One of the best times to negotiate to buy something is when no one else wants it. The seller is reading all the negative data about the housing market including things like:
- shadow inventory is going to flood the market;
- buyer’s can’t get loans to buy homes;
- prices keep declining;
- the economy is about to collapse.
If you believe these things, you probably shouldn’t be very excited about buying a home. However, all real estate is local and national trends may not apply in your area. For example, here in Boise, Idaho we have the lowest inventory level in about 5 years and it is still decreasing. Our foreclosure process is better than most areas of the country so we don’t have a lot of shadow inventory. We still have great programs for first time home buyers and several 100% financing options available if you know where to look. Our prices have stabilized and our list to sales price ratios are in the upper 90% range. (i.e. a home listed for $100k is selling for about $98,000 yet people perceive they can buy them for 75 cents on the dollar.
In negotiating a purchase, you usually don’t get very far arguing with the seller. It is much better to agree with them. When I negotiate for my buyer’s I reinforce the national negative news with the seller. If their Realtor hasn’t taken the time to realize our local market is different, I stand to get a much better price for my buyers!
Now think about what happens if the national media starts talking about a recovery and price increases. Wouldn’t the seller start getting greedy and hold out for more instead of cutting their losses? When we start having multiple offers (like I did yesterday) doesn’t the seller regain a position of dominance and power?
The best time to buy is in fact when the market is at the psychological low. A good “buyer’s agent” will understand the psychology of sales and human nature and use that to your advantage. For example, I sold a home in Boise to a buyer that originally told me they were going to wait since they thought prices were going to drop another 10%. I asked them “if I could find the right home and was able to negotiate the price down 10% so you could move in now instead of next year would you buy it?” They have been happy home owners for about a year now and the price they paid is still lower than what that home would sell for today based on my strategy!
When you hire a Realtor to help you negotiate your home purchase, make sure they know how to negotiate! When you hire a Realtor to help you sell your home, do they know how to sell benefits not features? For example, do they know what features and benefits it would take to sell ice to an Eskimo or are they just selling ice by the pound?
If you want a Realtor that understands marketing, negotiating and sales, call Jim Paulson. My 20 years of local licensed real estate experience will help you understand real estate for the long term purchase it is supposed to be. I will help you look past the typically 5-7 year real estate cycles!
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