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Housing Markets and Value. What are they really?

Sep 25, 2023 | Uncategorized | 0 comments

Markets and Value:

Today’s blog was inspired by some of the creative, and at times, outlandish (in my opinion) real estate advertising going on out there.  Today I’d like to offer some thoughts on terms we frequently see bantered about.  .

MARKET and VALUE.

Market– simply put a market is the pool of people that may be interested in purchasing a product and have the means to pay for it.  When it comes to real estate the market is established by presenting the property for sale through advertising and marketing.  Your market CAN only consist of the people aware of the home being for sale.   A “market” could be a pool of investor clients that have a relationship with a real estate agent or company that solicits homes for the investors to bid on.   The market could be the agents within a specific company that have buyers looking for a home listing that another company agent has coming up.  Whenever you restrict the number of people that are aware the property is for sale the better the possibility you exclude someone who would have paid more.

Value– value is the price point at which the highest price a person can, and will, pay for something that the seller is also willing to sell for.  When those two number match, value is established.

This all means that value will be established by the market the property is presented to.  If the seller is willing to sell for the person that pays the most, then value in that market has been found and the house sells.

Most real estate professionals market their seller’s listings on what I would call the Open Market.  Back in the day it was newspaper advertisements or weekly publications.  Then it was online Multiple Listing Services.  Now MLS syndication means most properties for sale show up on Zillow, Redfin, Realtor.com, and frankly thousands of other agent and company websites across the globe.  It has become as Open of a market as we can possibly achieve.  Anyone looking for a property anywhere in the world can view available properties that are listed on the Open Market.  It doesn’t get bigger or more Open than that.

Now if Value, is restricted to the Market you are advertising to, then what happens to a claim that “you’ll get a fast full market cash offer in minutes” mean to you.  What is the “market” you are receiving full value from.  Is it the entire global home purchasing market, or is it a market of investors that have a relationship with a real estate agent that solicits homes for them to bid on?  Is it full value in that Market?  Is that really the best price you can achieve from selling the home?  Answer is- there is no way to know unless you go to the Open market.  EVERYONE should know your home is for sale, not just investors.  Only then will you receive FULL OPEN MARKET VALUE for your home and truly have the best possible terms.

There are several situations that may make an investor offer most attractive to a seller.  In my 19 years of industry experience it is almost never because the investor offers the highest price.  Convenience of no showings, necessity for a fast sale, flexible closing all may be more important to a seller than just the price paid.  But don’t be fooled into believing that investors pay full market value for a home.  Most will not even come close.

One more thought.  What about the claim that any individual or company can get you more money for your home than another real estate agent or company?  Can that be true?  Can it be proved?  Safe to say that real estate professionals need a strong skill set to advocate for their clients and achieve the best results.  They must be good negotiators, savvy, communicate well and be able to handle surprises when they come up.  Agents that are good in these areas usually get great results for their client.  In honesty there is no real way to assess what one agent produced form a sale and project what another agent might have been able to do.    Even if one agent markets a home to the OPEN market and procures an offer that is too low for the seller.  Seller cancels listing and hires a different agent.  That agent markets the home to the OPEN market and gets a better offer.  Was the second agent better?  Probably, maybe, seems like it.  Did the buyer that ended up buying the house see it when it was listed by the first agent and not want to see it, but the second agents marketing made the home more attractive.  Or was the buyer not even looking for a home when it was listed by the first agent.  These nuances are hard to assess because the market is constantly changing.  New buyers enter the market, existing ones leave when they buy or change their mind about a purchase.  It is never the same for more than a moment.  So how do you really know?

At the end of the day, real estate is about matching one buyer, with one property, and negotiating the best possible terms for your clients then conducting a smooth transaction and easy close.  Those are our goals every time.  We always recommend selling on the Open market and we never claim that we will get more money for your home than another agents or that a quick investor cash offer is in your best interests.  We assess properties and seller motivations and provide the options we feel would yield the best results.  We are trusted advisors, we are skilled negotiators, we are innovative marketers, we are Newman Realty.

Until next time friends,

Mark Newman

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