I believe that the really great properties are still difficult to find and if you are looking for a specific location, specific school district or specific features…..when you find it, make sure that you put the features that you love into the formula. If the property is close to what you have been looking for, look at the market at your second and third choice. Do the 2nd and 3rd choices satisfy your specifics also? If you would be happy with the other house, you can be a little more aggressive with the offer on the property. If there is nothing else that works, be careful….don’t let the house slip away over a few thousand or worse yet….10 or 20 dollars per month!
What I have found over the past 21 years in every market is that these “jewels” are always rare, and they typically will hold their value better than their counterparts. Also, if you are looking at an ugly home with great bones (good room sizes, location, and mostly cosmetic upgrades), know that with a 203K rehab loan from FHA, you can easily fix the cosmetics, and decorate to your liking……and probably a better deal than the house that shows perfect. However, remember building materials and labor are expensive and many times the finished product might take more effort than expected-especially if you have to find the time and money to do the work.
I usually pull the listing agent’s past SOLD activity and show my buyers the original list price, and sold price difference on the listing agent’s prior SOLD activity for the past 12 months. This will show a trend of the listing agent’s list to sale ratio. It is not foolproof, because each seller has their own motivation-but most sellers will listen to the listing agent’s recommendations. I also like to know the reason for the sale if I can find out, because level of motivation to sell is a determining factor for most sellers. A vacant house, vs. occupied house, a foreclosure, a short sale home, a property that is controlled by Medicare all have different expectations. Different foreclosure lenders each have different expectations as well. A 30 day activity and a 12 month activity for your neighborhood should be reviewed at time of offer as well. (we call it a CMA)
Bottom line, I try to convey to my buyers that most of the time-ULTIMATELY the price will be determined by the buyer and who will own the property. I don’t have a crystal ball, but I watch for the jewels, and many times I see the best priced jewels bringing at or near list price….or in the event of “bring your highest and best offer” occasions which happens many times even in this market…..an overpriced offer typically will be necessary. If you can stay unattached to any property, you can make offers until you are able to catch a below market deal!
There are other methods to obtain a great deal on a property! Cash, AS-IS is a great way…but inspect before the offer of course….eliminate as many contingencies as possible, obtain your pre-approval from a reputable lender without conditions if possible, quick closings and extended possession times (or ask the Listing Agent what the seller needs).
I like to write an offer that the seller can sign without the need of a counteroffer. Be wise about the taxes, and annoying closing costs that can annoy a seller and force them to counter on every point, and while they are countering….might as well counter the price.
Other tidbits: Be courteous during showings by being on time, and make sure the house is left the way it was. Also, quick feedback is appreciated to the listing agent. Sometimes you can make an offer to the seller, thinking that they will counter any offer you make. I try to be polite and not hit the seller at the kneecaps if you have a sincere interest in buying the home. Sometimes a mid-modest offer is better than a very low offer. Sellers get emotional and lose objectivity sometimes, but it is important that the seller respect the buyer.
