Schupp & Ernst - Real Living HER, real estate in Columbus and Central Ohio

We have experience in the Columbus area a very fast and competitive housing market. Over the past year however, the Central Ohio real estate market has slowed down and the dynamics of the market have changed. Many buyers had gotten carried away with this market and paid too much. Many sellers think their home is worth much more than it actually is at this time. On the other hand, some buyers paid over the asking price, but in looking back and realized what a great deal they received. Every situation is different and needs to be approached accordingly in this ever-changing market.

As a buyer, one of the very first things you need to do is sit down with a good mortgage broker and determine exactly what you can afford to spend. Not what you want to spend, but what you will qualify for. Then you can work with a Columbus buyers agent to determine what you can get for the money. It is critical that you must establish realistic expectations from the beginning. In almost every situation, however, some compromise is necessary.

How do sellers and real estate agents determine what the listing price of a home will be? Good question. We often ask ourselves, "How did they come up with that price?" Often, the sellers themselves determine the price, and most real estate agents just go along with it. Other times the agent does a CMA (comparative market analysis) to determine value. Agents generally look at what sold in the last six months in the same neighborhood. They then base their price on these comparisons.

Sometimes this comparison can be very difficult and misleading. What if a so-called comparable home recently sold for $50,000 too much because several buyers got into a bidding war? Typically, with bidding wars, ego is the driving force, and ego really doesn't have any valid impact on home values. But "There it is...the best comparable...in the same neighborhood...so this home must be worth the same or very close" is the rationale that the typical seller and agent uses. This is a real danger for buyers today in the Seattle real estate market. The home, if it is a good comparison to the one that sold, is really only worth what the other home started out at, not the $50,000 over the asking price it sold for. Just because someone got carried away when they bought the home doesn't drive up the price of the next similar house unless the home was actually priced $50,000 under market value, which does happen, but not that often.

If you walk into any real estate office and ask five agents to price a property you will most likely get five different prices, and they may vary as much as $100,000. On the other hand, there are agents who really know their business and how to price property and are very accurate in determining market values. However, these agents may run into resistance from the seller and may have to compromise the listing price for two weeks or a month before the seller is willing to lower the price to what it should be. We have been in that situation and, while we've advised our client what the price should be, we sometimes had to put the house on the market for a higher price to satisfy our client. Over priced homes usually end up being a better deal for buyers if they are willing to wait. The longer it stays on the market, the lower the price will go.

The Listing Agent, whether good, ho-hum, or bad, represents only the seller, and tries to get the highest possible price for the seller. The Listing Agent signs an agreement with the seller that stipulates a commission. That commission is usually 6 percent of the selling price and it is split 50/50 between the Selling Agent and the Listing Agent. So the Listing Agent has an agreement with the seller that he will get paid 3 percent of the sales price when the house sells and closes. The job of the Listing Agent is to market the home and represent the seller's best interest. So if a buyer walks into an open house and asks the Listing Agent if the home is priced correctly, even if it's $100,000 over priced, what do you think the Listing Agent will say? "It's a great house and priced really well," is a typical response. And if the buyer wants to work with the Listing Agent, then he may be able to give up some of his commission to help the deal go together and save the buyer some money.

This is a false economy and here's why. If the selling price of the house is $300,000 and the commission is 6 percent, the total commission is $18,000. The Listing Agent will get $9,000 and the Selling Agent will get $9,000. The Listing Agent knows that he will receive $9,000 when this house sells. Now the unsuspecting buyer walks in and uses the listing agent to write up the offer. The listing agent says he will give up $4000 of his commission so the buyer can get the house for $4000 less. So the seller gets $296,000, the listing agent gets his $9,000 for the listing side and $5,000 from the selling side, for a total of $14,000. The buyer saves $4000, the seller gets his full price because the listing agent gives up $4000 in commission, and so the seller's net is the same as if they sold it for $300,000. Every one wins...right! Wrong! The buyer in these situations usually pays too much for the house. The buyer has NO REPRESENTATION. The Listing Agent becomes a Consensual Dual Agent and says that he will represent both parties, but that is just like going into court and telling the judge that you represent both the plaintiff and the defendant...it just doesn't work! The buyer has no one advising him or her whether the house is priced correctly. The buyer has nobody working for him or her during the entire process. The Listing Agent makes $14,000 -- not $9,000. That's $5,000 more then he thought when he listed the property - who do you think he represents? The sellers make everything they wanted to. And the buyer...well the buyer may have paid $20,000, $30,000, perhaps $40,000 too much for the house.

So we strongly suggest: Never ever use the Listing Agent to write up your offer.

Effective Columbus real estate agents possess a very strong sense of the Columbus real estate market and are attuned to its nuances and subtle changes. A good buyers agent�s approach to the clients needs are well thought out and documented. Of course, we think we're great buyers agents, but we realize we may not be right for everyone.

Good agents possess a very strong sense of the market and are attuned to its nuances and subtle changes. Their approach to their clients needs are well thought out and documented. Of course, we think we're great buyers agents, but we realize we may not be right for everyone. You can read about our approach here.

Here are a few things that we would do if we were to hire an agent: We would only work with agents that have been in the business for at least three to five years and that have some advanced designations, like Associate Broker, GRI, CRS, or ABR. Even if you think you know the right agent, you should interview several agents, at least two or three. We would call the three top companies in the area and talk with the Managing Broker to ask who their top agents are, and who really specializes in Buyer Agency. We think it is important to work with agents who both list properties and represent buyers, because they have a fuller view of the market. We would then interview the agents to choose whom we think best understands our needs and would best represent us. We would probably talk with five or six agents over the phone but actually sit down with only two or at most three. We would also call their references. Finding a good Buyers Agent could be one of the most important decisions you can make. If you were going to invest a large sum of money would you do it without good advice and guidance?

Every situation is different. That is what we like about this business, but everyone should be aware of all of his or her options. Your first option is that you don't really have to do anything. Or you can choose to do it all yourself. But to be a well-informed buyer, you should analyze your own situation and analyze all your options.