5 Worst Questions to Ask Your Buyers Agent
This article is about the 5 worst questions to ask a real estate Buyers Agent. The answers to these questions never help but only get in the way. Avoiding these questions will take confusion out of the business at hand which of course
is establishing fair market value for the property in question.
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When you ask your Buyers Agent questions, the answers you get should help you establish fair market value. The answers to these never help but only get in the way. Avoiding these questions will take confusion out of the business at hand which of course is establishing fair market value.
Worst Question #1.
“What percentage below asking price should I bid”?
My advice must be to first find a Buyers Agent you trust. With a little bit of grade school math and some common sense he can arrive at a number that makes the asking price look like a wild guess. Your Buyer’s Agent should be able to nail down the fair market value within 5 percent. The fair market value may be higher or lower than the asking but we are going to ignore the asking price. The number your Buyers Agent comes up with only takes 20 to 30 minutes but that will be a number you can hang your hat on as it was arrived at statistically and hopefully not influenced by personal opinion or conjecture. If you want to check you Buyers Agent’s figures ask him to show you all the sold units he did or didn’t use in his calculations
Worst Question #2.
“How much did the seller pay?”
Talk about a shot in the dark! Could any number be more irrelevant to the job of establishing fair market value? What if he bought it from his mother for one dollar? The answer to this question always hurts and never helps establish fair market value. Not only does it not give us a number we can use but it opens the door to a myriad of negative human emotions. If the price paid by the seller was low, this information can inspire jealousy and resentment in the unenlightened buyer. I’m always amazed when I hear otherwise intelligent people say ” Well I’m not going to pay 500K when the seller only paid 350K, 2 years ago!” What? Please say that again and this time listen to yourself. Whatever someone paid for a property has nothing to do with what it’s worth today.
Worst Question #3.
“When did the current owner buy the property”?
Again another question whose answer can only confuse the basic issue for buyers, which is the current fair market value of the home. Whether it was purchased yesterday or 30 years ago is totally irrelevant if what you are looking for is objectivity. Fair market value is based on comparable units that have sold in the last 6 to 12 months and when the current owner bought the property has nothing to do with that.
Worst Question #4
“How long has this property been on the market?”
Whats the difference if it was put on the market yesterday or 2 years ago? Again the answer to this question won’t help anyone. What possible conclusions can the answer to this question inspire that affect current fair market value?
Worst Question #5
The answer to this one calls for a fortune teller. It can’t be answered! Where will the DOW be in 5 years? The five year time frame is the minimum we are taught to use with real estate. As an asset class the returns on real estate average 5 to 6% per year but that doesn’t mean we can’t have 15 straight years of decline or many years with consecutive double digit gains.