Is Knowing The Market Really Important?
There are some real estate commentators who advise that knowing the market is an essential part of home buying. Is it really? The answer really depends on why you’re in the market and whether you are looking for a particular suburb or just a city or town.
Knowing the market is obviously important if you’re looking for investment properties. That’s true of any investment whether it’s shares, real estate or any other valuable commodity. Buying real estate that is going to be your home is slightly different, but only slightly. You cannot compare home buying with any other purchase in your lifetime. A bold statement, but true.
Do you need to know the market when buying a car? Most people have no idea. They walk into a car yard, find what they like, negotiate a little, and drive away with their selection. Cars, of course, are throw away items – we don’t expect them to appreciate; rather, over time we expect them to depreciate. Homes are different. Over time, with care, homes will appreciate in value – but are they an investment?
For most people, even though it’s home, it’s still an investment. In ten, twenty or even thirty years, after the children have gone their separate ways, the family home will most likely be traded for a smaller version with a nice cash windfall as an added bonus. Over that period of time, particularly 20-30 years, your home will appreciate. We could go through two or three recessions with significant price drops while the price of your home will still have risen.
With that in mind, how important is ‘knowing the market’ right now? The reality is, you do need some knowledge, but not nearly as much as an investor. Fortunately, if you engage a real estate agent to act on your behalf, you can rely on the market knowledge that they possess. They can guide you towards properties that are good value and advise you when properties appear to be over valued. As a buyer, you need to the find the property that is right for you – let your buying agent worry about the market in general.
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