I talked to an Investor today that was planning on buying a $170K condo in South (SONO) Norwalk, CT., and paying all cash. It was burning a hole in his pocket and very excited to make a good choice. He hired an Agent from Greenwich, CT. to represent him in this purchase. He was happy, his Agent came highly recommended and he was marching ahead. His Agent probably knows the Greenwich market well but knows nothing about the local market of South (SONO) Norwalk. Greenwich and Norwalk are two completely different markets. A deal this small in Greenwich is probably a good investment.
This makes sense.
Hire a Broker that works, sleeps, eats, and plays in the marketplace you want to buy in. There is real meaning to “ask the neighbors they know what’s going on” before you actually buy into the particular area. A good Broker knows what is going on in the local Market. For example, the Broker has probably represented a sale and or purchase in the same Association. They will know what sales have been accepted and what is a reasonable offer to make and get accepted.
They know about parking in the city. They will know how to best represent you in his market. A good Broker will tell you if they think it’s a good investment or bad one. They should know what amount of rent to collect on his investment. A Local Broker will know how long it takes to get a tenant. They will be able to tell you how many months to budget for non-rental periods.
This information is very important when you are trying to figure out the cap rate on an investment. In this situation, I personally could have saved this buyer $35k in the purchase price and slash his closing costs by 18%.
Work with a Broker who knows the local market, has great references, and lives and works the street in the area you are thinking of buying in. Do not hire an Agent to represent you in a market they are unfamiliar with. It’s kind of like hiring a Power Broker in South Carolina to represent you for a purchase in Spain. Totally different culture. Negotiation strength comes with Local knowledge.
Post by: Chris O. Buswell, Partner / Broker