Given the real estate recovery that's strengthened the hand of sellers in many U.S. markets, homebuyers no longer have access to as many terrific bargains as they did even five years ago, in the wake of the economic downturn.
"There's much less low-hanging fruit for buyers now," says Tom Early, a veteran real estate broker who was twice president of the National Association of Exclusive Buyer Agents (naeba.org).
But Early says it's sometimes still possible for buyers with a strategic plan to get a solid property without overpaying -- even in some of the country's most coveted markets.
Take the true story of an actor and actress in their late 20s who spent seven months seeking to buy in a part of Washington, D.C., that offered easy access to the theaters where they work. They were lucky to get down payment help from their parents, but they still had to compete with other buyers in a city where multiple bids are now common.
To make sure they'd be credible to sellers -- and wouldn't back out of a deal for financial reasons -- the couple obtained mortgage pre-approval before they went out shopping. Then they systematically compared alternate neighborhoods to determine the best one they could afford. Finally, they began targeting particular properties --focusing on houses that had languished unsold for a lengthy period.
They kept an eye on the place for several months, waiting until it went vacant and the owner was eager to liquidate. At that point, the couple picked up the property for a price their agent estimated to be at least 5 percent below market value.
"A stale listing can represent a huge opportunity for buyers, assuming they swoop in at the right time when the owner is really motivated and will negotiate," Early says.
But Mary T. McCall, a long-time real estate broker, cautions that any buyers considering a property that's lingered on the market for a lengthy time without bids should make sure to rule out any possible hidden problems.
"Almost without exception, buyers are well advised to get an in-depth inspection from a professional in the field," says McCall, a past president of the Council of Residential Specialists (crs.com).
Here are a few other pointers for buyers:
-- Carefully time your bid for a "stale" property.
Before they bought a home, the actor and actress lived in an apartment with a month-to-month lease. Therefore, they could afford to take their time to locate the right property.
As it happened, the opportune moment to bid on the bungalow occurred between Christmas and New Year's Day, when potential rivals for the purchase were busy with holiday festivities. That worked to the young couple's advantage.
Early says that during vacation periods many "test-the-market" sellers, including those free from pressure to move, take down their "For Sale" signs. Most who are left are highly motivated to cut a deal.
But how do you know which sellers have a strong need to sell soon? Early says many owners, along with their listing agents, are remarkably frank about their motivation to move.
"It's amazing just how candid many people are about their reasons for needing to sell. They'll tell you if they have serious financial problems or major health issues, or if they're going through a marital breakup, even if that weakens their bargaining position," Early says.
-- Consider buying a "spec home" from a builder.
Early, who's sold homes since 1982, says he's helped many purchasers score a good deal on a brand-new property that the builders constructed without specific buyers in mind. These are known as "spec" properties.
Though many such homes have already been snatched up by eager buyers, Early says there are still more available for those who hunt them down.
"Seek out builders who still have several spec houses in their developments. They need to sell these homes to pay off the bank for their construction loans. Their urgency could result in a good deal for you," Early says.
-- Realize that the potential for a great deal in a hot market is limited.
Through strategic planning, the actor and actress were fortunate to have snagged a better-than-average markdown on the bungalow they chose in Washington -- a city favored by young home purchasers and with a relatively strong economy, due to a stable federal government employment base. But not all Washington buyers are equally lucky. Because of the popularity of this area, many must pay at least list price to avoid losing out in a competitive bidding situation.
Early says there's no shame in offering list price or slightly more in such a hot area -- assuming you've done your homework and are convinced you're not paying more than a couple of thousand dollars above true market value.
"You can't let emotion cloud your judgment. But if you've found a house you dearly love, years from now you won't regret that you ran that extra mile to make it your own," Early says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)