If this is the worst real estate market (for sellers) in recent history, then surely it creates some of the best buying opportunities in a lifetime as well.
We are seeing smart money aggressively buying in our San Diego real estate market, and hear reports of the same elsewhere.
The properties are being bought as primary homes, as fix-and-flippers --or are being held as longer term rentals.
We receive inquiries about these homes almost daily; but more recently, we are being consulted about strategies for buying real estate at bargain prices. These buyers may or may not have to sell their existing home to buy another--and may also be open to exchange possibilities.
Listed below are 7 strategies we use to help our home buyers (and others) get some of the best bargains on the market.
- Study Market Time: Homes in general may take longer to sell these days because of pricing, percecived seller value and a more cautious pool of buyers. But that doesn’t mean sellers are any less motivated to move on with their lives. At one time, we thought little of homes sitting on the market for 90 days or more. These days, we seek buying opportunities if a home has been on the market over 60 days-- and are seeing some heavy price discounting from our buyers if days on market goes over 90 days.
- Check Tax Records and other Sources: Is there more debt on the home than what it is worth? Has a Notice of Default been filed that would indicate a looming foreclosure? If so, and if this is a home of interest for our buyer, we submit an offer contingent upon the successful negotiation of a short sale (where the lender sells the property for less than what is owed). In this case, either we or professional negotiators deal with the lender(s) to reach the best possible price for our buyer.
- Did Owners Pay Cash or Have They Owned Their Home for Longer than 10 Years? These sellers may be in a position to sell at a discount or may be motivated to do so due to life transitions or other investment opportunities. They may also be open to owner-financing for all or part of the home mortgage. Become knowledgeable about installment sales and other creative financing strategies.
- Are You Open to Remodeling? Homes sold in as-is condition are more likely than others to sell at a substantial discount. Owners, especially when the home has been on the market for some time, are often overwhelmed with the thought of remodeling and updating–and fearful that their decor choices will not suit potential buyers. In many markets, older or outdated homes are sometimes sold at land value.
- Foreclosure Sales: The f-word (foreclosure) is occurring even in the luxury home market. Highly leveraged homes purchased in the last few years are more frequently ending up on the courthouse steps. Foreclosure purchases, which require cash and carry no disclosures or guarantees, offer both great potential for profit–and big dangers for the uninformed. Bidding should be non-emotional and it is best to have a professional bidding for you–but only after thorough-as-possible research has been done regarding the home’s condition, its history and resale potential. Cracked slabs, structural defects and boundary line encroachments are unwelcome surprises.
- Home Exchanges: This is a rather novel strategy for those trying to sell their luxury home in a bloody market. Life transitions encourage luxury homeowners to make moves. Empty-nesters may wish to relocate from their large estate to something equally posh but far less demanding in upkeep. Others may have expanding families that crave acreage, pools, tennis courts or equestrian facilities. In the Southern California market, Owner-Broker Bob Dyson and Villa Sotheby’s International Realty have set up a property exchange platform that allows homeowners to directly exchange properties and ownership. It is a tactic that helps to support neighborhood values and removes many of the pressures involved in having a home on the market for an extended period of time.
- If the property you want is listed, have your agent check the other real estate agent’s listing history. If that agent tends to have listings on the market for a long time, you may wish to lower your offer. On the other hand, if the agent prices properties aggressively and has short “days on market,” you may consider coming in near to, at, or over list price. You will likely find those listings already priced at or below market to attract multiple offers.
A combination of patience, perseverance and the ability to move quickly will serve all astute buyers of real estate these days, but the greatest potential of all may lie with properties whose replacement value could far exceed the purchase price--or those with exquisite locations.
Roberta, these are good ideas. Thank you for sharing them!
Hi Roberta,
Thanks for the great list. I especially like #7. Great tip.
Marlene
Well Roberta, this sounds awfully like Ann Arbor. All are important and checking tax records, and having the title company see if a second has been taken out are critical to the process in knowing what the sellers net will be and if they can afford to sell. A conversation that needs to occur prior to listing.
Tony & Darcy: Thanks for stopping by!
Marlene: In this market, we need to do so much more to make sure our offers are on-target for buyers. They are nervous and we can't blame them.
Missy: Many potential home sellers I speak with in the San Diego area who don't have a real need to sell are leasing their homes or just staying put. These are tough times for sellers.
Roberta - this an excellent. I, too, am a big fan of #7. There is so much more we can do in this challenging market, and many buyers, too, are looking for the right opportunities adn trying to make sound financial decisions. Strategies you have outline will help us to enable them to do just that.
Jeff
Roberta,
I think you nailed it on this one. The seasoned veterans and agents that specialize in investors use these methods, but clearly, this will help rookie agents quite a bit. Nice Going!
Some great points and I too liked #7, never thought of that before.
Roberta, What a great post. I love number 7 too. Never thought about searching the agent's listing history? I am finding that the really strong buyers are out there in force. They are shopping and spending their money wisely. That may take a bit longer, but they know this is the time.
I think it's a combo of a bunch of those, as you have mentioned. Great ideas!
The property exchange idea, especially in the luxury home/secondary home marketplace, is a very interesting one. thanks for sharing!
I know we should all research the agents history when making an offer but a lot of misconceptions are going on about that. I think if a property is aggressively priced then we should at least come in at asking price. I hate when my clients want to lowball every offer because other agents have told them that they can do that. I then have to explain that a property is priced right and may have multiple offers and they look at me like I am crazy. I believe that in our marketplace we, as real estate agents, should know which properties are priced right and not have to research our competition. We should know inventory and go from there.
Great tips in the current market we're in for sure! Thanks for sharing your well thought out post with us here in the Rain!
Great info! Thank you for posting!
Roberta, great post! Thanks for the excellent tips. I love refresher courses.
That is a great list of steps for helping in the negotiation process. It is great to let buyers know these things, as many would never think of them, and it makes you look that much better.
I found the blog interesting, particularly the part about home exchanges. What a great idea!
I try to get as much info on the house as possible to make sure you are negotiating the transaction. I would hate for MY buyers to tell everyone how they overpaid for their house.
Great post with solid information!
Re: #1 Checking the History. Properites with no price changes for months and months can indicate an unmotivated or possibly an unrealistic seller. A steady series of price reductions can indicate motivated sellers looking for the offer.
Jeff: I think we know of several agents in our area who are super-aggressive in their pricing:-)
Patrick: Thanks!
Rita: Start checking; it is the aggressive pricers that I follow most closely.
Great post, thanks for sharing your ideas! I like the idea of home exchanges for luxury properties - an interesting concept.
Audrey: Thank you!
Randall: These are only seven; there are many others that might be incorporated into an agen's due diligence.
Li: The exchanges are actually working in the San Diego market--and it is open to all Realtors, not just Sotheby's.
Carol: I agree, but if we can show cautious buyers an additional solid reason why a given listing is priced to perfection I think we should.
Lisa and Robert: What better place to share than in the Rain?:-)
Jean: Thank you!
Carol: I'm always game for pertinent refresher courses.
Karl: I agree!
Pam: The home exchange makes a lot of sense in today's market--and helps many get from Point A to Point B. It may or may not the the exact home they were seeking, but at least it gets them in range.
Latonia: That would be painful, indeed!
Gabe: Good points. Thanks!
Jonelle: The home exchange program here is working very well in the luxury market. We just a $ 6 million trade in Rancho Santa Fe for a $2+million in La Costa. Both sides very happy.
Some good tips Roberta! As to #7, I think your time is better spent in researching the neighborhood comps to decide if the home is priced right, etc. If the agent has a long DOM track record, who's to say he/she hasn't priced it too low OR too high?? If you are showing someone a specific neighborhood you should know before you ever put that perspective buyer in your car if the properties you are showing them are priced correctly-then adjust for condition and other surprises when you actually view them!! :0)
The Tampa Bay Area of Florida is heating up! The buyers are coming out of hiding-the investors too. It is a great time to buy here!!
Robin Landis, ERA DEnnis Realty & Inv Corp, Lutz, FL E-mail: RLandis@ERADennis.com
I agree with Carol that we should know our inventory and do the work to know our market, but #7 caught my eye also and is rather fetching. It can help bolster the homework already done and presented to a buyer to keep them from making such a lowball offer if the agent has short DOM on other listings as well.
#7 is an interesting idea to be certain. How is that done with existing loans? As a realtor, broker and lender over the last six years I have not ever seen this but I am always interested to learn.
-Sky Minor
Really great tips. Realtors willing to invest a little time can find out all sorts of things.
Thanks for the tips. You hear them verbally but it really hits home and makes sense when it is written in an article like this.
You raise some valuable ideas....a few I've not heard about previously. Nice post.
Robin: I guess I wrongly assumed that agents would first have a handle on local market conditions and comparable sales. Buyers and investors are out all over, but most demand assurance they are getting the best deal possible.
Roberta, this is a great list you have gathered. My only question is number 7. I think a CMA is best, and buyers don't really care about the listing agents success. (I could be very wrong). I know that most of my recent buyers are not buying nearly as emotional as they did in the past....so I think this would not matter to them.
Hi Roberta,
Excellent and your closing sentence sums it up beautifully.
Very well written post. Some emotional sellers are more than likely to make any improvements to their house. Some feel that they don't need to spend more money since they have and still losing value in their property. But we all know that making more appealing to ready,willing and able buyers will improve the chances of the home getting sold quick for top dollars.
Roberta, I like the term "smart money". Very astute! When the seller's market is soft the smart buyers jump all over it! History repeats itself and I feel that we will be getting a stronger selling market in about a year. Let's get that smart money flowing! Thank you for the post!
Later in the rain~Deb
Sharon: Agreed! Our value as an agent is directly tied to the information we bring to the client.
Sky: Check your local MLS listing stats. You should be able to see the listing history of agents.
Eliese: Thanks!
Greg: Double thanks!
Diane: And that is the value of a forum like this! Thanks:-)
Diane: Thanks!!!
Elizabeth: The only point in checking the listing agent's history for market time is to determine if the agent prices aggressively (short market time) or...otherwise (long market time). That could and very may well influence the offer.
Cynthia: A most gracious thanks:-)
Lanre: Great points. Sometimes the staging of a home doesn't necessarily bring a higher price--but it may the the first to sell.
Deb: Agreed;-) When blood is tunning in the streets....buy fur coats in August...we know the drill and so do smart investors.
Thanks for the info... I bookmarked this page and subscribed to your blog.
;>)
Ann-Marie: Thanks! Let's share ideas and strategies.
Don't buy fur coats at all. I had to discount my 10 million dollar home in Sun Valley, Idaho 40% last November but am glad I did. Things are still really tough here. If there is a buyer they want a HUGE deal. Bythe way, not only will they not buy any of your vfurniture, but they will figure out a way to make you give it to them.
this is pretty much the stuff Roberta, right on. time is what we look at first, and who paid what and how. becomes the basis for finding a "solution", which is what, as you most know, a good negotiation is.
best
Thanks Roberta It's true in this market we have to look at all properties up down and sideways.
Roberta, you might want to find another word for "CRACK" in your title LOL. Other than that the tips are great.. Makes it sound like 7 tips of a cocaine real estate agent.. lol :-)
Gary: We're always seeking ways to successfully negotiate a transaction:-)
Diana: Agreed!
Thomas: I thought about that, but decided to go with it:-)
Hey Roberta, great comments. In my limited experience only a small handful of listing agents discuss Installment Sales, Options, and other Creative techniques with sellers.
Consider the current credit crisis as a group we must drag, pull, and push our sellers into understanding the enormous benefits of creative sales. Yes it takes more work, and it a Thinking (Wo)Mans game. But creative stratigies will keep inventory moving, and hasten a return to a healthy market.
Hi Roberta - I'm glad to hear you say, "If this is the worst real estate market (for sellers) in recent history, then surely it creates some of the best buying opportunities in a lifetime as well."
Sure wish the media would report that - then, things might be completely different
Loved your tip #7, too.
I'm stressing all this to prospects, but nobody is jumping on anything. I do feel things picking up and it's rough to write five offers and four of them would be considered an insult. I will find the best value in town. Bring back the sellers market soon!!!!!!
Lawrence: Amen.
Mike: The media reports one dimensionally. Every market action has a reaction. Someone gains, someone loses.
Bob: Don't feel badly about the multiple offers. It's just the market. I recall seller's reveling in multiple offers....
Roberta:
Thanks for your nice article on positive potential for buyers with properties whose replacement values could exceed the purchase price. We agree.
Harrison K. Long, Explore Properties Group
Harrison, Thank you!
Roberta, Great tips for the negotiation process. It is important to know the listing agents style of operation... do they always drop the price after 30 days? Do they tend to list at a low price from the start? etc. Thanks.
To Negociate is human. To create value and a win-win is divine.
Sky Minor says so.