The housing market in 2022 will feel very similar to 2021. Housing inventory will continue to be low and buyer demand will be high, resulting in homes trading at a super fast pace. And when homes are on the market for what feels like a nano-second, home buyers need to be prepared. Every home buyer in 2022 needs to use what I call “comparative benchmarking“.
The Typical Home Search Process – See Lots of Homes
If you saw your “perfect” house on the very first day of house hunting in-person, most likely you won’t make an offer. Why? Because you might be thinking you haven’t seen “enough” homes. How many homes is “enough” before you say yes to the house?
This is the beginning dialogue I inevitably have when I meet with my home buyers for the first time. They immediately want to know how many houses they need to see before they make an offer on a house. Seems reasonable, right? Actually, it’s only partially right.
It’s not about the “number” of homes a would-be buyer sees, but rather the information you gain when looking at a home. Let me explain.
It’s Not about the Number of Homes
When house hunting, you really need to know what you are looking at when you tour a home for sale. Imagine, for example, you are looking at an abstract painting hanging on the wall in a museum. How do you know how much you like the painting without first understanding what it represents? If a museum tour guide explained the history of the painting and the background of the artist, you would have more insight about what you are looking at. In essence, you need to see the painting through the lens of an art expert.
Similarly, when you tour a home, you need to see the home through the lens of a home expert. The key question is, “what does the home offer you and your lifestyle, as well as your individual needs and preferences?”
The “Lens” of the Home Expert
House hunting can be very overwhelming if you go from one open house to another on a Saturday or Sunday afternoon. After seeing 4 or 5 homes in a single day, you might find that the homes merge together and become a blur in your mind.
To help determine if a particular house is “right” for you, you will want to look at the home through the “lens” of a home expert. Not only can the home expert schedule private showing appointments, but more importantly, can guide you through the process of “comparative benchmarking” when you embark on your home buying journey.
What is “Comparative Benchmarking”?
Comparative benchmarking is a term I use to describe an efficient process for evaluating a home in relation to other homes. Just like the example above of the abstract painting in the museum, the home you see in-person needs the expertise of the realtor to provide you with a benchmark for comparing each home you visit. So what does comparative benchmarking look like?
Let’s consider for a moment a house which has 4 bedrooms and 2 full baths. When a buyer walks through the front door, there is often a myriad of design details to look at. In the absence of some form of “comparative benchmarking“, it can be hard to know the significance of what you are looking at and may be a bit overwhelming.
Comparative benchmarking is like constructing a table top jigsaw puzzle, but with a lot less pieces. A key difference, however, is that your house hunting pieces can get re-sized, removed, added as your preferences become fine-tuned over time. So when most of your significant puzzle pieces come together, that’s when you’ll know that you’ve found the home for you. It’s really that simple!
Comparative Benchmarking – One Puzzle Piece at a Time
When using comparative benchmarking, you are essentially acquiring one puzzle piece at a time. With each piece, you become increasingly more clear as to what the “right” house for you looks like. Sound confusing? Not really. Here’s why.
As part of the home buying process, your goal is to establish a comparative benchmark for individual features of a home that are important to you (e.g. the layout, kitchen, baths, flooring, windows, etc.) Think of these as your “puzzle pieces“. So instead of comparing each home as a whole, you are comparing each puzzle piece, or feature, of each home.
You don’t need to see a countless number of homes, but rather just enough to collect one or more pieces from each house that you can use as your benchmark. Even a home located on a busy street, a corner, or next to railroad tracks, has a potential house hunting piece that can be used in benchmarking. You probably won’t know all of your pieces that you want to use for benchmarking on your very first day of house hunting, but you will over time.
Example of a House Hunting Piece
If we create a puzzle that comprises all of your key home design features, you can begin to grasp just how many house hunting pieces there may be. So I am going to choose one popular design feature that is often mentioned by my clients – the garage. For some buyers, this might not be a big, or significant, puzzle piece. And that is exactly why it is an excellent example – – some house hunting pieces actually can be quite complex. Are you ready for me to dive in?
The garage isn’t something that often comes up in the first few minutes of an initial consultation with my buyers. But as the house hunting process unfolds, the “garage” piece tends to get a lot of discussion. Here are just 5 points of comparison:
1) Is there a garage? If not, can you add a garage?
2) Is there a one-car or two-car garage?
3) If the garage is attached, is there a door that leads directly into the house? If the attached garage is not built-in, there may not be a way to enter the house from the garage.
4) If the garage is attached, is it located on the main level of the house, or do you enter from the lower level? Carrying groceries might be challenging if there are a lot of stairs.
5) Can you fit your car into the garage? Some garages cannot accommodate anything larger than a small sedan.
Shall we move onto the laundry room? The kitchen? As you can begin to imagine, there are quite a number of puzzle pieces to gather for your comparative benchmarking. Each time you see another home, you will realize how something as straight-forward as a garage, can be a house hunting piece that you didn’t know just how important (or not important) it is to you in determining whether a home is “right” for you.
Using Comparative Benchmarking in 2022
If you are house hunting in 2022, you will want to gather your pieces early in your search process. If in the above example, the garage is important to you, then select a house with a garage style that you like. It will then serve as your benchmark for comparing the garages of other homes you see. You may find that many design features of a home can be subdivided into smaller puzzle pieces. A kitchen, for example, might have a separate puzzle piece just for the cabinets and another puzzle piece for the center island. You will be curating your own benchmark pieces for a happy home. Sound exciting?
As you continue to see more homes, you will be able to swiftly evaluate whether it is the “right” home for you. You will compare the individual puzzle pieces of each subsequent home to an earlier home with the benchmark pieces that you’ve identified. And when the home has most of your benchmark pieces, it will become abundantly clear to you that you have found your “right” house.
Piecing it All Together – Want Some Help?
Comparative benchmarking can be a great tool when looking for your next home. It can be especially useful in 2022 when the market is expected to be very competitive with high buyer demand and low inventory. Comparative benchmarking takes a lot of the guesswork out of how many homes you actually need to see, which is critical when there may be only a handful of properties on the market at any given time, or when you feel compelled to make a quick decision.
One of the primary advantages of using comparative benchmarking is that it will streamline your house hunting journey. It can help you identify your top ranking “puzzle pieces” for creating your ideal home. This will make you feel more confident in making an offer. You just may be surprised as to how enjoyable your home search adventure can be.
When I accompany my clients on their home buying journey, they feel a sense of relief, joyfulness, and excitement. Their sense of relief comes from knowing there is a simplified path to finding the home that is truly meant for them. They experience great joy in discovering their personal house hunting pieces. And when everything comes together for making an offer, they are beyond thrilled. Want some help?
For greater insights as to how to successfully navigate the 2022 housing market, reach out to me at 908-239-9261 or [email protected]. Whether you are house hunting in New Jersey or in another state, I can assist you and collaborate with my Compass colleagues located in over 300 cities across the U.S.
My Bird’s-eye View
Comparative Benchmarking: What it is and How to Use it in 2022 to Find the Right Home for You