Are you thinking of entering the Chicagoland real estate market as a buyer or seller?
As you start getting the ball rolling, you may find that lots of people are going to want to weigh in on real estate. Your friends and family, social media, your Uber or Lyft driver — suddenly, you’re going to start hearing a lot of advice about what it takes to buy or sell in today’s market.
There’s just one problem. Often enough, a lot of the so-called “advice” and “conventional wisdom” you may hear could actually end up doing you more harm than good.
It’s time to separate fact from fiction, so that you can enter the market with the confidence and knowledge you need to succeed.
Here are five common market myths that buyers and sellers need to know:
Myth #1: There’s Always One ‘Perfect’ Time to List a Home for Sale
As you begin to look into selling your home, you’ll likely hear plenty of advice about the “best” time to put your home on the market. You may hear that you have to list in the spring or summer, because that’s when the market is the most active. In other cases, you may hear that the best idea is to take a “wait and see” approach, and hold off on selling until there’s a particularly hot housing market.
Now, as with so many myths, there are some kernels of truth there. For example, home prices do historically tend to hit a peak in the spring and early summer months (though not always), which can be a big plus for sellers. There may be advantages to having your listing ready to go when the weather is nice, and people have more free time to devote to their real estate hunt.
But there are other things to consider, too. What if you live in a particularly competitive market? In this case, listing when everyone else in your area is also going to market could mean that your property goes overlooked, causing your sale to go on for longer than you might like. Could your home stand out more if your listing is active in the fall or winter, when inventory is typically lower and buyers are more motivated?
And as for waiting for the “perfect” market? The reality is that there’s no such thing, and it’s usually better to start the process in the present, when you and your real estate team can gauge what market conditions are actually like. While brokers can use projections and models to get a sense of the future, the fact of the matter is that market conditions are always changing, and are affected by factors ranging from interest rates, to political cycles, to the weather.
The real deal:
It’s important to remember that there is no exact right time to list a home for sale. It’s all going to come down to your personal timeline, and the unique specifics of your local market. Working with a knowledgeable local broker is often the best way to get a deep understanding of conditions for your market, and devise the sales strategy that will work for your property.
Myth #2: As a Seller, You Should Always Price as High as Possible
Selling a home usually comes down to negotiating, to finding common ground between buyer and seller. And often, you’ll hear that the conventional wisdom of negotiations is to start with the highest possible number, so you have more of a “buffer” to come down in price over time. There’s certainly value to that strategy, and it may work — for the right home, with the right buyer, at the right time.
But the reality is that it’s going to take a different strategy to sell every single home. There are not really any hard and fast rules to a successful sale, and adopting the mindset that it’s always right to aim as high as possible could slow down your sale.
Finding the right price for your listing is going to come down to understanding any number of unique factors, including the specific details of your property, as well as the market conditions for your local area.
If there are a lot of homes on the market in your neighborhood, or near your price point, buyers are likely going to be more attracted to the listings that they see as a better value. Aiming too high could cause your home to linger on the market and leave you responsible for paying carrying costs; it could even force you to drastically reduce your asking price down the line, resulting in you getting a lot less than you may have hoped. At the same time, remember that home buyers usually search for homes in a price range (say $200-250K). If the home is priced too high, your target audience may not even see the property, or know that it’s on the market at all.
The real deal:
Determining the right price for your home is going to come down to a number of specific and local factors. Remember that you need to think like a businessperson when it’s time to sell your home, and be realistic about things like pricing and timelines. Be ready to work closely with your broker and listen to their insights about buying and selling in your market.
Myth #3: Buyers Should Always Start With a Low Offer
On the flip side, many buyers expect to go into every real estate transaction making as low of an offer as possible. The thinking behind this is that coming in low creates more room to negotiate, particularly if you’re willing to go up in price for your ultimate “best and final” offer.
However, there are many ways that this tactic could potentially backfire for buyers. In some cases, sellers won’t entertain offers that come in too low. Even if there aren’t competing offers, many sellers will simply disregard unrealistically low offers. Or, they may be far less willing to negotiate the price down on their end. Some sellers will see a particularly low opening offer as an aggressive tactic, and they may respond in kind.
Just as pricing a home requires a good deal of research and analysis, making an offer isn’t something that should be entered into lightly. Making a successful offer is going to come down to a number of factors, including your wants and needs as a buyer, as well as the unique conditions for the market you’re buying into, and the state of the property you’re negotiating over.
The real deal:
As a buyer, it’s important to have a realistic strategy when it’s time to make an offer. An experienced real estate broker is going to be an invaluable partner, one who can draw on their working knowledge of real estate and the local market to help you create and present a solid offer.
Myth #4: More Renovations to a Home Always Mean a Higher Value
Over time, plenty of homeowners put in a good deal of money and effort to modernize or update their properties. When it’s time to sell, many owners then want to get back every dollar they invested into their home, and then some.
Often, though, renovations don’t add as much value as homeowners would like. It all comes down to the matter of cost versus value. In many cases, home improvement projects aren’t going to net a one hundred percent return on investment (ROI), let alone prove profitable when it’s time to list your home.
Ultimately, when it’s time to go to market, the value of your home is going to be determined by a number of different factors working together. The look, feel, and function of your property will play a big role in determining your home’s value. But there are also plenty of things that you can’t necessarily control, such as the market conditions in your area, or the value of comparable properties in your local market.
Now, this is not to say that homeowners should always shy away from improving and updating their homes. In many cases, cosmetic upgrades and improvements are going to be what it takes to keep your home current with comparable properties in your area. A home with a lot of improvement projects may also sell more quickly, saving you time and expenses in the form of carrying costs. It may pay to be strategic with your home renovations. Do some research into which home projects tend to carry the highest ROI, and consult with a local real estate broker, who can offer some valuable insights into what features buyers may be looking for.
The real deal:
Be strategic when it comes to home improvement projects and renovations. Research the projected ROI of different projects, and be realistic about what you can get out of each upgrade. Talk to your real estate broker if you have any questions or concerns. An experienced broker can help point you in the right direction, whether that means giving you insight into your local market or connecting you with local home professionals.
Myth #5: You’ll Save Money If You Don’t Use a Real Estate Broker
As a buyer or seller, you may occasionally hear that it’s best to go it alone when it comes to real estate. As a result, sellers sometimes attempt “FSBO,” or “for sale by owner,” while buyers go through the process of searching for a home and attempting to close a purchase on their own. Often, buyers and sellers who choose this route believe that they’ll be saving money in the long run.
While attempting to handle a real estate transaction on your own may work in very limited cases, it is definitely not going to be the right fit for most buyers or sellers. There are so many moving parts on both sides of the real estate transaction that it can be incredibly difficult to buy or sell a home on your own. Buying and selling real estate is an incredibly complex process, governed by lots of state and local rules and oversight.
Whether you’re buying or selling, a real estate agent is often going to be the most important partner you have when you enter the market. Brokers bring an unparalleled understanding of markets and the overall real estate process to the table, possessing insights that can be absolutely invaluable. Brokers also have access to unique tools and resources that aren’t available to the general public, as well as an extensive network of home professionals, including insurance agents, mortgage professionals, attorneys, contractors, and other brokers.
And, statistically speaking, real estate brokers tend to make the real estate process faster, easier, and more lucrative than going it alone. In fact, a recent study of more than 200,000 sales found that FSBO listings tend to sell for about 5.5% less than comparable properties sold through a listing broker. What’s more, homes sold by FSBO tended to sell for less than their projected value, on average, while broker-sold homes tend to sell for more than their modeled value.
And for buyers, remember that you typically do not pay a real estate commission to the buyer’s agent. Instead, their compensation comes from the seller’s proceeds. As such, a buyer saves no money by forgoing representation, and gives up all of the benefits — their negotiation skills, their market expertise, their extensive network, and so on.
The real deal:
A real estate broker can help make things easier, for buyers and sellers. Having an experienced and knowledgeable broker on your side allows you to tap into their unique resources and skill set, allowing you to maximize your time and money whether you’re searching for a new home, or planning to take your current property to market.
The Baird & Warner Difference
Baird & Warner agents are hyperlocal experts who know just what it takes to help make the dream of home ownership easier. With thousands of agents in 30 convenient offices located all around Chicagoland, it’s never been easier to start bringing your biggest real estate dreams to life.
Whatever you’re looking for, your local Baird & Warner agent can help you find it. Yoga room? Ample space for all your vinyl? A chicken coop? Whatever your thing is, we get it, and we can help put you in the space that will truly work for you. And with our signature “One Company” approach, Baird & Warner can help streamline every step of the home buying process, with mortgage and title services all readily available under one roof. From buying to selling to financing, easier is just in our DNA, as it has been since 1855.
Have any more questions about buying or selling? Ready to start exploring the Chicagoland market? Find your local Baird & Warner agent today to get the conversation started.