I have been asked many times what kind of appreciation in value a buyer should expect from the purchase of a property? I have also heard other agents asked that question.
I have been quite shocked and amazed how many times an agent was willing to stick their neck out and predict the market. No intelligent agent would go there period.
I bet there are many folks out there who bought properties three or four years ago and were told how much money they should make, to now be foreclosed on or be in a short sale.
I will share historical data with clients and provide information comparables to help them establish market value. I will never predict what the value of their home will be in 2 years, etc.
Now I clients come to us for expert opinions and many expect more than side stepping the question, so what are you to do when pressed by a client?
Here are a couple of things I try.
- I discuss possible scenarios and what ifs.
- What if the market goes up?
- What if the market tanks?
- What if you have a drop in income, etc.?
- I run a spread sheet that plugs in various expenses, etc. to let them know what the numbers will look like under the scenarios.
- I discuss what the use of the property will be. (If it is to be their primary residence, they need to look at it differently than an investment).
So you can be a professional without making promises that are unprofessional and possibly illegal. Yes I said Illegal. If you are promising a return on an investment you may be selling a security, which we are not licensed to do.
So we can be an expert and professional without sticking our neck and making promises or predictions on the future value of their purchase.
Good luck and good selling!
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Randy L. Prothero, REALTOR®, ABR, AHWD, CRS, e-PRO, GRI, SFR
Century 21 Liberty Homes
Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers. His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.
Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.
www.HawaiiRandy.com * Oahu (Honolulu County) Property Search * Hawaii Military Relocations
Randy - We had an agent here that for years (she has since passed away) consistently told buyers they would enjoy a 7% increase in equity every year. A lot of her clients were military folks who she told, at the end of their tour, their home would be worth 21% more than what they paid.
The first time I heard her say that to a client I almost tripped over my own feet. When I asked her why on earth she would say something like that she said "that's the way the market has always performed since I've been a Realtor." Yikes.
Virginia - Now may also be the best time to buy.
Jesse & Kathy - Yikes is the word.
Barry - Well put
Randy,
There is no real way to know what they will make...if there was then we would make a good living as magicians or mind readers or have some special crystal ball. I let them know if the market follows regular trends you should make 3-8%. a year...not 25% every 3 months like the mess most of the country is now in...but I let them know it all depends on the direction we are going in.
Randy- that is why we always tell our people exactly like you said...I cannot predict the future, I can only give you the historical facts. Also, we always are telling the, I am just a REALTOR, not a financial analyst!
George - I have the warm beach, just need the lots of money and the time to enjoy the beach. :)
Jeremy - As long as we stick with the facts, we are doing our job.
Stephanie - It is extremely scary.
Sharon - They are still predicting wrong. The market is so different from place to place also.
Dave - I will not even do that. I will share the numbers historically and present. I let the clients insert the future.
Sharon - I also use the phrase "Buying Lifestyle" when discussing their primary home.
Monika - It is scary.