The other day I wrote a post on The Best Song for Sellers and Seller's Agents and how to utilize it when getting a property ready for sale.
Here's the song I use for buyers: Unlike the song for sellers, which is more useful to the seller this song is more useful to the buyer's agent than the buyer.
You Never Count Your Money Till the Deal is Done
When I was new in the business, some of the agents were kind enough to teach me some of the skills they had acquired over the years. "never count your money till the deal is done" was one of them. They knew that often the agent had to kick something in along the line, usually during inspection, to keep everything together. They said those agents who count their commission when they are writing an offer were the least successful, as their sales were falling apart over $50 nonsense items. You don't count your money till the deal is done...nor do you count ON getting every penny of what was offered at the beginning.
You Gotta Know When to Hold 'em...
You have to ask yourself what the odds are of finding a home like this in the near future? If you have been looking for a home for many months and you like this home FAR BETTER than any you have seen to date, you have to take that into consideration. If the seller is being a little unreasonable as to price. If the inspection has a lot of small cost items...you still want to "hold em" to the end and not lose the house. It's the house itself that determines that, and not necessarily the immediate issue at hand.
You Gotta Know When to Fold 'Em...
Conversely if it is a product readily available, even if not available at the moment, like a large townhome or condo complex, generally you don't go after the one that is overpriced. If the location within the development is not the issue, don't pay more than the improvement would cost you for the improved version. New appliances? New wood floor? Cost out that improvement and "Fold em" on the one that has them if the owner is asking too much for it and buy the cheapest unit and put those improvements in yourself. It gives you a cushion against a changing market.
You Gotta Know When to Walk Away...
While it is true that some sellers are dropping their prices by as much as $100,000 from start price, that doesn't mean you can walk up on day 1 on market and offer $100,000 less for a property. You don't have to walk away for good, but you do have to give the seller enough time to figure out that no one else is going to give them that high price. Value the property independently and don't just make an offer of X% of sale price. It's not in the negotiation until and unless you have first valued the property.
You Gotta Know When to RUN!
The Classic examples of RUN are where the owner has put lots of money improving a property with a substantial negative. This exists in new construction as well. Last year we RAN from 3 or 4 properties
1) Great View! BUT...bad foundation. The view was great because it was up on a high slope, but the house was sliding and the foundation was cracking. We had seen at least five separate fixes done at different times, So the fixes weren't holding. Unless you are going to tear it down and start from scratch and the seller is willing to sell it at lot value, then RUN!
2) Another foundation problem house but the seller had put $200,000 of improvements in without fixing the foundation problem. When a seller invests that much money into a house, they want top dollar on resale, and someone may get caught up Ooohing and Ahhhing over the improvements and overlook the foundation issues. If the seller is acting like all is OK and not willing to deal with the foundation issues...RUN!
3) Water intrusion. There was actually water IN the house at the inspection. Seller's response "It doesn't usually rain this hard". RUN!
Don't buy someone else's headache. There's a lot more to buying a house than simply liking it and going through the motions to close it. Don't get shuffled through the process. If you're gonna play the game, boy, then learn to play it right!
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