The current state of the real estate market can make it easier to get more for your money, but it’s not a given that every house will be a great deal. If you’re looking for a super deal in a crummy market, you may have to put up with inconvenience, pay in cash or be confident about your home improvement skills. From buying a house from a relocation firm to buying short sales, it’s possible to find bargains in a stressed market. Here are some tips on how to get the best deal in a down market.
Green talks. If your offer isn’t contingent on financing, you may be able to talk your way into a very sweet deal. Obviously, this kind of deal is contingent on your ability to come up with the cash to pay for a house without a mortgage. If you are in a bidding war for a property, cash can seal the deal due to the security that it provides the seller, assuring an easy close. Non-cash sales can be contingent on appraisals, the property condition and the ability of the homebuyer to get financing – all of which can cause a deal to fall through. On top of any other deal you might be able to put together, a cash buyer who can close quickly may merit a discount of up to 3 percent of the sales price. In a foreclosure situation, cash may buy a discount of up to 30 percent off the sale price.
Find Distressed Homes
Distressed short sales and foreclosures are not for the faint hearted. You may have to deal with squatter situations, deliberate destruction caused by the owner, or advanced decay of the property including termite issues, broken plumbing, and destroyed appliances. If you don’t plan to live there, are handy, and have enough money to fix the place up or tear it down and build something new, then you could be a good candidate for this kind of deal. The worse the shape of the property, the less popular it will be with buyers and the more likely you are to be able to make a deal.
Bid in Foreclosure Auctions
Foreclosure home auctions are all about the bargain. In order to get a real deal, you have to spend a lot of time researching the home, neighborhood, lot and value. If there are liens against the property and you have the winning bid, you may be responsible for paying these. Typically, the opening bid (or floor) is based on the amount owed by the current owner to the bank. If you make a bid and the bank accepts it, then you’re stuck. So do as much research as you can in advance – and know your number going in. If you like the thrill of the hunt and are willing to deal with the red tape, this kind of deal could be a good fit.
Look for Desperate Sellers
With a little bit of research it’s easy to tell how many times a property has been put on and taken off of the market, how the price has dropped over time and how many days the property has been listed. Look for properties that have been on the market for six to 12 months – or longer, have had more than one price reduction and have an air of desperation around them. Keep in mind that there are lots of reasons that a property might not sell. It may be that the property hit the market at a bad time, the pricing was way off given the market, or the sellers are difficult to deal with. It never hurts to make an offer on a property like this, even if it isn’t currently listed in the MLS.
Seek out Estate Properties
We’re not saying that you should troll the obits looking for real estate gems, but estate properties can make for choice deals. Often times homes owned by estates of the deceased are sitting unoccupied and heirs can be eager to turn their bricks into dough. To find out if a property is estate owned, you can check property records online. One thing to be wary of: If siblings are bickering or are out of town, it can be challenging to get a deal done. This kind of deal requires a lot of patience.
If you’re serious about finding a great residential real estate deal in a down market, you have to be patient and be willing to put together offers that some buyers may find insulting. And you need to stay focused on getting the best deal possible. If you get emotionally attached to a home, it’s always harder to get the best deal. It’s great to be able to buy into a property and establish equity immediately. But be careful what you ask for. One last piece of advice: Get a great inspection and do the math before you sign on the bottom line. Your amazing deal might come with a whole lot of surprises that make it more expensive than it appears to be.