Here’s What to Expect When You Go To Buy Real Estate In this Market
Part 2 of a 4 part series. Part One is HERE
You don’t have a lot of competition
The sellers do. When it’s a sellers market again someday, the tables will be reversed..
There’s 4 kinds of property for sale, and there are lots and lots and lots of each:
– Distressed (either a crappy house or a desperate seller or both).
Homes that are in foreclosure or owned by the bank are generally the crappiest homes. These are usually the same homes being sold by the desperate sellers. Big Bargains Abound, but there’s going to be a lot of money that will need to be spent after the closing to fix them up.
– One that is well priced and in pretty good shape.
The seller KNOWS the carpet is worn out, or about the wires stapled all over the home. Mostly there’s some cosmetic items that are easily fixable. He wants a “fair” price and priced his home accordingly. It’s easy to negotiate for new carpet.
– The best home in the best condition.
The seller won’t sell unless it makes sense to him, based on the condition of the home and his realistic sense of timing. He’s proud of his home, wants to sell it, but has time on his side.
– Over Priced Homes.
Nobody is going to buy a home (or even look at one) that’s over priced for it’s condition or for the motivation of the seller or both. (These homes don’t really count and should not be on the market)
You NEED to know which type of home you’re looking for
Based on the choices above and a few other lists that you’ll need to create for yourself, or with the help of your Realtor. Either YOU or your Realtor HAS TO BE ABLE TO TELL THE DIFFERENCE. And you need to be focused on only one of the groups. Lowball Offers INSULT group 2 and 3 and 4 sellers. Group one sellers (the desperate) are willing to talk. You can’t negotiate effectively if you don’t know anything about the seller. Almost EVERY seller has some “negotiating room” built into their price, but the “best deal possible” for the home you choose should be the goal.
You don’t get to pay the same for a crappy home as you do for a great home
Unless you have magic on your side, that is. Some sellers of So-So homes are desperate though, as are a few of the “best home” sellers. The best homes are a bargain now, because of the reduced cost, time and energy to make the others two types back into great homes. The “best homes” with the most flexible and motivated sellers will sell first. There should be no shortage of them either for another while. But that will change one day.
So-So homes that are priced accordingly or negotiated appropriately, are still bargains for the buyer and the negotiated deal MUST make sense to the seller. BOTH you and your Realtor need to know which of the three you’re going for. A Win Win deal means BOTH the seller and the buyer get what they want. You don’t get to dictate to the seller what his motivation should be. You can’t have the best house at the least money of anything that’s on the market. Sorry. If it’s under priced compared to the condition, YOU WILL HAVE COMPETITION FOR IT!. ‘
Everywhere in between is a floating spectrum. It’s a juggling act of price, condition and seller motivation. In the middle are homes that will satisfy other needs like practicality, energy efficiency (home and commute), livability, sacrifice of one feature for another. Most buyers are actually going for one of these. The price you’ll pay for the home that best fits your needs is dependent on the motivation of the seller to get it sold. Again, you can’t force a seller to “give it away” just because you want him to. The largest pool of potential buyers between today and a few forevers from now will actually be shopping for the so-so home. Somewhere in the middle is where the biggest number of people always sit. It’s also ALWAYS where the biggest pool of homes and sellers are sitting.
Don’t mix up your categories. Only disappointment and frustration can follow.
-Parts 3 and 4 of this series will be posted this coming week.