Real Estate 101 with Jonathan Wolk, AIA, NAR
Jonathan, can you provide us with some basic tips on selecting a real estate agent/broker?
It’s important for the buyer/seller to have someone representing them and looking out for their interests. You want to have someone who is very familiar with the real estate process as well as someone that understands the market. For example in an aggressive market things are selling over the asking price. How much are they selling over the asking price? Are these particular deals that are not just priced-base, but it may be closing time issues or more due diligence money, where the price stays the same but you put in more money to show your commitment.
From the broker’s perspective, it’s understanding the intricacies of each opportunity and knowing your client. Our brokers want to understand our clients’ budget, what they want in a home, and what they need. And there’s a difference between what we want and what we need. For example, the client wants a two-car garage, but it may not be a deal-breaker if it’s a single-car garage, but it’s a home in a neighborhood they really like. Our approach is different because we are a buy, design-build firm. So we can look at a house that can be modified to meet their needs and lifestyle.
Flesh that out for us if you don’t mind
It might be that the client is looking for a specific geographic location. They may say, “Hey I like this part of town, or I don’t like this part of town, or I need a corner lot, I prefer a two-story, or I need a single-story home.” So when you are looking for a real estate agent what I encourage is that you find someone who will work with you and understand those particularities and nuances that you want and not somebody that’s looking to kick their sales volume for the month or give you the machine gun approach and show you a bunch of listings that may not necessarily meet your needs. There are realtors that aren’t doing anything for clients because the market is so hot they really don’t have to deliver good customer service.
How does emotion come into play in purchasing a home?
A lot of buyers get emotional and caught up. For example, let’s say we put in an offer and their maximum amount is $350,000 because they are going to do a $400,000 renovation on the property. So they put in the offer for $350K and then they push it up to $375K because they are emotional about it. We approach it differently. We would say to them, ok you want to offer an additional $25K to secure the property in a hot market, but unless you are able to come up with another $25K you are going to have $25K less for the renovation budget.
This is why it’s so important to gel with your broker. To get the best service is like therapy, if you don’t share and are upfront you are tying your real estate agent’s hands. This is an intimate relationship. Clients share a lot of personal information with brokers and it’s not just financial. They share about their lifestyle, how they live, do they have kids, want to have kids, do they have grandkids? And if they don’t have a good feeling about their realtor serving them then they need to pick somebody they trust. Realtors get into so many personal aspects of a client’s life and it’s important because the more that we know the more we can find them exactly what they want and need. So there has to be a transparent and authentic relationship with a realtor because if there is not the client is not going to be served well.
Are there times when you will tell clients to walk away?
Absolutely! Especially in a hot market where people are paying $30-50,000 above the asking price and if you buy into that then you are getting into something that you are not comfortable with. You have to tell clients the truth and remind them of their goals and budget without emotion. We have to do a lot of hand-holding and have honest conversations based on their desires, wants, and needs for a home. And the problem is that those conversations are happening very fast because it’s usually in the middle of a negotiation. Let’s be honest purchasing a home is emotional. You are creating something or buying something that’s not just a substantial financial investment, but it’s your home where you are going to live and raise a family, it’s where you are retiring, or downsizing. Many times these decisions have to be made in 15-30 minute intervals and it’s tough.
Can you explain what happens from the initial contact with Wolk360?
We try to find out what neighborhoods they like and what drives those locations. Is it because it’s close to their office, or they like the schools, or it’s within walking distance of shopping, parks, etc. Then it’s understanding their budget and what they can afford. We sit down and figure out what they want and what they know about the area or neighborhood. Are they relocating from out of town and want to live downtown? So we ask them why they want to live downtown. We seek to understand their perceptions of an area, their desires and where they are coming from, and what is they want to do. The most challenging part is looking at their life going forward, helping them dream, and finding a property that meets their needs.
For some people, they want a big dining room even though they only use it for holidays, but they host a big family and it’s important to them. Some know exactly what they want and a lot of people don’t know what they want so we help them manage the finances with their desires and what they want. It’s really about sitting down and gaining an understanding of all these things about the client. I’m a big believer in having dreams and breaking bread because I think that is part of getting to know people.
What are the advantages of having a real estate agent who has design-build capabilities?
I think being able to have that vision, understanding, and expertise is an incredible asset. For example, for the couple that wanted the big dining room, blowing out a wall and expanding a dining room wall can be very simple. There might be another property where the dining room wall is up against the property line or against the setback and blowing out that wall isn’t as easy, or you’ve got a complex roofline, or ok we can do it but we will have to get a variance because we are going to have to do foundation work. Having that expertise at your disposal is critical when you are looking at buying a house or a project because those nuances can be the difference between a $10K dining room expansion and a $100K project.
So having a real estate agent who can come at a potential property with that critical eye and resources is critical because you might buy into this house because you are willing to pay more money to get the property you want that just needs a renovation. Or, we help them see that it’s a project that will double their budget.
I like to call this the “tip of the spear”. The real estate for what you are wanting to do sets the tip of the spear for the ground rules for everything you want to do going forward. Do we have setback or zoning issues, what are the issues, and being able to go through them and ascertain if it’s a simple solution, but a complicated or expensive process? All those things weigh in and having that critical eye and experience is incredibly beneficial for the buyer.
The flip side of that is I’m a buyer and I want a 3BR 2.5 bath, two-car garage, and $600K house in the “A, B, C,” subdivision, I love the neighborhood and that’s what I want. That is a completely different set of parameters but we can work with buyers on that as well still with the same eyes from a design-build perspective. The advantage is our team can assess a prospective property like this with critical eye/expertise and attention to detail in assessing the quality of the construction and the property. I think what we bring to the table is unique compared to other realtors who just want to close the deal, make an offer, and head to closing. We come at every transaction with realtor, design, build, and construction eyes. Our brokers have access to our architecture, design-build, construction experts.
What trends do you see ahead in home buying, renovation and design-build?
We’re just doing our best to stay ahead of the industry issues. Who knows if the bubble is going to burst, or if we are even in a bubble. What we look at is what our clients need and stay on top of our suppliers, distributors, and subcontractors. What are they seeing as we are doing window orders, material orders, what’s happening? We are trying to stay on top of it as best we can and unfortunately for our area this is kind of the new normal. I don’t know what the next price spike is or the next available issue is going to be but we know there is going to be something and we are just trying to stay on top of it as best we can. Before we get started on projects we are ordering as much product or materials ahead of time so our contractors aren’t waiting for materials to complete their job and we can stay on schedule.
Do you see materials and supply chain issues improving in 2022?
You know it depends on what we are talking about. For example, PVC pipe factories may be back and running with production goods and now we have ample distribution but tomorrow it’s hot water heaters, so I personally don’t feel like this is solved across the board for all products in our industry. I feel like lumber and other materials have subsided and prices have come down a little, but everything else is still going to be a challenge. Everyone is still looking for labor, trucking companies need drivers, delivery of windows are four to six weeks out and we are just adjusting to it now and planning better to adapt and anticipate.
For us, the important thing is supply chain issues is one aspect but more importantly trying to get a handle on costs. It’s not just the fact that windows are four months out, but they’ve gone up 15%. So we have to build contingency plans for our projects to minimize cost increases and surprises to our clients. On the real estate side, it’s like hey houses in this neighborhood are selling for $50K over the asking price, yeah you want to be in this neighborhood but are you prepared to go in with this increase. I think the bigger issue is for a lot of people is what is inflation doing and how does that upset the apple cart? The critical issue is how so much of this stuff escalates and can we all keep up with it.
Wolk360 in Raleigh, North Carolina, is an innovative and creative buy-design-build firm specializing in helping clients create the perfect home. The firm is unique in that it has a multi-disciplinary team of designers, architects, builders, and real estate agents, so clients do not have to deal with multiple players when pursuing their dream. From real estate acquisition, planning, development, demolition, and building they serve residential and commercial clients with high-quality start to finish custom projects.