Here are a few myths that have been lingering around Fairfield County for years. Feel free to share your myths with me. I am happy to address them in a future blog.
Myth 1: Market and interest rate fluctuations directly impact your home’s value in the short-term
Fact: Market trends and buyer costs can have an influence on your home’s value in the long-term, but this influence is never greater than the features of your home such as size, materials, condition, location, floor plan, scarcity, style, etc. If you buy a style of home that is generally undesirable or you neglect to maintain or update your home on a regular basis, your potential for appreciation will be limited, regardless of what the market is doing.
Myth 2: A Realtor sets the list price of the house for the seller.
Fact: Recently closed transactions determine the fair market value of your home. This is what we think buyers are willing to pay in the current market. In Fairfield County, agents generally recommend a list price that is about 3% – 5% higher than market value, but sellers make the final decision. A seller can choose to list for less to create quick multiple offer situations. There is no evidence that either strategy is guaranteed to create a higher sales price. Many buyers refuse to take part in multiple offer situations and many sellers don’t necessarily want a quick sale. There is data that suggests that pricing excessively high (6% – 10% above market value) can lead to a lower sale price. Once a listing becomes stale, buyers tend to offer less and less over time.
Myth 3: Market conditions should determine when and what you should rent, buy or sell.
Fact: Your lifestyle and financial objectives should determine when and what you should rent, buy or sell. If you are buying a home as an investment, your approach, choice and timing should be completely different than if you are buying a home for lifestyle reasons.
Myth 4: There is an advantage to using more than one Realtor at a time.
Fact: In CT, all Realtors have access to all listed properties from all brokerages, so there are only disadvantages to using more than one realtor. These include lengthening the time it takes for a Realtor to understand your needs and increasing the risk that you will be late to the offer table. When you are represented by one Realtor, he or she becomes responsible for the significant due diligence and research required for finding and securing your new home.
Myth 5: There is one real estate market.
Fact: An experienced Realtor knows that you can’t characterize the entire real estate market in the country or even in a town. Investors, condo buyers, house buyers and sellers all have different needs and a good market for one group can be a terrible market for another. Similarly, if you plan to build or flip, market trends matter less than your specific financial model and the current demand for what you are building. The same is true if you plan to buy and hold a group of investment properties. You can find good long-term investments in any type of market. Just make sure you know how to make proper improvement, return, rent and vacancy projections.
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