Many homebuyers in today’s market are looking for that next “steal”. Most flock to the distressed (short sale & foreclosure) property scene. While there are great deals to be had in the distressed markets, primarily the short-sale market, I’m going to point you in another direction.
Just like bread, real estate listings can become stale. They are entered into MLS, get shown and because of overpricing they are ignored completely or only receive offers that are unacceptable to the home seller. Why would you want to pursue buying a home from an unrealistic seller? Often it takes the seller some time to test the water before they realize their property isn’t worth as much as they’d like to think it is. Sadly, for the seller, by the time they realize the price needs to be lowered, it’s too late. Generally, people only go out and see new listings that come onto MLS and when they scroll down the almost never-ending list of pictures they just think, “oh already seen it, didn’t like it then – won’t like it now”. Often not remembering that the reason they didn’t like it was because of the price.
So, here’s how you can potentially get a good deal on seller’s misfortune:
-Try to enter and complete the transaction without attaching emotions. Emotions cost money. At first, consider it an investment – not a home.
-Find yourself a realtor who knows how to negotiate. Most of the time these Realtors have the highest commission rates, why? Because they are good at negotiating. Why would they give their own money away and then go fight to save your money?
-Have your realtor setup a search for a time you consider listings go stale. EX: only send me homes that are with price range parameters and a “Days on Market” (DOM) filter. (I personally like to look at homes that have been on the market for over 90 days)
Ways to consider a listing is stale:
-Is it still on Broker’s tour and hosting Open Houses, or has the agent given up?
- How long is the average real estate contract (when listing agents contracts are getting close to their expiration they get more eager to convince there sellers to SELL!)
-What do you think the sellers perception of how long it takes to sell a home in the current market
-What is the average amount of time on market until pending status?
-Has the home gone to pending status previously and then fell through?
When making an offer on a stale listing:
-Have your realtor do research on what the home is worth. What has sold, what hasn’t sold (and is also sitting on the market) and what else is there to buy for the money. Decide on a reasonable amount below that offer. Ex: Your Realtor says the home should be worth $1,000,000, offer something like 15% less and set a cap of 10% below that number for negotiations. BE REALISTIC; no one (not a bank or private seller) is going to sell you a $1,000,000 house for $100,000. Advise your Realtor for a realistic “low-ball” offer strategy.
-Come from a position of strength– don’t look for houses if you’re not pre-approved by a major banking institution! In general, try to have the cleanest contract possible. Have contractors and inspectors ready to go so you can keep your contingency period as short as possible.
Will this work on every “stale” listing, NO. But remember, when trying to get a real estate steal it is a numbers game. Have your agent set up an offer packet so all he/she has to do is enter in a new address and price. Make numerous offers and something is bound to work out in your favor.