The following is a reprint of my column that appeared in Frontiers In L.A. magazine on July 15th, 2010.
As the real estate market continues to trudge through a economy, and more and more buyers decide now is the time to get off the fence, the ratio of buyers to sellers in my active client base has slowly tilted more towards buyers. And I love working with buyers. Helping someone realize the American dream (or a reasonable facsimile thereof) is a pretty awesome feeling.
With the growing popularity of websites such as Redfin and Trulia, my buyers are more savvy than they've ever been before. Talking to other agents in my office and around town though, I'm never surprised at the challenges put before us from buyers who have unrealistic ideas about what their money is going to get them and how they're going to go about it. Now, in their defense, a lot of the misinformation comes from the media, whether it's information that's simply factually incorrect, or it just doesn't apply to our region. Real estate is hyper-local, meaning what's true and applicable in Venice or Marina Del Rey isn't necessarily so in West Hollywood or on the Sunset Strip.
No Realtor expects you to know everything. I mean, how often do you buy a home? We do this all day everyday, and see everything you can imagine, and some things that aren't fit to repeat in a respectable publication such as this one. Tuning you in to what's happening in the local market is part of a good Realtor's job. I like presenting hard data that paints a true picture of the market. It won't be long before you - the buyer - can spot a good value a mile away.
When you first meet with your buyer's agent, expect to talk about what exactly you hope to find in a home. Be prepared to prioritize these things, because very often it's impossible to find everything on your list, and you may have to decide at some point what's a must and what you can live without.
When you find that house or condo that makes your heart skip a beat the second you walk through the door, don't hem and haw about it. It's painful to see a great property get snatched up by another buyer while you mulled it over. More painful – for agent AND buyer – is spending the next 6 months looking for something “just like that first one we saw.” If you like it, tie it up STAT.
One of the most common things I hear from buyers is, “find me a foreclosure I can get for 50% off with no money down.” I usually give the benefit of the doubt and assume they've been listening to too much AM talk radio and informercials. No part of that statement is going to happen. Unfortunately the days of “no money down” are behind us, and foreclosures are often priced an average of maybe 10%-15% below market value (I'm speaking about West Hollywood and surrounding areas). More importantly though, consider this. Of 34 lender owned condos in the city of West Hollywood that sold in the last 12 months, the average sales price was 98.5% of the list price.
Another thing that often becomes problematic for buyers (and in turn, their agent), is a refusal to offer one cent over the asking price. Well, that presents a couple of issues. First, one has to factor in the value of the property at that price versus other comparable sold properties in the area. If you're looking at a house that's priced $50,000 below a comparable house 5 doors down, you may have to offer over the asking price if you want to compete with other offers that may have been made on it. Don't be fooled by a too-good-to-be-true list price designed to create a flurry of activity and a stack of offers.
Don't tick off sellers and by making low-ball offers. It doesn't work. If a seller was willing to accept $500,000 on a house priced at $750,000, it would be priced accordingly. The myth of the “fire sale” is mostly just that – myth. When you write an offer, expect one of several possible outcomes. Ideally, the seller will either accept it or they will respond with a counter offer. What you don't want is for them to either formally reject it in writing, or ignore it and not even respond at all (the real estate equivalent of the middle finger). Throwing something against the wall to see if it sticks is not a strategy. Your goal is to make an offer that at least encourages negotiation on the part of the seller.
As I mentioned above, by no means am I saying buyers are not smart or not realistic. Buyers are very well informed, often more so than a lot of the agents I deal with. Become a partner with your agent, and decide together what your goals are, and how realistic they are. Make your agent earn your trust and respect and once that happens, make the most of it. Don't ever be afraid to ask questions of your agent, and don't be afraid to request data to support the answers. Now, get out there and find that house!