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
|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
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
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
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