The Nellis Group Approach
Step 1: If buying out of market make sure you consult your Nellis Group Realtor to find our equivalent where you are moving. We have a program called Anywhere Agent: www.nellisgroup.com/anywhere
Step 2: Get all of the following information from your Realtor prior to making an offer:
Evaluation: 5 Pillars of Real Estate (click here)
Location:
* Proximity to main roads/avenues
* Proximity to Airports (check airplane flight paths)
* Commute time to work (test drive commute if possible at morning & evening). If buying virtually or relocating request information from the Realtor do not rely on traffic.com or simply a map.
Is it too close for road noise? Flight noise?
Community:
* HOA vs. NON-HOA
* Amenities (pool/tennis court/tot lots/sidewalks/etc)
* Comparable Homes to Support Value (style/size/lot sizes)
What do you want out of your Community?
Crime:
* Crime ranking in this community vs. comparable communities
* Demographics of the Community
* Surrounding areas (zip codes)
A Realtor can not say one area is the "hood" and not to purchase there. They can provide the raw data for you to notice any "red flags". Typically delivered with a "too good to be true" pricing. (Similar square footage significantly lower in sales price).
Convenience:
* Metro Access?
* Bus/Transit?
* Retail/Coffee/Restaurants?
What is most important to you in regards to convenience? What do you need access to daily/weekly?
Schools:
* School Pyramid
* Public School Rankings (play a role for resale)
* Distinctive Programs
Whether you use private or public for your family it will impact future resale.
RESALE MARKETABILITY:
* Review Trends: (Request the Following Stats)
DOM: Typically over 30 days on the market Seller will be more flexible on price (What is the average for the Community?)
Original DOM (specific to home): When the home was originally purchased with current Seller (DOM)
LP/SP: List Price vs. Sold Price for the community (graph/chart of the last 14 sales)
Closing Costs: Review the trend for seller paid closing costs for the purchaser (review all 14 sales)
* Community Information:
Review Home Sales in Community for last 2 years
Request Height of the Market Comps (see market cycle for more details)
Request Lowest of the Market Comps (see market cycle for more details)
Get report for the average appreciation rate for Community (per year for the last 3 years)
Rental Information: Rental rolls for the last 2 years
* Market Cycle: Rebound Effect
The low point nationwide during the last correction was 2009. In DC's market the music stopped in 2005 (August) and we started to see the downward trend. Many homes continued with downward pricing till 2009-2010. Typically during a correction the areas closest to the epicenter of a city rebound the fastest. Some never rebound to the former heights.
Local Sales Cycle: (NAR) Nationwide reflects that it is a 5-7 year sales cycle. DC Metro Market is a 10 year cycle. Average ownership in DC is 3-5 years.
What is the average home ownership in the local market?
What was the low point for the local market?
Which communities rebounded the fastest?
Which communities did not rebound?
HOME SPECIFIC: (Request this additional information from your Realtor)
Positive Impact:
List 5 key features/enhancements for the home
Negative Impact:
List 5 liabilities with this home (powerlines/double yellow/home style for area)
Observation: Assistance with Comparing Relevant Data (Comps):
Square Footage:
MLA (main living area) vs. Below Grade: Request they break up the square footage of main and upper level vs. basement area to compare homes. Understand that in most areas the reported square footage is not guaranteed. (Request an Appraisal from seller if possible)
Basements: Walk-out, Walk-up, In-ground
* Ideal in most markets is the walk-out and then the walk-up (pass on the in-ground)
* In areas without basements due to soil/water table look for a FROG (family room above garage)
Appraisal:
Understand that all appraisals are subjective. You can have multiple appraisals done on a property that is off-market and get a range of answers. If you are concerned with the listed square footage request a copy from the Seller.
* We recommend to always keep your appraisal contingency in the contract. The appraiser does receive a copy of your contract and knows the EXACT amount he is trying to hit which is why many appraisals are the identical amount of your ratified sales price. This is also a BIG issue when your appraisal comes in BELOW the ratified sales price.
Miscellaneous Factors:
Road Noise: (drive by if possible during rush hour commuting. If not possible request Realtor to facetime you during that time)
Flight Path: (access the map- request that information)
Contingencies: Always request: Home Inspection, Radon, Appraisal & Financing.
Home Sale/Purchase: If you are using money from your DC home sale to purchase in another market ALWAYS make that purchase CONTINGENT on your DC home going to settlement.
RELOCATION SALES:
Relo Buy-Outs: If it is a relocation sale many times the Seller will have a "buyout". This is where the Relo company gets 2 independent appraisals done and offers the Seller the ability to sell direct to them for the average appraisal value after 60 days (or some predetermined) time on market without selling to the general public.
Some Relo companies offer a bonus to the Seller if they sell it prior to having to buy the home. (Average $15k-$25k)
* Always have your Realtor ask if there is a "buyout" - it can impact what a Seller will take/not take for the home.
Purchasing Relo: Even though the seller is involved, everything is done with the Relocation Company name as the seller. The actual seller does choose the offer. ONLY the Relocation Company will sign a contract. During contingencies the seller will negotiate any repairs as well. Once contingencies are removed, then the Relocation Company will purchase the home from the seller and afterwards sell it to you as the purchaser. Remember Relo Companies work banker hours so do not expect to reach agreement over a weekend or after hours.
CLIENT CONSIDERATION:
Recommendations:
* Do not use DC Metro Market Lenses: It is often when a client leaves DC they shop based on comparing home pricing to DC sales prices. Make sure you do NOT do that with home shopping! Base your purchasing off the local pricing to adjust your idea of over priced and "deals" in a given local market.
* Conformity of the Masses: Remember resale/relocation. Buy what sells the best and the fastest in your new market. Don't think DREAM HOME nor RETIREMENT home unless that is your final destination. Ask for the hottest sales price range when it comes to resale. Buy to the median of the market. Instead of the 800k or 1M home buy the one at $350 or $550 whatever moves the best in any market. Reviewing rental rates will also assist you in choosing the right sales price range.
MUST HAVE: Non-Negotiable:
What is your list?
Do you have your TOP 5?
* Everyone will make concessions unless you have an unlimited budget. Which items will you remove to find not a perfect home, rather an ideal home?
Making Offers:
Position yourself for ratification (agreement) with the seller.
Review: DOM, LP vs SP. prior offers on home, Seller's situation (local/relocated)
Timing: Make offers below list price on Tuesdays and be ratified before Thursday
* When submitting offers extended time only favors the seller. With prolonged negotiation they can continue to go back to other offers/interest and leverage against your current offer.
Multiple Offer Addendum:
If you find 2 homes or more of equal interest reach out to NG for our patented Multiple Offer Addendum. This unique addendum allows you to offer on more than one home in ANY state.
**** Once you have received all of this information from your Realtor and agreed on a strategy it is time to make that first offer.