|As real estate market cools, 'buys'
|By Joanna Glasner
After five years of sizzling growth, U.S. home price
appreciation is showing signs of cooling.
Pending home sales -- a leading market indicator --
are down from a year ago, according to the National Association
of Realtors. In many of the nation's hottest markets, brokers also
are reporting a growing gap between sellers' asking prices and what
purchasers are willing to pay.
For prospective home buyers, the market shift provides
a chance to remaster an old negotiating tactic: the art of the lowball
offer. Strategies for securing a below-market price vary by locality.
In any region, however, experts say bargain-hunting buyers can close
favorable deals by applying a few basic principles.
|The art of the lowball offer
|As real estate markets change,
you've got a better chance to buy at lower prices. Here
are eight tips to maximize your chances of having your
lowball offer accepted.
Shop in the off-season
The best time to buy a house is the week between Christmas and New
Year's Day, says Robert
Irwin, a real estate author and investor. Why? No one is looking.
"The only ones out there are people who desperately
need a home or investors looking for a bargain," says Irwin.
By the same logic, early spring ranks among the worst
times to make a deeply discounted offer. It's a popular time for
sellers to put homes on the market, taking advantage of pleasant
weather, longer daylight hours and heightened interest among buyers.
That seasonal pattern applies to most of the country.
But warm climates might be the exception. Florida, Arizona and other
locales popular with sun-seekers are likely to see high levels of
home-buying activity in winter.
Lots of buyers are looking for spacious, well-maintained homes in
upscale neighborhoods. Few will find bargains meeting that description.
To secure a low price on a home, buyers ought to accept
a few shortcomings, says Ilyce
Glink, a real estate writer and talk show host. This might mean
a property that needs repairs or faces a busy street. It could also
be a home in a more run-down neighborhood that appears to be improving.
Just don't be reckless. Buyers might be tempted by
the price of a local "handyman's special." Such homes
can be quite profitable for do-it-yourselfers or investors with
experience in renovations.
But if you're not handy and don't know any reliable
building contractors, it's probably wise to pass, says Curt Darragh,
president of the Mid-Hudson
Valley Real Estate Investment Club. If you do pursue the purchase,
Darragh recommends getting a professional estimate for the cost
of repairs and upgrades.
Unless it's truly the house of your dreams, don't be upset if a
seller turns down your initial offers. Rejection is a normal part
of the negotiating process. Some would even call it essential.
"Never make an offer you think they will accept,"
says Thomas Early, president of the National
Association of Exclusive Buyer Agents, who lists rejection as
his first rule of savvy home buying.
His second rule? More rejection.
"Make the seller say 'no' at least twice. It's
too easy to say no the first time."
Granted, that strategy doesn't work everywhere. Early
wouldn't recommend it for competitive real estate markets like San
Francisco or Boston, where it's been common in recent years for
sellers to get multiple offers above the asking price. But for Early's
practice in Columbus, Ohio, where homes sell for an average of 94
percent of listing price, he finds the method works well.