After many years of the real estate market mostly favoring sellers, buyers are sick and tired of bidding wars and cocky sellers who increase the list price of their house simply because they didn’t get an offer above the list price. Is there anything you can do to beat the system and possibly get a better deal?
There are many opportunities for buyers and we see them every day. Especially when a property comes on the market listed by an inexperienced agent who makes serious marketing errors or a stubborn seller who lists too high and eventually pays the price. These marketing faux pas compromise the final sale price which, as a buyer, you can take advantage of.
1. For starters there are many sellers who don’t interview multiple agents before listing their house for sale and forego getting multiple opinions of value. Sometimes they opt to list their house with a relative, a friend or an out of area agent who doesn’t know values in their area. Turning the situation into an opportunity for you, is when the listing agent doesn’t even set a date to review offers and the house can be purchased as soon as it comes on the market. This happens more often than you think and you can act on it.
Example: We sold a house that was drastically under listed because the listing agent did not know the area and used an inferior comparable sold property, that he had never seen, to compare to the one he was listing. Making matters worse for the seller is that he didn’t set a date to review offers which may have resulted in multiple offers driving the selling price to its market value. We showed it to our buyer clients within hours of it hitting MLS, brought the seller an offer and procured the house for 10% below its market value.
Sometimes properties come on the market listed too high and you can take advantage of this. Let’s say your budget is $1,000,000 and your agent viewed a house listed for $1,150,000 which he determines is too high but finds out the seller has to sell. Some agents may not show you this house because it’s too far from your price point. On the other hand, an astute agent will so they can prepare you to act as soon as the list price is inevitably reduced. If you wait for the price to be reduced before you see it for the first time, you will not likely be in a position to perform due diligence before another buyer snatches the property from under you.
Example: We sold a property that had been listed for $1,579,000 but was accompanied by a few price reductions within a four month period. It was probably worth about $1,475,000 but it languished on the market because the initial list price was too high rendering the property unattractive. We showed it to our buyer clients and monitored it for a few months. They were in a position to act, as soon as the property was reduced to a price they could afford, and procured it for $1,380,000.
We have dealt with thousands of offer situations and are putting forth these opportunities because they do happen to astute buyers who use great buyer agents. Why shouldn’t it be you? To take advantage of these scenarios, though, a few things have to be in place:
1. You have to be available to view a house on short notice.
2. You need to have your ducks lined up;
- financing should be in place so you can make a firm offer
- deposit funds should be available to submit a certified cheque
- be available to do a home inspection on short notice
- your current house should have been appraised and ready to go on the market if you have a house to sell
3. You have to be decisive or another buyer may beat you to the offer table.
4. Most importantly you need to be working with an agent whose judgement you trust, who is sharp, intuitive and experienced.
So hire one of these agents, because there are many, and try to get yourself a good deal.
NOTE: The home prices in the examples have been changed to protect all parties.