Jenn Vest made what she thought was a fair offer on a house in Broward County, but the seller rejected it and wasn’t much in the mood to haggle. The same thing happened on another property.
Vest later found a two-bedroom house in an eclectic neighborhood near downtown Fort Lauderdale. Originally listed at about $550,000, it was reduced to $349,000. She closed on the deal Dec. 29 for $316,000.
“She got the buy of the century,” said her real estate agent, Pamela Orr of Balistreri Realty in Lighthouse Point.
Buyers have been wielding more power since South Florida’s five-year housing boom last year yielded to a significant slowdown. Those getting the best deals are hiring experienced agents, pushing for incentives, wearing poker faces, finding motivated sellers and, when all else fails, walking away. It’s an environment buyers and sellers will have to get used to because many analysts expect the region’s housing slump to linger throughout 2007.
“If you’re a buyer, this is your time now,” said Jack McCabe, a Deerfield Beach-based housing analyst.
During the housing boom from 2000 to 2005, competition for homes was fierce as buyers swept in with full-price offers, giving sellers plenty of choices and lots of leverage to force fast sales.
Now, though, buyers are in control as investors have pulled out of South Florida real estate, creating less of a demand for properties. With fewer buyers, homes stay on the market longer. The supply of homes for sale has swelled in Broward and Palm Beach counties, creating havoc for people who need to sell quickly.
While good agents are invaluable, price-sensitive buyers should be prepared to do some of the legwork themselves. That includes driving through neighborhoods and scanning tax collector Web sites for recent sale prices. They even can peruse multiple listing service data that used to be available only to agents.
“Help your Realtor. She can’t read your mind on everything you want,” said Vest, 38, an information technology project manager. “And it makes you a more educated buyer.”
MLS listings also include histories of the properties, and they can show buyers just how motivated or desperate sellers are.
Orr, for instance, noticed that the home Vest bought had been on the market for more than a year. The length of time was the first clue that the seller might be getting antsy.
After probing further, Orr found that prices in the neighborhood were falling, in part because developers were buying homes on the cheap and tearing them down to build luxury townhouses.
Armed with that background information, Vest offered the seller $316,000, about 10 percent less than the latest list price.
“We told the seller, `This is our best offer,’” Orr said.
The seller had a comparable offer from a developer who wanted to tear down the property but chose Vest’s bid because she planned to live in the home.
In today’s climate, buyers who intend to live in the homes typically can pay 10 percent to 15 percent below market value, said David Dweck, an agent in Palm Beach and Broward counties and founder of the Boca Real Estate Investment Club.
Investors paying cash, closing quickly and taking the property “as is” might be able to swing deals with desperate sellers for 65 percent to 70 percent below market value. “That’s reality,” he said.
Some agents say buyers shouldn’t worry about making lower offers, reasoning that sellers can’t afford to be insulted in a market glutted with properties.
Douglas Rill of Century 21 America’s Choice in West Palm Beach just had a client list a Lantana condominium for $400,000. A prospective buyer first offered $330,000 and then $365,000, but the seller refused. After later agreeing to accept the deal, Rill’s client lost out when the buyer had bought another unit in the same complex for less money.
“Sellers can’t be choosy,” Rill said.
But Bruce Gaines of Lang Realty in Boca Raton said buyers shouldn’t make ridiculous offers, either.
“A lowball offer usually sets the tone for the deal,” Gaines said. “It becomes emotional for the seller.”
Dweck advises buyers never to show emotion, no matter how badly they may want a property because the seller will use that as an advantage.
But buyers shouldn’t be shy about asking sellers to pay closing costs or to cough up maintenance or homeowner association fees for a year. And new-home buyers should insist that builders match the incentives offered by their competitors.
“When I’m negotiating for a buyer, I want everything and the kitchen sink,” Dweck said.
If the seller balks at the price or terms and the real estate agents can’t bridge the gulf, it’s time to hunt for another property.
Michelle and Cliff Rich recently moved to Palm Beach County from Louisville, Ky. Like Vest, they made two offers that were rejected, only to find a deal later on a four-bedroom house in Jupiter. It was listed at $574,900, but they paid $545,000.
Michelle Rich said they made out well because they were willing to walk away.
“Someone once told us, `Fall in love with an area, not a particular house,’” she said. “If you fall in love with a house, there’s a good chance you’ll pay much more for it.”