Sunday, May 21, 2006

It's Payback Time

It's time for buyers to start playing hardball again. It's payback time. Drive those prices down; you buyers have the power now, exploit it.
Talk of the end of the real estate boom is on everyone's lips along with advice that buyers should start playing hardball again. That means more than making a low offer in a declining market.

Experts are telling home buyers they can and should ask sellers for extras, such as a year of mortgage payments or picking up all closing costs. And Realtors, who saw their ranks swell with rookies during the last few years, may also be willing to take a much smaller cut of the deal.

But not so fast, says Rhonda Duffy of Duffy Realty in Atlanta, a flat-fee brokerage. She takes a contrarian view on how home buyers should handle what could be a pause or a serious housing downturn.

While some overheated residential markets -- Southern California, Florida -- may see prices drop significantly, elsewhere homes are simply sitting on the market longer. Even in Atlanta, where home prices haven't swelled as much and so a bursting bubble is less likely, there are still four homes on the market for every one buyer. So instead of it taking a weekend to sell, now it takes a month, or two or six.

That's partly due to the Internet, which allows prospective buyers to look at hundreds of listings online and view maps of sales and estimated values in a neighborhood, according to Duffy, who says the glut of information has slowed the process down.

Instead of muddying up the contract with requests for extras, she counsels, buyers would do well to focus on the bottom line. Too many caveats can frustrate a seller, for whom the deal is as much an emotional decision as it is a rational business transaction. That's the opposite of what some others are saying, she admits.

And don't expect your lowball offer to be snapped up by anxious sellers. People are already gearing up for longer waits on the market. In fact, says Duffy, agents will do much of the hard work for you in bargaining the price down. In a flat market, they're more anxious to get the commission on a sale than to get a high price.

4 Comments:

Blogger Athena said...

Did you see Matt Lauer bagging on the 50 yr mortgage this morning? I wonder if this is just the beginning of the media criticism for this product? Granted it was a soft piece, but the point was still made.

May 22, 2006, 9:01:00 AM  
Blogger peterbob said...

I don't agree with much of what Rhonda said, but she's right about focusin on the "bottom line." Seems to me that it's silly to talk about any concession other than a lower price. I don't want closing costs paid, or one year of mortgage paid, or a car. I want a lower price. (and I'm not gonna buy until I find it!)

May 22, 2006, 9:16:00 AM  
Blogger Marinite said...

peterbob -

Exactly. The amount you save year after year on saved property tax far, far outweighs those short-term concessions.

Buyers - go for the bottom line. Accept nothing else but a reduction in the selling price.

May 22, 2006, 10:29:00 AM  
Blogger moonvalley said...

The 50 year mortgage..wow that's what the guys on KSVYs' RE show this afternoon were touting. That what we need, a 50 year mortage and a fountain of youth.

May 22, 2006, 7:33:00 PM  

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