Smart Moves by Ellen James Martin

Upscale Buying in a Tough Market

In many communities, income increases continue to lag price gains for residential property -- a huge source of frustration for wannabe homebuyers of modest means. But as the springtime market heats up, many affluent people are also finding it tough to compete with rival purchasers for the properties they want.

"Those at the top of the market want a house with lots of bells and whistles ... But now they must ace out others who are eagerly pursuing the same dream," says Tom Early, a real estate broker and past president of the National Association of Exclusive Buyer Agents (naeba.org).

The problem for buyers? Available homes are in short supply in many popular neighborhoods, and prospective buyers are in a rush to take advantage of the low mortgage rates that are still available.

Lawrence Yun, chief economist for the National Association of Realtors (realtor.org), says that unless more property comes on the market, springtime sales could plateau in many areas as the season progresses.

As with all buyers in a competitive market, well-to-do purchasers need to take a deliberate approach to get a good deal on the dream property of their choice, says Ashley Richardson, a real estate agent affiliated with the Council of Residential Specialists (crs.com).

Richardson tells a true story of buyers who, noting the sellers' sense of urgency, snagged their dream home by crafting an all-cash offer with very few contingencies attached.

"At any price level, a contingency-free contract can prevail," she says.

Here are a few pointers for buyers:

-- Seek out sellers in a hurry to move.

Dorcas Helfant, a former president of the National Association of Realtors, says the owners of upscale homes are no different from any other category of owners: Some are much more driven to sell than others.

Why should the prospective buyers of a home care if its owners are motivated to sell quickly? Because sellers in a rush are much more likely to negotiate in earnest.

Often, a home's owners will indicate openly what's prompting them to sell -- or they'll permit their listing agent to do so. Alternatively, your agent can often learn more about the sellers' circumstances or timing through polite inquiries.

Helfant cautions against wasting time trying to negotiate with non-motivated sellers. You're far more likely to strike a favorable deal with those who must move for one reason or another.

-- Don't rule out listings that have languished on the market.

Sometimes truly motivated sellers hold out longer than they should, discounting their overly high list price only after they've become desperate.

"Sellers usually get a wake-up call after they've had no showings in a month or so and their denial on price has worn off, which typically happens in four to six months," Helfant says.

In neighborhoods where the supply of available homes is less than demand, a few sellers will still cling to an over-market price until their property becomes stigmatized.

"Even spectacular homes can linger unsold for months on end. Buyers who wait until deep price cuts occur can be richly rewarded for their patience," Helfant says.

-- Give the sellers a "clean contract" offer, if possible.

Helfant tells the true story of one couple who aspired to own a stately colonial and were successful in obtaining $50,000 off the already-discounted asking price for the property because they wrote a "clean contract" on the place. They offered cash and promised to close within 30 days.

The offer proved so appealing that the owners of the property, who were under a deadline to move out of state for a job transfer, couldn't refuse. The buyers were ecstatic at the deal they obtained on a home they loved.

"No matter how upscale the house, some sellers are highly responsive to an offer that makes it easy and quick to close, especially when they need a sure bet on their house and they need it fast," she says.

-- Don't be afraid to counteroffer in a sellers' market.

Granted, it's easier to get a counteroffer accepted by sellers during a buyers' market. But that doesn't mean this approach is out of the question for buyers trying to beat a sellers' market, says Mark Nash, the author of "1001 Tips for Buying and Selling a Home."

"Timidity is rarely rewarded in real estate. If your first offer results in a counteroffer, you can generally go for another round or two without much risk," Nash says.

-- Keep your eye on the ultimate prize.

Obtaining a good value is always a positive in the home-buying situation. But especially for older buyers, acquiring the precise property they want, whether a city loft or a country colonial, can sometimes be even more important.

"If the property you've found is exceptional and really meets your long-held desires, it could be wise to offer the full asking price or maybe even a bit over," Helfant says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)