This month I’m going to cover, from my experience, what I’ve seen that are the most common reasons some buyers don’t get the kind of great deals that others do and how to make sure that you don’t run into these problems.
And no, that’s not me on the left in the picture…I don’t wear ties when I’m with clients.
But first, let’s go over last month’s sales statistics.
November routinely sees a drop in sales and is typically the 3rd lowest month of the year (behind January and February). I was curious to see what happened this November to find out whether it was the reports in the ‘news’ about a drastic drop in the housing market or the statistics that I’ve been seeing locally that indicate we’re still in a recovery were true.
I was actually surprised to see what happened last month because I was expecting to see the normal November drop but a continuation of the trend of sales being above 2007 and 2008. What surprised me was that there was no November decrease from the October sales. There was a decrease from the sales in November 2009 but as I noted in my previous newsletters, the numbers from last November were falsely inflated with the tax credit incentive. If you look at this November’s sales in relation to November 2007 and 2008 you’ll see that there is definite improvement which tends to confirm that we are still in a recovery trend here locally.
(In the chart below blue is 2007, red is 2008, green is 2009 and purple is 2010):
Before I get into the meat of the article I wanted to let you know that I do have a section on my site where I post about really good deals I find on the MLS and there is now a way for you to be notified about them as soon as I post them, without having to constantly visit my site. You can subscribe to have these posts emailed to you when they get posted by going to ‘Deals’ Feed and subscribing.
Now let me give you information on what I’ve seen to be the top 5 barriers to buyers getting the great deals. These are not in order of importance.
1. Not recognizing a good deal when you see it.
This requires some knowledge of what a property is worth and sometimes you will have to rely on your Realtor to provide you with information on recent sales of comparable properties to understand this. I’ve been through this situation with several clients and some recognized they had a good deal and others didn’t.
Sometimes the clients that didn’t recognize this weren’t aware that the property they were interested in was unique. In other words it had features they liked but were rarely seen in a property like the one they wanted.
One client of mine who did recognize the townhouse he liked was a good deal followed my advice and put in an offer at full listing price on this short sale property. He ended up getting it and the other person who had put in an offer at the same time lost out. This other buyer was told by his Realtor to put in an offer $15,000 less than the list price and as we got closer to the closing this other buyer offered to pay $30,000 and then $70,000 more than my client. I guess this is an example of a buyer who did get a good deal by recognizing it was a good deal and a buyer who didn’t recognize a good deal (unfortunately due to his Realtor) and lost out.
2. Not having the finances for your purchase worked out in advance so you can act quickly if needed.
This came up recently with a client. We found a property that they really liked and had features that I hadn’t seen in any similar properties in this area. Unfortunately we found out on the following day that another buyer was going to be putting in an offer and it was a Saturday and my client needed to speak with his financial advisor on Monday before he put in an offer to determine how he would do it. You can probably guess the outcome – the other buyer’s offer was accepted over the weekend and my client lost out on this property.
3. Having unrealistic expectations.
Sometimes this comes from buyers who have heard on an infomercial or have read somewhere about someone buying a perfect 4 bedroom house in an upscale neighborhood for $30,000. Unfortunately these infomercials or online stories give unrealistic expectations and are even sometimes deceitful.
Other times they hear from a friend about some unbelievable deal that their friend got or has heard about from someone else. There are some of these unbelievable deals occasionally but often they are bought by big investors or, sometimes, friends of the listing agent.
This doesn’t mean that you should settle for less, but you should be realistic about what you can get for the price range you have set.
4. Thinking that sellers will accept a lot less than the listing price.
What an individual seller will accept varies from deal to deal and depends on their particular situation. Sometimes a seller has to or really wants to sell as fast as possible and will take much less than the listing price. But that isn’t always the case, especially when they have their property priced very well.
Sometimes I have had clients tell me that the sellers of a property they are interested in will have to accept an offer way less than their listing price if they ever want to sell, or that in this market the seller will probably never sell when the property is actually priced pretty well. There’s nothing wrong with trying to get the best deal possible but if you approach your purchase the wrong way you’ll just keep missing out on deals that are actually quite good.
There are several factors to take into consideration when trying to determine what price to offer. How long the property has been on the market; if the property had previously been under contract; what the market value of the property is; if there are any unusual circumstances (like an estate sale). This point goes along with #1 above too – if the property is already a really good deal and will likely go quickly you should make an appropriate offer.
5. Forgetting the first three rules of real estate – location, location, location.
I’ve seen some clients that try to compare the prices of properties in different areas without taking into account that their values are affected a great deal by their location. In some cases they thought the property in the better location should be priced more like the one in the bad location. In other cases they thought the property in the poorer location was a great deal because it was less than the one in the better location. Location is one of the more important factors in determining the value of a property and whether it is a good deal or not.
Now that I’ve covered all that I want to wish you all a happy upcoming holiday and a happy new year. I hope to see you soon.
Sincerely,
Ron (727-687-1160)