Dear David,

We started our property search about a month ago and have made two unsuccessful offers. Both homes were listed in the $600,000 range, and ended up selling over $700,000. My partner thinks we should keep making low offers until we find someone desperate to sell. Is this realistic, and if so, how do we identify opportunities without wasting time or missing good homes? – LOOKING FOR A DEAL

DEAR LOOKING: Your two failed offers may have led you to misunderstand how home buying strategy works. The sellers you tried to buy from were likely not desperate. Instead, they were probably using the well-established tactic of pricing a home below its expected selling price in order to attract attention and trigger what’s often called a “bidding war.”

In these situations, it’s helpful to think of the low list price as a “marketing price”. It’s the bait, and not what a seller is likely to accept. When a home is listed in the $600,000 range and sells over $700,000, it doesn’t mean the market is irrational. More likely, it indicates the lower number was never realistic in the first place.

You are shopping in a high-volume price range, with many well-prepared buyers and very few desperate sellers. Keep in mind that Realtors are working to bring their clients the highest possible offer in the least amount of time, and because the information is online, your opportunity to “snag a deal” ahead of everyone else really only lasts a matter of minutes. 

For these reasons, “carpet bombing” underpriced new listings with lowball offers is unlikely to succeed. These homes have been purposely priced to generate competition, not bargains. 

With a few failed offers under your belt, this is a good time to sit down with your agent and clarify your end goal. Is it more important to buy the right house, or find a desperate seller? If you’re looking for a bargain, you’ll likely do better focusing on market-price homes that have been sitting longer than others in their area and price range. Sellers who are not getting much interest may be more open to negotiation, especially if their homes have been overlooked due to outdated decor or poor marketing. 

You are making one of the largest purchases of your life. Trying to win by making someone else lose is a dangerous game. Instead, try looking for the right home at a fair price, with terms that make sense for you.

PRO TIP: Embrace the positives in today’s market and use them to your advantage. Inventory is plentiful, interest rates are reasonable, and buyers are enjoying better market conditions than they have in several years. Be disciplined, informed, and strategic, but don’t let the search for a desperate seller cause you to miss opportunities. Professional advice is key: getting a $50,000 discount on a house overpriced by $60,000 is not a great strategy. #Advice #AskDavid #TheNegotiator