Not a total loss...-Part 2 of 'Bleeding in the Reno Sparks Home Market' By: Joe Salcedo
My recent post "Bleeding in the Reno Sparks Home market" might cause me some enemies and people saying, "Your looking at the glass half empty!"
I beg to differ. I see multiple opportunities on the buying side of the Market, allow me to explain. If you are a buyer now (first time,repeat,investor) I don't think I need to tell you about all the inventory that is out there and the number of sellers that are ready and willing to negotiate {more so the builders, Who are now paying commission to Outside Agents (they never use to) and giving unbelievable incentives just to close the deal.}.
Great Deals are out there to be made in this market. You just have to know what you are trying to accomplish and what is your top priority. You must negotiate. Below is an article about this one specific necessity to get that best deal for you in this market.
But before reading that,I just wanted to expound on the point that, "You have to know what you are trying to accomplish,your top priority". If you're thinking on buying a home (because it's so much cheaper compared to the precious years) and then 'flipping' it within the next few years. I don't think that is a good idea.
The market based on statistics, is still in a downward trend. I stated this on my last post, 'bleeding', But if you're thinking of staying in the house for the long run( at least 10 years) then that's a different story.
The opportunity that I'm talking about lies in the incentives of the builders and resales is giving you. They are definitely in the mood for negotiations. But 'Joe it'll only get worse and cheaper" yeah could be, but not necessarily.
The home builders in the Reno Sparks area are severely cutting down their inventory. They're not building half as much as they did a few years ago. I have Statistics to back this up.
Negotiators Miss Out By Accepting Deals too Fast
Most people -- even those who think they have great negotiating skills -- accept the deal too quickly, according to a study on how far both buyers and sellers are willing to go in a negotiation.
''Even experienced negotiators are not immune,'' says study co-author George Wu, a professor at the University of Chicago's Graduate School of Business. ''People almost always underestimate'' how far they can get the other side to go.
Rick Larrick, associate professor of management at Duke University's Fuqua School of Business and another co-author of the study, offers this advice for those who want to be a better real estate negotiator:
- Weigh your alternatives. ''The only time you should be concerned about the other side walking away is when you don't have good alternatives,'' Larrick says. "If you're buying a house, you should know if there is another one out there that you would be happy to buy if you couldn't get this one at a certain price. If there is, you can make the other side sweat.''
- Know the value. Whether you're the buyer or the seller of a home, know the value of the property. "Look at everything in that range and know what else buyers interested in your home might be seeing,'' advises Fran Vernon, an associate with Dilback REALTORS® in La Canada, Calif.
- Have patience. A buyer or a seller who is not in a hurry can rise above other buyers or sellers in the same price range.
- Learn from your deals. Just because you walked away feeling like a winner doesn't mean you were, Larrick says. Pay attention to subsequent similar sales, so the next time you can do better.
Source: Tribune Media Services, Kathy Kristof (08/19/07)
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Fine and well, but if I'm sitting on the sidelines having all the research available, there's still a gloomy forecast for each of the houses on my watch list for the next 6+ months. This is a very unusuall market which might be ready for some unusual tactics.
Should I
a) offer a price that's way way below what I know the seller needs to get out clean and see what happens?
Or
b) Simply have my agent call their agent and tell them "We're interested, but sidelined while the market sorts things out." Hoping that as a last resort before doing something stupid, they will call?
Yes the cards are all in my hand, but if I don't play them I can't win.
Thoughts?
Faust,
just wanted to let you know that I read your comment. I think joe will be in a better position to answer your question. I will forward this comment to him.
Faust,
I am going to answer each of your questions...
Answer to your question which goes.. offer a price that's way way below what I know the seller needs to get out clean and see what happens? Yes (even better if you really know how much the seller will net from your price.). Focus on your interests and priorities not the other party's. Yours.
Now you may be asking "Well, what should be my interest(s) and priorities?" that is a very broad question that can be answered in many different ways and angles. Do you really need to buy now? Are you going to be homeless if you don't purchase a home today? is it the right price for you? Yes the stats show it will still take a dip but is this the house you have always wanted? (Location, size,etc.) and the most important thing,can you afford the monthly payment with that purchase price with that interest rate,at that time you decide to write that offer for that to-die-for property?
Question b goes.. Simply have my agent call their agent and tell them "We're interested, but sidelined while the market sorts things out." Hoping that as a last resort before doing something stupid, they will call?(I'm thinking you meant "will they call?")
First of all, Yes have your agent do all the talking and negotiating if you have one and if you don't , I suggest that you do because we know the front end and back end of the business, it's our job. Second, I don't think that you should tell them that you're interested. Tell them you want to wait till everything simmers down or gets 'stabilized'. Do not give too much information to the other side especially if it compromises your leverage to negotiate whatever it is that you want to negotiate. By stating everything that you have stated earlier, do you want the sellers to tell you or ask you "hey don't wait, what is it going to take?" So if that's the case you might as well not lose focus on negotiating the price (knowing what you want simplifies it.). 'Ask and you shall receive', if they do not call, say to yourself "SO WHAT, YOUR LOSS NOT MINE" with a smile. To answer the question "will they call?" and if they don't say the same line I said earlier. Remember, In negotiation, The one who is willing to walk away, WINS! Do you want to win? Can you walk away?
Yes the cards are all in my hand, but if I don't play them I can't win. True, you can't LOSE either. Unless your need to get this deal done is greater than the other side better make sure you did your homework.
Thanks for the info.
No, I'm in no stress. We've got a nice little apartment and a short term lease. We've seen all the houses in the area we want. The nicest one for the price may go first, but we're sitting tight and waiting for some signs that the end of the downturn is in sight. It's frustrating for buyers too, but I guess we'll just keep waiting.