Searching For & Recognizing Value in Today's Real Estate Market

[flickr size="small" float="left"]http://www.flickr.com/photos/42659427@N02/3931867083/[/flickr] In todays economic, and specifically real estate, environment every buyer/leaser wants to negotiate. No matter what the price is, people want to offer less, just because they feel like they can. There are many instances when homes are priced well, and are deals at the asking price. I would caution against missing out on a deal, while trying to negotiate a steal. That is very important. I understand the concept of buying low and selling high as well as anyone, so trust me I get it. Negotiating on behalf of my buyer client’s is on e of my favorite parts about being a real estate professional. In some instances one can negotiate much lower than the asking price, but in others they may just lose out on the house they really wanted. The thing is, every seller on the market is not necessarily desperate, and with a plethora of information available, Los Angeles is one of the most knowledgeable markets in the country in terms of people knowing what houses are worth in the areas they are looking. Let me give you a specific example.

Recently, I represented buyers on a purchase of a foreclosed property in the Hollywood Hills. The asking price was $700,000 and the listing described it as a “fixer”. The listing agent for the bank told me he never even visited the property. I knew the house very well having previously met the original builder, as well as leased out the home twice for the investor /buyer that eventually foreclosed. It needed new carpets, but was not a fixer at all, and had designer baths, imported stone work, and a gourmet chef’s kitchen. It also had the roof engineered to be a deck, but did not have stairs to go up there; nobody could have known that but me, since I met the original builder when it was first completed. I told my client’s that I am not a hard salesman type, but this is an absolute deal and if you are interested, you will need to act quickly as this will sell fast. That was not just salesman jargon, but a real fact. They recognized the value and called me 20 minutes after we saw it to make an offer. We ended up offering $720,000 (yes, $20,000 over asking price) as there were 7 offers in a matter of days. Some of those offers were under asking, which is my point. We got it, and the property appraised by a bank at $850,000. Banks are conservative by nature, so the home is probably worth closer to $950,000. While some were negotiating off the asking price trying to get a steal, my client’s knew I was telling them the truth, recognized the value and offered over asking and got an amazing deal!

Beyond the basic dollars and cents of the deal, it is also not like buying stock, and if it is the home where you want to live, that has intrinsic value in and of itself. In closing, definitely use your negotiating power as a qualified buyer/leaser in today’s market, but when a deal arises, don’t miss out on it thinking you can negotiate it down even lower. If you find the house you like, it is priced well, and you want to live there with your family for years, then take advantage of historically low interest rates, lock it down and enjoy.

Agent & Seller Interests, Are They Aligned?

I was speaking to a client yesterday regarding the sale of a property, when they said something that made me think as well as kinda bothered me a bit. I am paraphrasing, but they said something to the effect of, I understand you want to reduce the price as you just want to make the deal regardless, while I as the seller want to maximize the highest possible sale. I understand where they are coming from on the surface, but had to disagree. Obviously, the real estate agent only gets paid when a deal occurs; thus, the incentive is to make the deal. I get that. That being said, I believe both parties interests should be, and with me at least, are aligned. I want to get all my client's the highest possible return on their homes, period! Nothing else makes me happier. In fact, I really don't like having the "we need to reduce the price" conversation with any of my sellers. Sometimes though it is just plain necessary, assuming both parties have the same objective--selling the home! Often, this conversation stems from seller's wanting to list their homes higher than suggested from the start. Unfortunately since real estate exploded into the mainstream consciousness in the past few years, and so much information available, everyone feels like an expert. That coupled with the emotional connection/bias that many have to their homes, and the recent decline in values, always makes pricing a somewhat contentious conversation. It is an accepted fact that if there is no interest from the market, a price reduction to attract a buyer's interest is usually necessery. If nobody is calling for appointments to view the property, either it is not a great product, or more likely the price is too high. Now, if a seller just wants to swing for the proverbial fences and if they get their number great, but if not they are content to stay, this is a different story. In this instance, I would say the objectives may be different. As an agent the profession is to adequately represent and inform their client in order to get the highest amount possible, but at the end of the day get it sold for their client's at an acceptable price. If a seller calls me to sell a property for them, I would think they would want my professional advice, and to sell the property. What good does it do either party to have a listing that doesn't sell?

The bottom line is, at the end of the day in a good faith business transaction, both parties interests should be exactly aligned. We are on the same team and should be working towards the exact same goal.