21 Golden Rules of Real Estate
Over the last 20 years my work as an attorney, advocate, project manager, educator and Realtor® has helped me to develop these important rules. Take advantage of my experience and keep these important rules in mind to help you get the most for your money and make your transactions feel effortless.
- ALL REAL ESTATE IS LOCAL. The old and simple saying, “Location, location, location” means that the most important factor in a property’s value is its location. This applies in all markets and at all levels, right down to the neighborhood, block and street. Keep this in mind when comparing homes. In the end, location usually wins out. When deciding between quality of house vs. quality of location, people with an eye on investment buy the worst possible property in the best possible neighborhood.
- BUILD TO THE NEIGHBORHOOD. When considering improvements, remember that the #1 Golden Rule of Real Estate is NOT: “Kitchen, Kitchen, Kitchen” or “Pool, Pool, Pool”; it’s all about location. Keep this in mind when choosing improvements; expensive extras only improve value when the neighborhood warrants it. If you know you’re going to live there for many years, do whatever you want, but if you plan on re-selling within 5 years, remember this rule!
- GO FOR THE CURB APPEAL. It’s the first thing people see, so when selling your home, establish a budget, get advice from an experienced professional (Realtor, landscape designer, real estate investor) and make smart changes that will entice buyers when they pull up to your home.
- DAYS ON MARKET MATTERS. A neighborhood’s Average Days on Market is a great indicator of a home’s value. If you see a home that is on the market longer than other homes in the area, it is probably over-priced.
- STALE DOESN’T ALWAYS TASTE BAD! Just because a home has been on the market “a long time” does not mean there is something wrong with it. A home can be on the market longer than average for various reasons. Don’t immediately reject it without first asking the right questions.
- DON’T TRUST ON-LINE ESTIMATES. The internet can be a powerful tool for home buyers and sellers. However, the information available is usually inaccurate. To get the full picture, balance your internet research with advice from a local real estate expert. Remember, “When confused by Zillow, call Tony Papillo.”
- DON’T TRUST THE TAXMAN. Tax Assessment is NEVER a reflection of fair market value.
- SIZE ISN’T THE ONLY THING THAT MATTERS. Price Per Square Foot is a great way to determine value when you’re dealing with tract homes. Not so meaningful in places in Los Angeles where there are few homes truly similar, except perhaps condominium units and town homes. Appraisers consider the following: Location, Site Utility, Size, Condition and Amenities (such as pool, view, home theater).
- GOOD THINGS COME IN SMALL PACKAGES. The larger the square footage, the lower the price per square foot; the smaller the square footage, the higher the price per square foot.
- CLEAR THE CLUTTER. Buyers like to see floors and counter tops, not the stuff you put on ‘em. Somewhere between a completely empty home and a “lived-in”, cluttered one, there is a happy place where rooms are sparsely appointed and buyers can see and feel the open spaces within.
- LEARN THE LAG EFFECT. When the real estate market is on the rebound, number of units sold increases first, prices increase second (lag effect).
- BUYERS DETERMINE DEMAND. Neither sellers, nor their agents, establish the VALUE of the seller’s home. A ready, willing and able buyer does that and the buyer’s lender has the ultimate VETO if the house doesn’t appraise. The only thing the seller can do in consultation with their agent is to establish a MARKET POSITION that will excite buyers, establish value and thus create a sense of urgency and give their property a SIZZLE effect. Sellers should use the asking price as a marketing TOOL to make their home more appealing than the competition.
- IF IT AIN’T IN WRITING IT DOESN’T EXIST! Any promise made has to be in writing to be enforceable. No matter how small the matter, if you want something delivered as promised, make sure it’s in proper written form.
- DON’T TAKE IT PERSONALLY. Remember that a written offer is an invitation by the buyer to start a dialogue with the seller. Sellers should keep emotions in check when they receive an offer that seems “low”. Sometimes the first offer amount has little to do with the buyer’s ultimate willingness to pay what the seller deems “fair”. Sellers should never be insulted by an offer. If you do feel insulted…get over it!
- EVERYTHING IN REAL ESTATE IS NEGOTIABLE. Don’t be afraid to think outside the box to present a “win-win” solution.
- DON’T SUFFER FROM “PREMATURE NEGOTIATION”. Good timing is always important. After escrow opens, there are still items to negotiate. Know when to start this dialogue with the other party. Doing this too early can be detrimental, such as when a buyer asks for a credit before all property information is made available.
- TALK TO THE NEIGHBORS. Once you’ve opened escrow on your home purchase, your “due diligence” time clock starts. This is not a time for a buyer to be shy. Get out there and talk to folks who live on the street. Knock on doors if you have to. Often times, information gleaned from a short and friendly conversation can provide important information about the home you’re considering and the surrounding neighborhood.
- “THE WAITING IS THE HARDEST PART” – Tom Petty. Negotiation involves the drama of developing a plan of action based on strategy. Once we deliver our position, the other party gets some time to consider our proposal. This time is called “The Waiting” and feels like it takes forever. This is the time to play the Zen game: practice non-attachment with outcomes and know that you did your homework, considered all options, stayed true to yourself and put your best foot forward.
- PRACTICE PATIENCE. In real estate, 24 hours can make a HUGE difference. Whenever possible, take at least 24 hours to “sleep on” any decision of consequence. Sometimes, things change, providing different options or removing the need to make any decision.
- “YOU CAN’T LOSE WHAT YOU NEVER HAD.” – Muddy Waters. Remember that until the agreement is in writing, and escrow closes, you don’t have anything to gain and you have nothing to lose.
- TRUST AND LET IT GO. In every real estate transaction there is a moment when you can only “Leave it up to the Real Estate gods.”
© 2013 Tony Papillo, Residential Real Estate Broker, Agent, Attorney
Coldwell Banker Residential Brokerage
9000 Sunset Boulevard, Suite 100
West Hollywood, CA 90069
BRE# 01464847 | CSB# 231002
International President’s Circle