Quote:
Originally Posted by polak
I hate to be happy about this but I really am. As a not married 25 year old that is ready to buy a home, this drop couldn't come at a better time. A correction was desperately needed for people looking to enter the market. 280,000-300 for a basic 2 bedroom condo in the suburbs was ridiculous. I can't wait to scoop up one of those for 200-250.
I know this would be a complete dick move and I wouldn't do it but what would a sellers reaction be if I tried undercutting their sale price significantly right now with all of the doom and gloom in the media? Are sellers starting to get nervous?
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You need to understand the situation (or have your Realtor understand the situation) before writing an offer.
Despite what many said after you posted this, it really doesn't work that way. Unless someone was in a absolute need to sell this week position, they would be a fool to accept 20% less than their asking price.
If I am selling a home for 500k and market value is also 500k - why would I let my seller look at anything less than 450? A offer of 450 would be a low ball and I would advise to counter back at full price until the buyer showed they were serious.
Instead, if my seller was motivated - I would advise them to drop the price to $470k. This is now a 30k discount and most likely 30k cheaper than the comps selling in the area. We now set ourselves up for a potential multiple offer situation or someone who recognizes the deal and comes in with a offer very close to 470k.
I also tend to find that those in dire needs to sell are the toughest to negotiate with. They look at a offer 10k less than asking and instead of viewing it as a reasonable offer, they view it from the point that they are giving up 10k which is a large chunk of money in their position.
Also keep in mind, most sellers I am dealing with right now are looking to upgrade. When prices flatten or drop it is always a great time to look at upgrading. You lose 5% on your sale but save 5% on a larger purchase. The other group I am working with are people who have planned on selling for a while. I have yet to come across anyone who is in a desperate situation due to a layoff.
There is no doubt that those sellers will hit the market over the next several months however, I go back to asking why they would accept a lowball. Hypothetically, you find someone willing to accept an offer 10-20% less than their asking price (wouldnt happen but lets pretend). Why not stall the negotiating process and reduce their asking price to the price they are going to accept with you in a matter of 48 hours. All of a sudden you have people flocking in for this amazing deal and you are competing against others.
A lot of money is made in this city from people who find sellers pre foreclosure and offer to buy the house for what they owe. Saves the sellers credit and they can go rent and get back on their feet in a years time (vs the years involved in repairing credit through foreclosure) and the buyer has now bought a house for 80% of its true value. These are extremely hard to find and typically the seller who is in denial about going into the foreclosure process, refuses to try and sell and ends up striking a deal at the last minute.
Keep in mind, you could easily spend tens of thousands trying to find a seller who is about to go into foreclosure. Once you find them, you still need to check their equity position. If you thought the odds were slim finding them, odds will be even slimmer that they have not taken the equity out of the property already.
I believe the easiest money to be made / best deals are from foreclosures that have been trashed. The person going into foreclosure no longer cares about the property and I have seen some disturbing places. The majority of buyers are scared away by holes in the wall or damaged flooring. A smart real estate investor will see a opportunity and better yet, it is easier to negotiate with the banks on damaged places as they would rather take a hit on the selling price than have to bring in trades people and spend money to fix it up.
Sorry for the long read - any clients of mine on CP know I am all for getting a great deal. Quite often the buyer wants to accept a agreed on price and I convince them to let me try for a little more off.... I just felt the need to explain to anyone who feels a downturn = easy lowball offers.