Rules Of Real Estate(Whether you are a real estate agent, a home owner looking to sell, a potential buyer or just a regular person, you will find it is very important to have a good understanding of your local real estate market.)
If you are looking to sell or buy, or if you are an agent, you will find that knowing the housing market will probably make your life a lot easier.
Understanding the market, as well as having more knowledge than everyone else, will obviously give you an upper hand in every real estate transaction, or just in your everyday housing market conversations.
A November 8, 2006 article from Realty Times and posted on Yahoo’s Real Estate page, “Three truths that rule every real estate market,” gives some very important information on understanding any market.
“Here's a fact: Most real estate Agents know too little about the markets in which they operate. That is one of the reasons why consumers think they know more – or at least as much as – their Agents do and why they don't hold their Agents in higher regard.”
“Now, here's a tip: You can give yourself an edge over other Agents and establish yourself as a regional real estate expert simply by doing your homework, researching your market area, and gaining a good understanding of the realities and trends that affect the real estate decisions of your buyers and sellers.”
The writer of this article writes to agents who are new to the game, but any type of person can benefit from these rules, especially if they are about to start, or are in the midst of a home buying transaction.
The first rule of any real estate market deals with supply and demand:
“Real estate is governed by the law of supply and demand. This rule is absolute and without exception. The appreciation of a market, the expectations of buyers and sellers, and the velocity of market sales are all dictated by the supply of -- and the demand for -- real estate for sale.”
Right now, we see that there is an excess supply of homes on the market, with very little demand, resulting in a slow market.
“Real estate is governed by the law of cause and effect. Put differently, positive situations cause positive outcomes, and vice versa. For example, a vibrant economic growth leads to a vibrant real estate market and strong appreciation of homes, while loss of jobs and a languishing economy produce exactly the opposite effect.”
That is why it is a very good idea to know just as much about the economy as you know about the real estate market.
The last rule that every person should have a thorough understanding of is how every real estate market has a cycle, just like the one we are seeing now. Things were bad in the ‘90s, then things were good in the early 2000s, and now the market is slow once again. “History will repeat itself. In any marketplace, there are cycles. Periods of rapid real estate appreciation are followed by stagnant periods where values stabilize or even decrease. By acquiring marketplace knowledge, you can foresee trends both for your own benefit and for the benefit of your clients.”
Knowing these three rules of real estate will help any person understand the market better.
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