There are many would be thieves out there in today’s real estate market. In fact, I keep waiting for a HGTV show entitled “Property Bandits” to be introduced. Mark my words -- I know it’s coming. Heck, it might already be here, after all, when was the last time I had time to watch TV? <sigh> Nonetheless, I feel confident in expressing that a definite trend is upon us. Modern day robber barons arrive at the doorstep of my real estate office every day requesting “a steal.”
My first question for these theft inclined buyers is -- what is a steal? Does that mean you want to pay a price so low that all your coworkers' jaws remain dropped from now until next year? Or does it mean you paid $10,000 less than the lowest comp in the same neighborhood? Does that mean you got a well upgraded home for the price someone paid for a beat up foreclosure down the street? Or does it mean you bought the beat up foreclosure down the street? Does that mean you put nothing down, they paid your closing costs, and threw in the lawn mower to boot? “A steal,” after all, can be defined many different ways.
That being said, there ARE people who are getting what I would call “steals” in today’s market. Usually they are paying all cash and often times at a foreclosure auction where they purchase homes sight unseen and subject to liens, taxes and tenants. And yet, most of the people who desire a “steal” can not or would not buy a home that way. In fact, when I think back on the real “steals” I’ve gotten clients in the last 3 or 4 foreclosure driven years, almost all were all cash deals, and the other remaining ones were large down payment deals.
It is difficult for low down payment buyers to understand why the method of payment should affect the type of deal they get. But it does. Put yourself in the seller's position, why might you offer someone a steal of a deal? Desperation? Maybe. But, you still expect something in exchange for selling your property cheap, right? You probably want the property to sell fast and you don’t want to make any repairs to it either -- after all the buyer is getting a steal and you know it. Cash enables an immediate close without any of the delays that go along with getting a loan in place. Waiting on your down payment gift money was not part of the equation when they priced that home.
Even a large down payment loan (40 - 50% down) is generally more of a sure thing than a low down payment loan and will often be the first runner up to cash. And, most low down payment loans require repairs to be made to bring the property up to a certain standard -- which sellers who are offering “steals” don’t often want to do. So, quite often these days you will see homes listed at a low price, but it is essentially a “cash price,” because that is the only "financing" the seller will accept. They don’t want the risk of your financing or finances -- that’s why they are selling at pickpocket prices.
How do you get a “steal” in today’s real estate market? I’m afraid the approach hasn’t changed -- pay cash, save your money, write a clean offer, and be willing to put in sweat equity.
Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
Copyright © 2011 Tni LeBlanc *How to Get A Steal of A Deal in Today’s Real Estate Market*
Comments(48)