Everyone wants a deal! I remember back a few years ago, I used to run into buyers all the time who wanted to get the killer properties for way cheap. Of course, back a few years ago, this was pretty much impossible - even the dingiest knock-down shack was selling for $400K in these parts, and the prime properties were attracting 10, 20 offers even when priced high to begin with. Nowadays, things are different! There are still multiple-offer situations going on - but they're a different flavor. I just got off the phone with an agent who has a listing for a home + guest home on 1.6 acres up in the mountains. Great price - just $450K. Been on the market 147 days. Imagine my surprise when she told me, "Yeah, but we've got multiple offers on it."
The buyers I had for this are not the kind of folks who can compete in a multiple-offer situation. Actually, they were hoping to low-ball this $450,000 asking price. That would have been tricky, though: the listing agent had already worked her magic, dropping the price every 4-6 weeks; originally, it had been listed at $624,500! Of course, at this $450,000 price, the sellers are now in a short-sale situation, and whatever contract price (and commission amounts!) will need to be approved by the Loss Mitigation Department of the lender. Fun stuff!
Now, I've got some other clients I've been working with for quite some time now. They'd been hampered by the fact that before they could buy the kind of home they wanted, they first had to sell their home up in Lake Tahoe (about 4-5 hours drive from my office). Finally, they found a buyer, after many dashed hopes and gnashing of teeth. Of course, the buyer low-balled them. He could smell their desperation. He offered them about 91% of what they were asking for - but with a sweetener: all cash, 14 day close. They took his generous offer, and were off to the races looking for the perfect piece of Santa Cruz Real Estate.
My clients here have been looking for quite some time, sometimes I feel like they have as good a grasp on the inventory as I do! They're big fans of the drive-by: they check out a neighborhood, and if they like it and the house, they call me for a showing. Fortunately, they reject about 90% of the candidates, so I only end up showing them places once a week or so.
There was a house down by the beach - just a block and a half away - in a very kid-friendly neighborhood in a great school district. It had been on the market for over five months, and had been in escrow twice (the first time, it went into escrow when the asking price was $80,000 more than the present list price). It had just fallen out of escrow the second time about a week before. My clients pounced - bam! Low-ball offer, away! They did a bit of tit-for-tat, and also offered only 91% of the asking price.
The seller's response? A counter-offer, countering back at full price. Oh but hey, they did say they'd add the smoke alarms and strap the hot water heater, that was nice. When I get a counter back like that, here's what I'm thinking: the seller thinks a better offer is just around that corner. That, or they can't afford to sell it for less, which in this case, I didn't think applied, as it's an old family vacation home that probably had a ton of equity in it.
My clients are savvy home buyers. "Seb, we are NOT going to pay full asking price in this market! Have you seen the news?" Countrywide had just laid off 12,000 workers - and First American Title Company also just announced layoffs of 4,000. So what's a savvy buyer to do? Here's what we did: came up in price a bit, shortened our contingency period down to 12 days...and sent along the reports from MarketWatch and Reuters about the layoffs I just mentioned. Less than 24 hours later...we had an accepted counter-offer from the sellers.
What did the trick? A number of factors: my buyers had a decent amount of cash down, were pre-approved through a great lender, and were saying they could release contingencies quickly. Sending along the news articles probably didn't hurt, either. However, would this same strategy have worked when the property first came on the market? Probably not. Often times, getting the low price is about being in the right place, at the right time - kind of like a game of musical chairs.
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