I have been working with several buyers in Metro Phoenix, Scottsdale and Carefree who are finally eager to purchase a home.
Though, like anyone who can read a newspaper or stand by the proverbial water cooler, they now it is just that; a buyer's market and can afford to be , shall I kindly put it, aggressive with offers.
Now, I do suggest, I recommend and share comps (which seem to be of little value in this market) with my buyers to arrive at a price that for which we can make a compelling argument to the seller to facilitate a transaction.
However, as a Realtor, we have to do what our client wishes. and, when they ask me to prepare an offer, it seems to start at a dollar value at a large percentage discount to whatever the home is listed.
However, yesterday, we made a full price offer on a home. Here is what happened.
Mr. & Mrs. client have been looking for a home in Carefree, AZ. a wonderful community with breathtaking mountain views. The home that they first wanted was listed at $1,050,000. My clients offered $850K and their offer was rejected.
However, we next found a home in the same area that was listed at $819K , reduced from $1.2MM that it was purchased for just 4 years ago.
They asked my opinion, and I said, if you want the house, "I recommend you Pay full Asking Price !"
Today, we joked around about the look on their face when they heard that. However, like they said the Price is Right !!
By the way, they did offer full price and as you might imagine, it was quickly accepted.
In fact, there are situations that still occur, with the abundance of foreclosures, that i recommend you bid higher than asking price. In fact, Real Estate auctions have bids starting below $100K for homes that will sell for more than twice that amount.
The general rule for buyers (not investors) who will own the home as a primary residence is to find the home you love, and offer a price you can comfortably afford.
make sure you or your realtor helps guide that offer price with a detailed comparative market analysis.
Make sure you stay in your home awhile (at least 5 years). You will receive tax benefits, long-term savings in equity, a hedge against inflation (if you have a fixed rate mortgage) and since you are buying 20%+ below the market highs, you will likely see some wealth creation through long-term equity appreciation.
Most importantly, you will have a place to live, to call a home and share with family.
There are excellent Realtors on Active Rain who can help you prepare a detailed CMA for your area
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Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
James, great advice for buyers, particularly if they can get the home purchased substantially below what you consider current market at.
James, great post. However, I am just wondering if you can get any of your clients to pay full asking price for my home. :) -
Gary - even if you considered the market overvalued in 2005, you are right that you can by at prices 3 - 5 years ago.
I think most buyers, (if they could get a loan these days) would feel comfortable calling many of todays listings "good deals' . If they see one and it is priced right, dont be affraid to pay full-price
James - very interesting story.
I have a client who priced thier home as equal to that of the foreclosures, short sales in the same neighborhood and received 3 offers the first weeked.
The reason was the pricing #1. But, also buyers preferred to buy a home that was not a foreclosure dud to condition, seller-disclosure and working with a seller directly versus a bank
James -
excellent blog and very good advice. However, getting buyers to do this is another thing in it of itself. I have a client who offered full price and asked for 3% closing costs even though the prices was probably fair.
They lost out to a full price offer. If you really love the home, and you think it is a great deal for you and your family, my advice is dont mess around for 2-4%.
I agree. People should look and find the house they want, in their price range and then make the move. If it doesn't work in the long term, especially on primary residences, then maybe they should be looking for a cheaper or more affordable home instead of offering such ridiculously low prices. The seller's have break even points too.
Good luck while you fight the battle. Hopefully your buyers are serious and won't just have you write offer after offer and low-balling the seller's the entire time. (seen it happen to a couple realtors and it really isn't fun for them or the lender)
Eric - if you are looking for a home that is in your price range, and can get a fixed rate mortgage (call Eric Murrietta) , then pay full price if it priced appropriately.
cheaper and more affordable housing is the right way to invest or buy a primary residence.
Overspending on a home only allows you to work all day to barely pay mortgage that you cant enjoy because of the stress.
It is a very tricky market and one which is difficult for many consumer to understand (or anyone for that matter). However, I am seeing the same kind of thing here in New Hampshire. It makes it more confusing because the national media reports may or may not be accurate for a given local market. Working with a professional like yourself is the key!
showed a house today that was a lender owned home. The agent had already recieved an offer, told me to show the home in case it didnt get accepted. When I got to the home there was a realtor and client leaving. When I drove away, there was another car driving up. If homes are priced right, they will sell. Paying full price may be just fine