Over the years, you have read a wide variety of techniques on how to find a "great deal" right here, in the Market Insights column. This week, I am disclosing three buyer's secrets for buying property well below the market value.
I have said it before, just a couple of weeks ago, and I will say it again - for the very best values, buyers must look beyond bank-owned properties, short sales, foreclosures and other sorts of "distressed properties." The most important aspect is to search out the seller who is genuinely motivated to sell a property. I am talking about that rare person who just wants out.
As a buyer, you don't care why they want to get rid of a property, you just want to snap up the property at a low price. The following are techniques that have never been disclosed before.
If your Realtor insists on being a transaction broker, then find another Realtor. Buyer's agents are required to do all they can to get you the lowest price possible. The following is what the Colorado Real Estate Commission states: "A buyer's agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer." And that is what you must have.
I define huge price drops as those of at least 10 percent of the asking price. I need to explain this a little bit. This is only a useful indicator if the asking price is currently close to the market value. If a seller is asking 40 percent over the market value (no joke, I have seen this plenty in Summit County), and they drop the price by 10 percent, the most they will generate out of me is a mild yawn, certainly not an offer.
However, if the price starts out realistic, then the sellers make a massive drop in their price, it is as if they are standing up waving a flag telling the marketplace, "We are sick and tired of this place, please give us an offer so we can get rid of it." Many times over the years, I have experienced, after a big price drop, a seller who ends up selling for more than 20 percent below the market value.
I would love to have a $1 for every time a buyer or their Realtor asked me, "Gee, will the sellers accept $xxx,000?" I call the seller (in this case my client) and say, "I have a verbal offer of $xxx,000," which in most cases is such a low amount that it is taken by the seller as an insult, resulting in a response of, "No way." However, when I send the seller a written offer with an earnest money check attached for the exact same amount of money, the response is much, much different. Now the seller has something tangible to consider. And in this case, the seller begins to think seriously about selling. It's true, "money talks."
The best example I know of is the home at 1489 American Way in Breckenridge. This four- or five-bedroom home (depending on how you configure it), with four full bathrooms and an oversized three-car garage, had a price drop this week of $60,000, down to $579,000, telling me the seller is motivated. It started on the market in May of this year at $699,000.
Buyers: Build a strong working relationship with your buyer's agent and be ready to buy when the right motivated seller starts waving that flag.
Sellers: If you are a genuinely motivated seller, tell your Realtor. Give him or her the approval to put into the marketing phrases such as, "bring all offers," "motivated seller," "must be sold."
Daniel Webster Johnson has earned the national Quality Service Certified Platinum award, recognition of 100 percent client satisfaction. He is a broker associate at Resort Brokers Real Estate in Breckenridge. Call him at (970) 393-3300 or drop him a line at Daniel@YourMountainBroker.com.