I have a friend from Australia that enjoys “taking a holiday” with his American wife for periods up to six weeks at a time. On some trips, their luggage is a backpack and their transportation, a motorcycle. This mode of traveling is not for the lighthearted and requires a certain adventurous gene that is not found in the main stream population in the United States. Many Americans, myself included, tend to place a high value on the comfort factor and tend to carry substantially more items with us on a vacation than our world counterparts.
I was a witness to a time that they were packing for a trip that involved traveling through Australia on a motorcycle. He had his wife place the items that she wished to carry on the bed in the spare bedroom. When he saw all the items that she planned to carry, he stated that she would have to severely reduce the amount of stuff. After the second and third reduction, he said “for us to make this happen, you are going have to be ruthless”. At the end of the day the contents were reduced to a single backpack each and they had a great trip in Australia.
There are several applications to being ruthless in the current real estate market.
Sellers
If you want to sell your property in this market, you need to make sure that you consider the following advice.
1. Price the property to reflect today’s market. Take a serious look at what sales have occurred in your area in the last few months and what your competition is with regards to other properties that are for sale. I have watched communities sit with little activity because a property owner set a price on their property and everyone else based their listing price off of that price. They do this without knowing the process or reasons used to set the price on the original property. Conduct due diligence before setting the price and keep a sharp eye on the market data so your price level does not become stagnant.
2. If you are in current financial trouble or on the cusp of it, do not wait until you get behind on your mortgage to put the property on the market. With the current property inventory and the subsequent credit crunch, real estate agents need more time to find a qualified buyer. If you are in this position, you need to be frank and honest with your real estate agent and be absolutely ruthless in setting the price. Neighboring property owners will attempt to discourage you from do so. They do not want their perceived property values to drop if a property sells below what they believe is the value of their property. Just remember, it is highly doubtful that those owners will chip in and pay your mortgage if the property does not sell in time to prevent the foreclosure.
3. If your property is currently for sale or lease in this market, make sure that it is clean and ready to be shown at any time. Make your property as available and accessible as possible for agents to show to potential buyers. Appointment only listings will reduce the amount of times that your property is exposed to the pool of buyers. Take a serious look at the maintenance, cleanliness and general appearance of the property. Be ruthless in reducing the amount of clutter in the closets and storage areas of the property as well as the main living areas. In a market with numerous choices, you may only get one chance at a potential buyer before they move on to another property.
4. If you receive a low offer on your property, do not make the mistake of failing to counter the offer. The low offer may come from a person who is capable of paying a price that you will accept. If you fail to counter the offer, you will never know what they might have paid.
Buyers
If you are a qualified buyer that has the ability to purchase a property, quickly and without financial contingencies, this market is full of opportunities that can be “cherry picked” at price levels that have not been available for a long time. The chances to successfully acquiring a value based property in this market are as sure as the sun rising from of the east tomorrow morning.
If you are an unemotional investor in this market, you can be ruthless with offers on properties that are for sale. The probabilities of a seller accepting your offer decreases as the ruthlessness of your offer increases. I recently had an investor who placed four contracts on potential properties in a five week period. One of the offers was rejected without a counter offer, two properties failed the inspection and he successfully acquired the fourth property.
This market has more to offer to buyers than it does to sellers. However, all markets are cyclical, and we will reach a point when the market will settle, inventory levels will stabilize and property prices and values will again increase.
James West
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