by Robert Thompson
On Tuesday, February 9th, a happy couple – clients of mine – closed on a house in Lyle, Washington. On Wednesday, February 10th, a mother and son – also clients of mine – went under contract on a new home in Oregon City. And it wasn’t even too hard to find a home, which not every homebuyer can say lately.
“So what,” you may say.
Well, if you follow the real estate market at all, you know that the market is “hot” – a seller’s market with very low inventory and rising prices. As a homebuyer, it can be tough! There are more buyers than there are sellers, meaning that sellers can often pick and choose. As a buyer, you’re in the best shape if you can make an appealing offer. This is not necessarily always about price. It also involves negotiating by learning what is important to the seller. While for some sellers it may be only about price, and for almost all sellers it is predominantly about price, other factors can be important. Factors such as how long it will take to close or time in the house, after the sale is final, so the seller can move without ever being ‘between houses’.
Sometimes, though, a homebuyer does not have the ability to compete very effectively against very high bidders and folks who aren’t worried about the house appraising (meaning they have the financial resources to make up the difference).
So back to my two sets of clients. I mentioned them both because, in each instance, they had limited financial resources. Both clients had FHA approvals but needed the sellers to pay the closing costs. And one of the clients, in Washington, also took advantage of the Washington Bond Program, which allowed them to come in with 0 out of pocket (save inspections, etc.). (The Oregon Program has more restrictions, but there is a program. To find out more of the details about these programs, let me know and I’ll point you in the right direction). From a negotiation standpoint, having ‘no skin in the game’ is a relatively weak stance – a low down payment or none at all, an inability to negotiate price (already at the peak of their respective preapprovals), and, worst of all, in need of the seller to pay closing costs. In a less biased market, these things might not be all that important. But this is not an unbiased market.
Yet both homebuyers managed to land the second house they offered on, without bidding wars and with seller-paid closing costs. As much as I’d like to say this was because of my deft negotiations and shrewd insight into the psyche of today’s seller, it wasn’t.
It was about the property.
I searched out properties that had been on the market for a longer-than-average time (meaning two days, lately – that’s a joke but it’s not far from the mark). And these ‘staler’ houses are those the folks bought – in both cases without competition.
One of the homes was a beautiful, new construction house with a beautiful view, but it was a bit remote and the neighborhood down the road wasn’t necessarily what you would choose as a favorite. The second was on a busier road and it had no backyard… essentially a fence line. In both cases, the sellers, whose homes were not selling like the hotcakes all around them, netted their full amount and the homebuyers, who might have never won in a bidding war, got beautiful new homes.
Down the road (I know… past performance does not guarantee future performance, but let’s say it does, for the sake of argument), real estate prices will rise, equity will increase, and these folks will have the future ability to buy up. In the meantime, by being a little more flexible and creative, they’re now paying themselves instead of a landlord.