Everyone wants a good deal. But, good deals are few and far between in the many low-inventory markets around the country.
Recently a couple was trying to buy a starter home in El Cerrito, a hot housing market in the San Francisco Bay area. They lost out over and over again in multiple offer competitions. So they decided to try a new strategy. Rather than continue making offers on hot new listings in their price range, they made an offer on an over-priced listing that had been on the market awhile and hadn't sold.
The seller had lowered the list price just as the buyers made their offer. The buyers had no competition and were successful in buying the property. Their good fortune was that they were the first to hear that the seller was willing to accept less than his list price.
HOUSE HUNTING TIP: If you're having troubles finding a home to buy—or a home to buy at the right price—consider listings that aren't drawing a lot of attention from other buyers. Well-located listings at the best price and in the best condition are the ones that sell the fastest, and for the most money. To find a good deal, you have to be willing to go against the herd.
There is a certain comfort, however, in buying a property that everyone else wants. A listing that's in high demand is likely to be desirable when you want to sell it. Buying a prime listing can be a good investment, as long as you don't over-pay. But, in a multiple offer competition, you may have to pay a premium to be the successful bidder.
You don't want to buy just any listing that's not selling. If the property has defects that can't be fixed—like too many levels or a chopped up floor plan—you may have a difficult time selling it later. Also, if the sellers are unrealistic about the price or condition of their property, you may not want to waste your time.
Before you make an offer on an over-priced listing, have your agent talk with the listing agent and try to determine the seller's motivation. Find out if there have been any offers. If there have, why didn't the property sell? If the seller is obstinate about his price, go on to another property.
However, if the seller is considering a price reduction, give it a go. If the listing agent thinks the seller is not ready to negotiate, ask to be informed when the seller has a change of heart. The best time to make an offer on an over-priced listing is usually just before the seller drops the price. Otherwise, you could face competition.
Most buyers gravitate to the most attractive listings. Buyers who can see past a dowdy décor may pick up a property at a bargain price. The trick is to know a house with potential when you see it.
Looking at a lot of listings and analyzing what you see can help. Often it's the paint colors, updated finishes and attractive furnishings that make a listing desirable. With a little imagination, you could create an appealing ambience yourself, after you buy.
Listings that are back on the market because a deal fell apart present another opportunity. These listings often sell for less the second time around. Find out why the deal fell apart. But remember to buy a house with good bones, not one with serious problems.
THE CLOSING: Homes with good appreciation potential are always a good deal. Look in areas that are adjacent to neighborhoods that have already experienced a significant run-up in prices. These areas could be the next hot markets.
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