Looking for a Deal? This is it!

Friends, colleagues, and other people tell me all the time, "I'm not really ready to buy a house, but I will if a good deal comes up." Sound familiar? As soon as I hear this, I know that they are not ready to purchase a home. Why? Because most people don't know what a good deal is even if it hit them in the head! Unless you're actively looking, you can't know what a good deal is. Plus, if a truly good deal comes up, then it won't last long so you have to be prepared to move on it quickly. So, my usual response is to provide them with resources on how to prepare for a home purchase and have them contact me with any questions. But I don't send them any good deals because I know they're not ready.

Many of you might think you are ready. Are you? Let's find out. Check out this property:
http://matrix.mris.com/Matrix/Public/Email.aspx?ID=30668364884

It's a two br, two full bath in U-Street with a great floor plan for $400k. I've seen this property and the place dosen't need much work....maybe new carpet. At $400k, the interest only mortgage will be about $1700, plus taxes at $350, plus condo fee $550 (which includes your insurance and some utilities). Total monthly payment, $2600. That seems high, but let's look at the U-street rental market. Renting this place will be easy at $2200-2400 per month, plus, your interest only mortgage payment is tax deductible - which we assume 30% discount and your actual payment is $1200+350+550=$2100.

But, this is assuming that you pay full price. You can negotiate and get a better deal! So, are you really ready to buy when a good deal comes up?

Interesting note is that this isn't a gem. I'll have another post with a gem.......

I just saved my client $64K!....for a new condo!

Sounds pretty amazing right? I'm sure when you first read the title you probably thought that there must be a catch right? No. I actually just got my client ratified at the Yale Condominiums for $64K below list price!

How is this possible? Well, they're not going bankrupt; investors aren't bailing; so how did I save my client $64K? A combination of things. The combination of the market, credit freeze, condo conditions, and my understanding of the developer's business model is how this happened. We've heard over and over that how the market is crashing with no end. We experienced pretty significant decline in real estate prices in the DC area. Initially, sellers were still clinging on to hope that the prices will rebound. Unfortunately, the prices didn't rebound like everyone hoped. And by the time sellers were willing to offer steep discounts, the credit market tightened up. All these things really caused real estate agents to accept the current reality of lower prices.

Next, along with the market condition, the timing was really good. As of now, the developers at the Yale Condominiums sold a little over 70% of available units. They really want to get this number up to 75% so that they can officially call this building a Condominium. Until this occurs, DC won't allow the building to be officially a Condo. So, if you were interested in the Yale, then timing couldn't be better.

Finally, with some research and several conversations, I was able to determine the seller's position. You see, builders and developers aren't like individual home owners, where emotion comes into play during negotiation. For developers, everything is based on a financial model - the cost of holding a number of units, cash available through alternative financing for their future projects, and projected income and losses. So, if you can understand what the developer's position is, then you can figure out their yes/no decision point is and how to negotiate properly. Of course, my extensive knowledge in finances and business model really helped me through this. Still, such helpful information isn't easy to find; the Yale Condo provided enough information for me to determine their stakes. I'll be honest though, I did get lucky because I understood the seller's position almost too well.

And these three things all came through together to help save my client $64K! If you're interested in the Yale, then I suggest you consider them now!