| As real estate market cools, 'buys'
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Make many
offers
Bargain-oriented buyers should also plan to make offers on several
homes, says Irwin. An investor who makes lowball offers on 10 houses
is more likely to find a willing seller than one who pursues only
one or two properties.
That said, Irwin doesn't see much point in making
wildly underpriced offers. They're rarely accepted.
Find a guide
When you see a great-looking house in a real estate circular, you
might be tempted to call the agent listed by the photo. That could
be a mistake.
"A lot of buyers think that 'If I call the listing
agent, I'll get a better deal.' That's not true," said Bob
Wilson, an agent with the Guiltinan
Group in San Diego County. Because listing agents have a duty
to get the best possible price for the seller, they're not suitable
advisers for crafting a lowball offer.
Buyers need someone to represent their interests.
Typically, that person is a buyer's agent, who researches listings
exclusively for a home seeker. When a purchase closes, the buyer's
agent normally splits the sales commission with the seller's Realtor.
In most states the buyer's agent is required to deal with the seller
honestly but, unlike the listing agent, is under no obligation to
get the highest possible price for the seller.
A good buyer's agent earns much more than the 2 percent
to 3 percent commission, says Glink. That's because buyers don't
have the deep knowledge of neighborhoods, comparable homes and current
prices of an experienced agent.
"Your agent is more than just someone who drives
you around," says Glink. "Your agent is supposed to be
your eyes and your ears, helping you sift through what information
is valuable or not when constructing an offer."
Look for
motivated sellers
The more desperate homeowners are to sell, the more likely they
are to accept discounted offers. Therefore, bargain hunters should
be on the lookout for homeowners anxious to unload their properties.
One strategy that broker Chris Edwards of Raleigh,
N.C., recommends is to look for listings that have been on the market
longer than normal. In Edwards' market, a well-kept home in a good
neighborhood typically sells within a month. Sellers with homes
on the market two months or more are probably more receptive to
lower offers.
Another tactic Wilson suggests is to keep watch for
announcements of large-scale company layoffs, closures or relocations.
In the months to follow, large numbers of affected employees are
likely to be selling their homes. This could provide a buying opportunity.
Offer
incentives
This strategy works best for people with some experience in real-estate
investing. The basic premise: If you offer a lower price than sellers
expect, you need to give them a reason to take your offer.
Darragh's favorite incentives include offering to
close quickly, to pay in cash and to attach few contingencies to
completing the deal. Such offers, he says, are particularly attractive
to homeowners under duress, who might be facing foreclosure, struggling
with debt or forced to relocate.
Don't fixate
on list price
The true value of a home might not be reflected in its listed price.
A property's listed price simply reflects what a seller hopes to
get, usually based at least in part on selling prices of similar
homes.
Glink cautions buyers against taking too much glee
in getting a property substantially below list. In some cases, initial
list prices are so inflated that even a buyer who negotiates a substantial
discount still overpays.
"It's no indication of what you should pay,"
says Irwin. "You have to do your own analysis."
Joanna Glasner is a freelance writer based in
Northern California.
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