools, which is often important to good real estate appreciation.
Of course in terms of houses, buying on a very busy street, next to something stigmatizing like a electrical power corridor, is often also a cheaper way to get into a bigger or lower-priced home in a good area. But know this, the concerns you have will often be the concerns that the future buyer will also have. If you buy a house that is cheaper because of a fatal flaw, when it comes time to sell, if the flaw still exists you will have to keep your price low.
Recent comparables are the best guide to determining current value
In the first six weeks of this year, homes that my clients were viewing were selling as if we had a balanced market in KW. Then in the third week of February, and for the next six weeks, the market clicked into Seller’s market. It was almost as if all the folks looking in the first six weeks were ready to buy in the second six weeks. And they were willing to compete to get what they wanted.
The point is that the market is made up by the sellers selling and the buyers buying and where they are on their selling and buying journeys is more important than looking at what just sold (though that is very important).
The problem with real estate is that we are always looking back when trying to predict the future. Although the past is a good guide to what might happen in the future, a better guide is the present. Most realtors (I hope) keep a daily eye not only on new listings, sales and days on market but also on listing to sale price ratios of what their clients have seen or have shown interest in. I do. These are much better indicators of market conditions than traditional “comps”.
Cost per square foot (or some other number) is a good indicator of price
Many of us, especially the techies I work with, try to find a way to determine value based on square footage, assessed value, municipal tax rate, listing price or some other number. I wish it were that simple. But there are just too many factors, too many differences between properties for straight math to work. People do not behave rationally, the market is always changing and you can never know who else is out shopping, how many houses will be listed that will appeal to them… You can’t use straight logic when house buying.