JR, although I respect your opinion here, I have to disagree. Perhaps, you (and other agents) will have to learn to accept that agents and investors are trained to think differently, and they both have very different goals. Agents don't work for free, and neither will we (investors). Although Gene and I probably have slightly different investing styles, I'm sure Gene bases his offer price off of an income analysis for rentals, a CMA and the appraisal for flips, and a discount analysis for any repairs (if necessary). Many (if not most) agents, who aren't also investors, or who don't specialize in working with professional investors, only evaluate properties using a CMA. That's understandable, because their responsibilities for a property typically end after closing. Investors don't have that luxury.
Keep in mind that investors get paid AFTER everyone else has been paid, so we have to buy properties at the right price or else we end up losing those properties and contributing to the current problem. I hope everyone realizes by now that buying on speculation is often insane.
Real-estate investors aren't the only ones who purchase their supplies at wholesale prices, add value, and resale the end product for retail prices. Manufacturers, doctors, teachers, and other professionals do it too.
Although some buyers may want to "get back at the sellers," that's not a very intelligent way to conduct business. IMHO, the right way to conduct business is to structure deals that are win-win for both parties; nevertheless, sellers (and their listing agents) need to realize that win-win deals--especially in a buyer's market like this one--are going to appear somewhat in favor of the buyer if one obsesses alone on the price. Every good deal consists of a set of price and TERMS. Sellers who want more money HAVE to be more flexible on their terms, and sellers who are less concerned about the price CAN be more selective on their terms.
Nevertheless, I feel compelled to share that 'this strategy' works VERY effectively. It's a similar strategy to the one that Donald Trump, Robert Kiyosaki, Robert Allen, Warren Buffet, and countless others use for investing in real estate. if you don't believe me, then check out a few CNBC clips, and check out what's going on in the KC, Indy, and Detroit markets for starters. I know of hundreds of investors (and communicate with them regularly) who use similar strategies. You can also check out your local REI club(s) for more data and possible leads.
Reper, actually the sales prices aren't plummeting everywhere. The prices are increasing in Fargo, some areas of Cleveland, some areas of Columbus, some parts of San Antonio, etc. I can also attest that properties are selling, because I'm actively buying.
A question for Gene: using this strategy, how many times have you been successful? I had a customer once who did the same thing, including the lowering their offer when the seller countered. Even the most desperate sellers didn't want to do business with him/us and eventually I "fired" him as a customer because I thought he was being a poser and my time was better spent with folks who wanted to really BUY a house rather than folks who were mad that prices went up so high and wanted to play "let's get back at the sellers". Now this is two years later and my "buyer"-- ahem, I use the term lightly -- has still not bought anything but has made the rounds of a couple of other agents. It's a smalll world in my neck of the woods and people like that don't remain anonymous for long.
Actually, that is your straw man version of the initial premise. My initial premise was that I wasn't talking about professional investors.
This guy wasn't an investor, he was a smug know it all who seemed to enjoy insulting sellers. I would encourage true investors who want to use their own secret strategies such as lowering their offer when the seller counters, to get their own licenses so they only waste their own time, not mine.
As hard as it is to comprehend that concept, it is true. Yet I would not hesitate to do business with J R.
Why? Because I can view J R 's comments and opinions to see they are honest and consistent and when agreeing with mine are correct. lol That is what a consumer wants!!!! Right or Wrong a large number of consumers do not trust any industry that might have had a role in the economical situation in this country. Like it or not, the RE industry is one of those industries.
I'm an ignorant person, but it seems that rebuilding that trust and showing consumers the helpful side of the industry, the side that wants to help people make wise decisions that effect their financial future without suggesting they are ignorant might better serve those who continue to work in this industry. There are those who will buy now, make sure they get the best advice and assistance for "THEM" and those who "sit on the fence" don't try to entice them with" buy, buy, buy" help them better understand the possibilities you wish them to be aware of by discussion and assistance combined with facts..
The general mood of the country right now is to mistrust, to review their own financial security, priorities and goals. They are worried about the future, not optimistic....Help, don't self-promote..Assist with information, don't use it as a door to jam your foot in so you can better explain how wonderfull an agent you are.
Bottom line...The consumer will decide the direction and future of this market..and who they do business with..
1.3 cents worth, Dunes
My goodness you certainly are defensive. I'm not going to nitpick your post, I simply asked you a few questions based on your initial post, did not ask for all the gory details. My questions were not specific to their situation but to your market in general. Thanks for your answer.
Not trying to start an argument, but I'm just wondering Mark. . . . A couple of questions. . . 1. none of us has a crystal ball, I realize that, but ballpark, how long do you think it's going to be before things turn around? 2. what conditions would exist before things turn around (I don't mean "how will be know", like because prices start going UP, I mean conditions such as inventory decreasing or banks giving out easy money to anyone who can fog a mirror again), and 3. when things DO "turn around", when you say "turn around" do you mean prices start going back up, or prices go up to what the homeonwers think their houses were worth at the peak? Because when I have homeowners tell me they're going to wait, they seem to think it is imminent that the value of their own home is going to rise up higher than whatever their unrealistic expectation is now.
You are only partially informed...............
You get no arguement about the current economic status of the country and world but to say nothing is selling is a GROSS exageration.
There are buyers, domestic and foreign and homes are selling in most locations. Volume is down and today's buyers are looking for real opportunities to save money.
To be accurately informed an individual needs to expand their knowledge base beyond the nightly news and the daily paper.
Over on the Seattle Bubble website about a year ago someone said: "The bottom isn't as fun as we thought it would be." Since then things have only gotten worse for buyers.
I would also note that if you look at the non-distressed median, prices probably never fell a great deal from January 2009. It was mainly due to the REOs and short sales that there were good bargains, and also mainly due to them that the published median numbers fell as much as they did. A higher percentage of properties selling at a discount means a lower median, a fact which escaped most of the press reporting.
OK. Perhaps, I read a little more into what was written than what was meant; however, I extracted my premise ("extremely low offers are insulting to the seller") from your statements: "I had a customer once who did the same thing, including the lowering their offer when the seller countered . . ." and "[this] guy wasn't an investor, he was a smug know it all who seemed to enjoy insulting sellers." I've also had other agents to tell me (and others)--in RL and online--that the "right way" to make offers is to present them featuring a purchase price that's no more than 5% less than the list price, and that anything less than that would insult the seller. This is EXACTLY the type of thinking that I intended (and still intend) to challenge.
For me, there's no such thing as an insulting offer (ie one that's too high or low). Rather, there are offers that match the appraised value, and ones that don't. The ones that match are fair, and the ones that don't aren't fair--no matter which stage of the business cycle we're in (a buyer's market for now). The buyers and sellers who play by these rules will continue to transact deals, and the others usually won't.
Let's explore this notion of an insulting offer a little further. Our initial premise is that extremely low offers are insulting to the seller. Does that notion work bilaterally? Restated: is it also equally insulting to buyers for sellers price their homes at or above the current market value--especially when their properties will require some TLC? If not, then the expressed indignation is completely one-sided. Are sellers and their agents wasting the time of prospective buyers and their agents when the sellers price their properties without first having order an appraisal and inspection? If not, then the sellers and agents have no right to fight the results of a buyer's appraisal and inspection, because that wastes the buyers and their agent's time. Additionally, please recall that many sellers had no remorse for their prospective buyers as those sellers sold their properties often above their market value during the sellers' market (2003-2006). Savvy buyers remember this, and won't succumb to any selective amnesia. Respect is a two-way street: one has to give it in order to get it, and it only works well bilaterally.
I hope what I wrote doesn't come across as if I have some vendetta against sellers and their agents. I don't. I didn't buy during the sellers' market, so I didn't get burned. Rather, I'm most concerned about any arbitrary definition(s) of "fairness". IMHO, it's not fair or reasonable for someone to exploit an advantage, and to complain when his/her competition begin to exploit their own advantage(s) when the market conditions reverse course.
I believe Gene could have worded things better, and I suspect Gene wrote it that way with a little tongue and cheek humor. Yet, the ad homenim attack was also not right.
Goldendale is a little market, and my stats infomation might be nothing compared to other areas but we are a city and we are thriving. I serve about a 4000 population area. I do feel the market is different in different area's. Some area's like Goldendale have some sort of econmic growth from industries that are surviving. We have the windwill project which have all the rentals full and our local hotels. The wind mill workers are supporting our resturants, gas stations and many of our local business that would be folding like you see in other cities, if it wasn't for the Windmill workers. They are also putting money in the pockets of farmers who have worked their whole life and now they are seeing some rewards from their land like never before. We also have recreational activities that have and will help keep our area alive... There are projects planned to start work in the next year or so that again will bring heavy amounts of workers to our area not related to the windmills but to the natural gas pipeline.
Some homes are selling, not paricularly quickly, however they are selling! It is not a great time for Sellers to sell their homes, the homes tend to be on the market longer, however, it is an incredible time for Buyers to buy!!
Check out the interest rates at the moment, then tell your buyers they are mad to buy! If they have done their homework they will think you are crazy! Everyone has to live somewhere, now is the time to buy, and sellers need to know that there are buyers out there.
So, the sky maybe dipping and drooping, however it is not "Falling In, yet". So people, check with your LOCAL REALTOR and ask them for the cities yearly stats for 2008, I think you will be surprised in some areas.
If the Sellers home has depreciated, and yes, I know they have in some States, then they need to way the pros and cons of selling right now.
Lets start to work together and try to make this bad situation better! Not scare each other from making comments that we feel strongly about.
But you can dwell on how bad things are or you can hope things get better for your fellow man. I am not saying to be unrealistic, or heaven forbid suggesting being dishonest as you imply. Prices in my area are not plummeting, I am sorry if you are stressed by the falling values in your area. There is no doubt the world is facing a very serious economic crisis. But being negative and thinking begative thoughts will not help you.
Last week, I meet with some really nice people and told them their home was not worth what they wanted it to be. I advised them to continue to rent it until the market turns around unless they were willing to lower the price well below any competing comaprable listings to get it to sell.
FRIEND, THIS IS A MEGA COLLAPSE BEYOND THAT. . .SERIOUSLY, THE MAN IS CORRECT AND EVEN MORE IN TUNE WITH THE SITUATION.
THIS IS A WORLD WIDE EPEDEMIC THAT HAS YET TO REAR ITS UGLY HEAD. THE CURRENT DEFECIT AND AMOUONT OF MONEY ($200 BILLION TODAY FOR BOFA, ONE OF THE LARGEST).
FOLKS, POSITIVE THINKING IS GOOD AND I WONT DENY IT; BUT MY GOD, THIS MESS IS BEYOND WHTH THE PUBLIC IS BEING TOLD!
I don't see any false hopes for the people that are buying homes here? In fact, there are also helping our community.