How to get the best deal in real estate
How to get the best deal when you buy and the best price when you sell
By Pat Mertz Esswein
Home buyers and sellers gearing up for high season are encountering a swing in the balance of power: more parity between supply and demand, sellers and buyers. Last year, home sellers worried about missing out on thousands of dollars in profit if they sold too soon. This year's class frets about how long it will take to get their price. Last year, buyers feared that if they didn't jump into the market, they would miss their chance. Now they wonder how long they should watch prices fall before they make their move.
Nationwide, the National Association of Realtors (NAR) has forecast a 5% price rise for existing homes in 2006. That's less than half of last year's rise of 13%. In some of the hottest markets, the froth in prices will evaporate. Buyers will have more homes to choose from and more bargaining clout -- that is, a return to contracts with contingencies and without escalation clauses. The NAR also expects the number of existing home sales to fall 4% or 5% in 2006 (although that would still make it the second-best year on record).
What this means is that sellers need to lower their expectations. The days are over when you can slap any home on the market and sell it for more than asking price. Now you have to find the pricing sweet spot and work harder to reel in a buyer.
Sellers: Price it right
It can be difficult to price a property when recent comparable sales are higher than you can reasonably expect to get for your home. Roberta Murphy, a real estate agent in San Diego, says you have to look not only at how much comparable homes sold for but also at how much time they spent on the market. In Murphy's market, homes that are priced right sell within 30 days. Keep in mind, too, that houses on the market for "too long" can develop a bad reputation, and today's buyers are more clued in to time on the market than in the past. "Buyers often ask about it and construct their offers accordingly," says Murphy.
Stay flexible. A more balanced market means you'll probably be negotiating with the buyers. Also, don't judge an offer on price alone because other factors may make it worthwhile. For example, an offer from buyers who will rent back the house to you until you're ready to move might be worth a lot. Or maybe you've found a buyer who can easily qualify for a mortgage at your price but will have difficulty coming up with the down payment or closing costs. In that case, a seller contribution in exchange for a higher price might make sense.
Make it stand out. At a minimum, make repairs, clean your house and get rid of clutter. You'll also give buyers peace of mind if you're willing to share the cost of a current appraisal and any appropriate inspections, such as for termites.
Buyers: Don't wait
Is now a good time to buy? Dave Liniger, chairman for a nationwide real estate company, gave his four children some advice when they asked if they should buy or wait: "In every case, I advised that it's impossible to time the market -- no one can say accurately what will happen." He recommends that buyers go ahead and buy something they want to stay in for at least the next five to ten years. "If prices go down, you're not hurt -- you're in the house you want to live in."
Target your offer. Start by finding out how motivated the sellers are, then target your offering price. Roberta Murphy, the San Diego agent, tells buyers that if a home is new to the market and priced very well, they should make an offer at the top of the range; if it has been on the market for six months, they might make an offer at the bottom of the range or even below.
Many builders have begun to offer concessions and upgrades as their new-home inventories grow fatter. If those aren't advertised, negotiate for them. You may find bargains on resale homes in developments where builders are still selling new properties. The owner of one slightly used property may have more freedom to reduce the price than the builder who has already sold 200 at the higher price.
Win the beauty contest. You may still find stiff competition for properties with the greatest discounts, so you'll want to look like a sure thing to sellers. Get pre-approval for your financing and try to schedule any appraisals and inspections in advance to minimize the time those will take. You can even write a "love letter" to the seller, pleading your case. "By putting a personal story to the offer, you stand out," says Murphy.
Protect yourself. In some of the hottest markets during the past few years, buyers have felt compelled to make "clean" offers. As sanity returns, get price and property protection by adding to the contract contingencies for a current appraisal, financing and a home inspection.
Article from Kiplinger’s Personal Finance Magazine found online at http://www.kiplinger.com/
March issue 2006
For more information on this article or assistance with your San Diego real estate needs contact Noel Wheeler of Prudential California Realty at (619) 718-4266 or visit http://www.noelwheeler.com/
By Pat Mertz Esswein
Home buyers and sellers gearing up for high season are encountering a swing in the balance of power: more parity between supply and demand, sellers and buyers. Last year, home sellers worried about missing out on thousands of dollars in profit if they sold too soon. This year's class frets about how long it will take to get their price. Last year, buyers feared that if they didn't jump into the market, they would miss their chance. Now they wonder how long they should watch prices fall before they make their move.
Nationwide, the National Association of Realtors (NAR) has forecast a 5% price rise for existing homes in 2006. That's less than half of last year's rise of 13%. In some of the hottest markets, the froth in prices will evaporate. Buyers will have more homes to choose from and more bargaining clout -- that is, a return to contracts with contingencies and without escalation clauses. The NAR also expects the number of existing home sales to fall 4% or 5% in 2006 (although that would still make it the second-best year on record).
What this means is that sellers need to lower their expectations. The days are over when you can slap any home on the market and sell it for more than asking price. Now you have to find the pricing sweet spot and work harder to reel in a buyer.
Sellers: Price it right
It can be difficult to price a property when recent comparable sales are higher than you can reasonably expect to get for your home. Roberta Murphy, a real estate agent in San Diego, says you have to look not only at how much comparable homes sold for but also at how much time they spent on the market. In Murphy's market, homes that are priced right sell within 30 days. Keep in mind, too, that houses on the market for "too long" can develop a bad reputation, and today's buyers are more clued in to time on the market than in the past. "Buyers often ask about it and construct their offers accordingly," says Murphy.
Stay flexible. A more balanced market means you'll probably be negotiating with the buyers. Also, don't judge an offer on price alone because other factors may make it worthwhile. For example, an offer from buyers who will rent back the house to you until you're ready to move might be worth a lot. Or maybe you've found a buyer who can easily qualify for a mortgage at your price but will have difficulty coming up with the down payment or closing costs. In that case, a seller contribution in exchange for a higher price might make sense.
Make it stand out. At a minimum, make repairs, clean your house and get rid of clutter. You'll also give buyers peace of mind if you're willing to share the cost of a current appraisal and any appropriate inspections, such as for termites.
Buyers: Don't wait
Is now a good time to buy? Dave Liniger, chairman for a nationwide real estate company, gave his four children some advice when they asked if they should buy or wait: "In every case, I advised that it's impossible to time the market -- no one can say accurately what will happen." He recommends that buyers go ahead and buy something they want to stay in for at least the next five to ten years. "If prices go down, you're not hurt -- you're in the house you want to live in."
Target your offer. Start by finding out how motivated the sellers are, then target your offering price. Roberta Murphy, the San Diego agent, tells buyers that if a home is new to the market and priced very well, they should make an offer at the top of the range; if it has been on the market for six months, they might make an offer at the bottom of the range or even below.
Many builders have begun to offer concessions and upgrades as their new-home inventories grow fatter. If those aren't advertised, negotiate for them. You may find bargains on resale homes in developments where builders are still selling new properties. The owner of one slightly used property may have more freedom to reduce the price than the builder who has already sold 200 at the higher price.
Win the beauty contest. You may still find stiff competition for properties with the greatest discounts, so you'll want to look like a sure thing to sellers. Get pre-approval for your financing and try to schedule any appraisals and inspections in advance to minimize the time those will take. You can even write a "love letter" to the seller, pleading your case. "By putting a personal story to the offer, you stand out," says Murphy.
Protect yourself. In some of the hottest markets during the past few years, buyers have felt compelled to make "clean" offers. As sanity returns, get price and property protection by adding to the contract contingencies for a current appraisal, financing and a home inspection.
Article from Kiplinger’s Personal Finance Magazine found online at http://www.kiplinger.com/
March issue 2006
For more information on this article or assistance with your San Diego real estate needs contact Noel Wheeler of Prudential California Realty at (619) 718-4266 or visit http://www.noelwheeler.com/
posted by Noel Wheeler San Diego Realtor | 1:25 PM
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