This lament came from a First Time Buyer. You see, his family had been saving and planning to buy a home. Prices are the lowest they’ve ever been since these homes were built in early 2004 in the area where they’re looking. Interest rates are very attractive and his rent keeps increasing. This is their time.
And while that is true, it’s also true for many other First Time Buyers.
Investors have always known a good deal when they see it. Guess who else is buying homes? Sellers who did a short sale 3 or 4 years ago, and are back in the market. Retirees looking to downsize are looking at smaller homes. The demand is HIGH in the entry-level price market.
All of these buyers are encountering the same thing – few homes on the market in their price range and fierce competition. Just days after coming on the market, most homes are in contract before these buyers can even arrange to see them. Frustration was setting in. They found that this house-hunting business can be very time-consuming.
We found a short-sale that had come ‘back on the market’, usually an opportunity in the making. In this case, the bank had already stated the offer price they’d be willing to approve. We looked at comps – they were within reason, and then agreed to a full-price offer. However, just before signing the buyers said, “Let’s talk about this. We thought in real estate you get to negotiate.”
While that is true in many situations, it certainly wasn’t in this case for several reasons:
- Less than 1 months inventory
- Comps show the price is within reason
- The lender has agreed to this price (this buyer of course, still needs to pass muster)
- The sellers and the bank know the TIDE HAS TURNED. It is now a seller’s market.
In the big scheme of things, the lender did negotiate by way of a counter to the last, lower priced offer. We already know what we need to do to win this one. If we say no, there are plenty of other buyers waiting in the wings to say yes. The price will be supported by comps and supply and demand.
These are difficult concepts for buyers to digest. While they’ve been waiting on the sidelines readying themselves for homeownership, the market has completely shifted. I could hear the disappointment in the buyer’s voices. So we had to re-visit earlier conversations:
- Are you willing to lose this house for a few thousand dollars?
- How much more time do you want to spend finding another house?
- While you’re waiting, 30-60 more days, what will you have spent on rent?
- If you pay $4000 less for this house, do you know that will only amount to $20 per month savings?
Ultimately, they decided to move ahead with a full-price offer, which the sellers readily accepted. Now we wait for the bank’s approval, but are very optimistic about their timely response.
So yes, real estate transactions do involve negotiating, but it depends upon the market and who has the advantage. A year ago, many buyers were saying no to negotiating. Now, it’s the seller’s turn. And those sellers are traditional homeowners, banks and investors. After they say NO, they just say NEXT!!
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