Previously Posted on www.tonycard.com
I was reading through a Real Estate forum yesterday when I came across a consumer asking the question, "How Much Should I offer On a House?" The majority of the responses were statements like, Offer 80% of asking price, or my all time favorite answer was LOWBALL the seller. I'm sorry, but in my opinion, this is not giving a potential buyer in any market good advice! Real Estate is just like the weather, it's local. If you want to know what the weather is like in San Francisco, you are not going to listen to the weather reports for Boston. What is happening in the Real Estate market in Rancho Cucamonga has nothing to do with what the Real Estate market is doing in Big Bear. Just because you might be able to low ball a seller in San Bernardino doesn't mean that the same tactic will work in Big Bear. As I said earlier, just like the weather, every market is different and must be looked at from that point of view.
You may live in a market where the percentage of bank owned, REO properties accounts for 50% of the inventory. Or, you could live in Big Bear where the number of bank owned, REO properties accounts for less than 10% of the inventory. If you're trying to buy in a market where just about every other home is a bank owned property, you may be able to get away with offering far less than the asking price. But, if you are trying to buy a bank owned property in a market where only 1 in 10 homes are bank owned, and the banks are pricing the homes aggressively, then any offer made at 80% of list price is marked for failure. It drives me crazy when these Realtor's make these blanket statements like you should low ball the seller, or hey, it's a Buyer's market. They don't know what they're talking about!
Here is an example about why you need to look at each market separately. As I mentioned earlier, Big Bear has an inventory where less than 10% of the homes listed for sale are bank owned. Yet, those 10% of homes make up for more than 60% of the sales. With those kinds of numbers, the bank owned property not only sells quickly, but it sells for asking price or more in many cases. It's not uncommon to see multiple offers on bank owned properties and bidding wars develop over the property.
So, when you start looking to buy Real Estate, don't go into it the deal thinking that what worked the last time you bought a home is going to work now. Don't go into it with the idea that I am the buyer and the seller should be lucky to that I'm looking at his property. Just remember this. You are not the only buyer!
For more information on the Real Estate market in Big Bear, contact Tony Card and tony@tonycard.com
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