Too frequently, I get an email from somebody that has been following my blog and tweets for months and is now ready to buy!
I get the details of this person’s dream home, including number of bedrooms, lot size and location (don’t get me wrong, most buyers still do their own searching). But then they end the email with a catch. “Oh, but the only problem is our maximum is $400k.” Meanwhile, homes in this area sell for $550k.
What to do with buyers wanting the IMPOSSIBLE?
1) Reply that they are nuts and spend an hour explaining why.
2) Ignore the email or a quick reply saying I’m too busy. (But do I look too busy? Watch Video)
3) Lie. Accept the “challenge,” but in reality hoping they would come to their senses. Many agents that are hungry (anybody see the site Hungryagents.com, how hilarious is that? Do you bring them bagels at each meeting?) will say yes to several of these types of customers, hoping that one will stick. Knowing (lying) that they can not get the client what they want… a miracle.
4) Save a tree and send them a link to this post.
If I do send you this and tell you that you are nuts, I’m not trying to upsell you. I’m trying to educate you. Save you from wasting your time (cough, cough*, and mine). Don’t be offended. This route is much better than #3. Homes are expensive. Really expensive. Maybe you should rent. No harm in that (see 2006 video on Buying Myths and Renting Benefits, notice the full head of hair. How many people would have saved $500k by watching that in 2006!)
Whatever gut feeling price target you have, increase it by 10-15%. Again, not an upsell, just our society which tends to have taste buds just outside of our gut feeling “reasonable” price (see blog post on buying a pricier home).
* Make sure when you cough to cough into your shoulder, not into your hands. Stop the spread of H1N1.
5) Still want that miracle deal? Skip your agent (because the “seller pays” doesn’t apply). Go buy a courthouse Foreclosure (see my video at the Courthouse). Not an MLS listed Foreclosure, short sale or REO, but a real courthouse auction. Look through the notice section of your newspaper or search the Washington Post trustee search (which blows since a search for a zip code can bring up hundreds of results if the law firm’s zip code happens to be in that city). People who do this, THEY get homes for $100k below market. Easy money? If it was, I’d be doing it.
But wait, there is more! Here are the pitfalls for #5:
a) Professionals doing this have 3 employees going to dozens of auctions in hopes of getting ONE property (good for an investor that doesn’t care about getting a “home” but more about a “steal.”)
b) Research 20 homes. No photos. No entry into the house. No home inspections. 100% as is.
c) Only 1 or 2 of those homes will be sold at any decent price. The rest of the 18-19 times the seller reclaims the property in time (think Brady Bunch movie saving the family home from auction) or the bank, which is too busy to get a proper value on the home, will buy it back for the loan amount, which is way over market.
d) Oh, and do a title search first for each home. It might have a hidden $100,000 trust or IRS tax levy that is NOT disclosed and you have to pay for it.
e) Win the house and in some states, the homeowner can still get it back.
So, I digress. A good agent will help you get the best price possible. A great agent will be willing to lose a couple deals for you (this about that for a second. LOSING a deal can be a GOOD thing) because you came in just under the “price that would pass the seller’s laugh test.” A fabulous agent might tell you to read this post because what you want is impossible. If you let it (the customer) free, it will come back (is that how the saying goes?)
See related 2008 video: lowballing doesn’t work
Written by Frank Borges LL0SA- Broker FranklyRealty.com
(NVAR members, have you voted yet? And customers with agents, tell your agent to go to www.ChooseFrank.org to vote me onto the NVAR Board of Directors before Oct 8th 2009)
Nuts by Sergei Golyshev , H1N1 by Guerry, Needle by naughty architect
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