Everyone knows that the list price in the Bay Area is irrelevant. Or do they? Why, then, do I always get postcards in the mail and scroll past Facebook posts that say “SOLD! 400% OVER ASKING PRICE! LOOK AT ME! I AM AN AMAZING NEGOTIATOR AND MARKETER!”
If you price your $2+m Berkeley craftsman at $1.2m you are going to get 1. A lot of offers and 2. $1m over the asking price. This isn’t rocket science.
So, why? When did this start? I don’t know. It was like this when I got here in 2011. I was as shocked as you are. My first house was listed at $70,000 and I got it for $65,000. I come from a totally different place. My second house was listed at $159,000 and I know we paid substantially less than that for it, but we were moving up in the world. My third house, well, that one was here. And I didn’t pay over asking even though everyone else was getting outbid. It was listed at $500,000+- I don’t remember the exact number. But it was sitting. It looked weird. The layout was weird. It had mirrors and clown paintings. The photos made no sense and the exterior color was an anemic tan. Yes, I said clown paintings.
We wrote a below-asking offer. I was functioning as our agent even though I had never done a real estate transaction in California. I was my first client. We got it in contract and closed it for $30k under the asking price. It had been sitting empty for years. Everything about it was weird. Weird cheap appliances, weird floors in the downstairs, and fast-food orange counters in the inlaw unit kitchen. It was an incredible first buy in California.
My second buy was all moxie. An incredible view in the most sloped crooked cracked house ever. The foundation had failed. It was a serious project- and we are still ironing out the final details 8 years later. But it was so so so so worth it. The house has quadrupled in value and has the most epic views, the best hanging fireplace, and is my exact favorite place in the world overlooking Lake Berryessa.
It is 10 years later and I am still passionate about getting the highest price for my sellers and the best prices for my buyers. How does a buyer get a good deal in this market? On any given day, there might be 200 listings in your selected areas. Of those, about half have been on market more than 21 days. So that is 100 listings ready and waiting for a buyer. Of those 100, maybe only 10 are good. Those are 10 houses that are an opportunity for you. Don’t like any of them? Wait a few weeks. One will pop that is the perfect bargain for you.
In a recent Sunday guide I said this is like the current uptick in gas prices. People would rather complain about $7.75 gas than drive an extra half mile to that Arco that has gas for $5.09. Many people would rather complain about the price of houses than try to find that fixer bargain. And ok, I get it, some people want a turnkey home and have the cash to make that happen. But what does a budget-minded buyer do? You have to be smarter, work a little harder and make a few sacrifices. There are always bargains out there. There are for-sale-by-owners that smell like dog (no offense, dogs), there are houses with unwarranted additions (go to the city and see if they can be retroactively permitted before releasing your inspection contingency). Most problems can be fixed in real estate.
My top 10 tips for finding a good deal in today’s market
Look for listings that have been on market for more than 14 days, but fewer than 45. That is a sweet spot.
Bad photos. I love a sideways iPhone photo of an open toilet. That is money in the bank for a buyer.
Good photos of a home that shows terribly. Nothing better than a home that is gorgeously photographed….then when you get there it is not at all as represented, but still fixable.
Bad carpets. Bad carpets are easily fixed. Did you know carpets are easily removed from a home? Its true! And they sell floors out there in the world. You can just, you know, buy new floors at at the flooring store. Crazy.
Many many paint colors on the walls. This was never a trend. I love a bright blue room next to a yellow room next to a red room.
Pet smell/smoke smell. Not my favorite bargain technique because sometimes it takes years to get the smell out. But sometimes you can get it out by refinishing the floors & painting the walls.
Owner occupied and cluttered. Clutter kills equity for sellers, but it is instant equity for buyers.
Weird layout. Sometimes a house just seems weird. But sometimes you can make little changes to fix that, like in how the furnishings are arranged.
Overpriced. Look at homes that are just a bit over your price range that have been sitting. Sometimes the owner pushes for a higher list price than the market will bear and this is your opportunity to come in just under asking
For Sale by Owners. There aren’t many of these, maybe just 4 or 5 in any given area at a time but this is a great way to find a deal- and you - the buyer - can still have an agent represent you at no cost or little cost.
Who do you know looking to buy a home? I am a certified negotiation expert with the National Association of Realtors. I am a property investor and premier agent with BiggerPockets.com. I am here to help with all your real estate needs, big and small.