Monday, February 06, 2006

Desperate Sellers, BIG Discounts

by Osman Parvez


I should start by saying I'm not trying to highlight or take advantage of anybody's misfortune. Occasionally a seller will mis-price their property and it takes time for reality to take hold. At other times, a seller's personal situation forces rapid liquidation of her assets.

Naturally, good deals can be found when sellers lose patience or must liquidate. It's also likely in the next few months buyers will exercise greater caution as the media focuses on the bubble deflating in overheated markets. Despite the strong evidence that Boulder, Colorado is not a bubble market (see my posts on Boulder and the Bubble) we are still impacted by national psychology. We are all exposed to the same nation-wide news programs and magazines. This could create a nice buyers market this spring. It's time to be on the lookout for deals.

If you're a savvy buyer, choose a buyer's agent who can help you find bargains. A good real estate broker should understand your situation and be able to provide you with a list investments/potential deals that suit your needs. The nice thing about a buyer's agent is that while working for your interests, they'll usually be compensated by the seller (check your contract for details).

One way to sniff out value is to search by Days on Market (DOM) and even better, by discount from original asking. Here's an example (MLS# 425809). The sellers decided to list this property back in September, 2004 for $2,280,000. In March of 2005, they dropped the price to $1,950,000. Nearly two years later, the property is listed at $1,475,000. That's a 35% discount from original asking price. It's one of the largest discounts on the MLS. Talk about coming back to reality.

Want something with killer views? Ok, here's another potential deal (MLS# 475841). Originally listed in November of last year, the seller's just reduced the price $200,000 from the original asking of $1,950,000. It's a custom home adjoining Open Space with one of the finest direct views of the Flatirons. Most of the living space is on one level with walk-out to multiple patios and views. Now, heading into Spring it's priced 10% lower at $1,750,000.

Note: A big discount nor high DOM doesn't ensure value, but should be considered an indicator to dig deeper. If you are in the market for a high-end home, ask your realtor to provide comparative properties. What else has sold in that neighborhood over the past six months and what is currently on the market? Consider the short and long term changes that are expected in the area.



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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

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