How to Save One Million Dollars When Buying a Home
I just saved a client a million dollars on a house, and this is how I did it. Just because it's a seller's market, does not mean there aren't opportunities for buyers everywhere. You just have to recalibrate the lens through which you're analyzing these ‘’propertunities’’. See what I did there? I'm going to give you a quick bit of tips on what to look for when you're trying to find that deal.
#1: Know The Market
You have to really put yourself in the shoes of the future buyer, the person you're going to pass the baton to. So whether this is something you're buying to live in, or something you're buying to develop and make money, your focus should always be on the next buyer. The things that you're experiencing in the property are the same things they're going to feel and those can dictate if a price is going to be a record-breaker or something's going to sit on the market.
#2: Forget About Pocket Listings
Listings that are not on the market publicly do not have the risk exposure of the days on market clock ticking. So they can ask whatever price they want. 100 billion dollars. Instead, look for the homes that have been on the market for six months, for a year or for several years. Those sellers are likely so fatigued from enduring open houses, showings and a multitude of agents at times trying to get them to take a lower price, that by the time you get to them, they might be likely to sell a property for less than what it would have normally sold for had they priced it right in the first place. The opportunity is in the properties that have been on the market for a long time.
#3: Use Short Expirations on Your Offer
Any offer you submit should have a short expiration on it. You do not want to end up in a multiple offer scenario. I have seen situations where a property sat on the market for 180 days, there was a slight reduction and all of a sudden, there were five offers. If your offer is not in play after it expires, then it cannot be used to leverage another buyer up. Make your offer strong and make it expire quickly.
#4: The Reverse Bidding War
The bidding war that most people know about is when there are several buyers courting a seller, and the price goes up. What if you were to tell several sellers that you're putting in multiple offers on multiple properties and you are going to take the property that accepts the lowest price? That is a reverse bidding war and gives all the power to the buyer.
#5: Find Out The Specific Needs of the Seller
Find out if the seller has any special needs. Maybe they want a long escrow, or maybe they want a 60-day leaseback, or some contingency to find a replacement property. If you can be patient and you can give a seller their terms, you can trade that for money off the price.
#6: Be Interest Rate Sensitive, Not Price Sensitive
Sometimes, an interest rate is so favorable like the times we're finding ourselves in now. What if interest rates go up a point as our markets become a little bit more uncertain. So think about your net, don't always hone in on one metric that is price.
#7: Don't Be Afraid to Walk Away
It will serve as great negotiation leverage, and I can assure you, there will always be another house.
Remember, the money made in real estate is the buy, not on the sale. So make sure you're buying well.
If there's anything specific you want me to touch on, please don't forget to comment below!