In today’s buyers’ market, you hear stories of $500,000 homes selling for as little as $250,000—a buyer’s jackpot by any standard. Price reductions are everywhere—so how can a savvy homebuyer make the most of them?
Searching for discounted properties is easy enough. Log on to realcentralva.com for an up-to-date list of price-reduced or foreclosure properties. The site’s database allows you to search by the amount of time a property has lingered on the market or its percentage decrease in price.
The downside to this approach is that every other buyer from Culpeper to Crozet has access to the same information—everyone is looking for a “distressed” situation right now (real estate parlance for short sales or foreclosure properties)—so it’s unlikely you’ll get the drop on a deeply discounted property before anyone else.
Which is why, for the best deals, sometimes it pays to skip the listings all together and do a little investigating on your own. Routinely walking around neighborhoods that interest you is a great way to get a feel for what’s happening there. How can you tell a property is about to be reduced before it’s actually listed as such? There are a few telltale signs.
Number one, the house sits empty with a For Sale sign out front. This means the owner is likely straddled with two monthly payments—one for the house she’s trying to sell, and the other she currently lives in, a predicament no savvy investor wants to be in.
Number two, the house has been on the market for more than two months. Most real estate transactions occur within the first eight weeks of being listed. After the second month, the clock starts ticking. Meaning, if the seller hasn’t already dropped the price, you can bet she’s at least mulling it over. Now is the time to make her an offer.
But what to offer? The biggest mistake deal-crazed buyers make is thinking they’re in a position to low-ball the seller by offering 40 to 50 percent less than the purchase price. Most sellers can’t afford to let a property go for a pittance and, in fact, may be offended at the suggestion and decide not to work with you at all.
As a good rule of thumb, offering 20 to 30 percent less than the asking price is a good place to start the negotiations.
If you do want to make a low-ball offer: First find out if the seller is delinquent on her property taxes, a signal that she’s indeed over her head. This information is open to the public and easily attainable at the county assessor’s office. It’s not the most endearing way to buy a house, but sometimes that’s what it takes to get the best deals.—Jessie Knadler