Lee Ginsburg · (650) 358-3959

DEAL or NO DEAL
September 23, 2008 · Lee Ginsburg · (650) 358-3959  

Deal or No Deal?

    Everyone’s definition of a “DEAL” is different.

Many of today’s buyers are in the mindset that a “Deal” is purchasing a home below current market value.  What is current market value?  It is the price a willing and capable buyer is willing to pay and a seller is willing to accept.   Below Market sales do not occur in today’s web 2.0 world.  Information is plentiful for both the buyer and the seller.  Properties priced below market value are not kept a secret for long.  Homes listed at below market prices wind up getting multiple offers and sell at the price determined by the bidders which is now the market price.  Many of these people looking for this type of “DEAL” have not purchased anything and may not because they continue to offer below the market price. They are not the only buyer out there.   I recently heard of aproperty with 89 offers. The demand is still very strong. Before the internet many properties were kept a “secret” because it took more time, effort and money to get the information out; so yes purchasing below market value was possible then but not now.

 

Some buyers define “DEAL” as comparing it to the original list price.  Some go back further and compare it to what it sold for previously.  I believe using this method is not sound fundamentally.  The original list price could be someone’s dream.  The price it sold for a few years ago is not a good comparison because as we now know people were not buying with real money.

 

Others define “DEAL” as an opportunity for the long term.  How much will it be worth in a specific time period, 3 or 5 or 10 years from now?  What is their return on their investment as compared to other investments with similar risk?   What is the downside?  These people look at what sold recently, what sold previously and what is available today.  Using this definition of a “DEAL” has made many investors and homeowners in the past very happy and will continue to do so for years to come.  People using this are not concerned with what the price is 3 months from now or a year from now.  They are concerned for the long term.    This method has made many people very rich.

 

There is another group of investors and developers that define “DEAL” as an opportunity to add value.  I do not see many of these in the market place today.  They generally like to add value and move on.  They add value by remodeling, adding additional space, changing the use of a property, etc.  I recently sold a personal investment property like this.  I did not have the necessary skills or finances to add the value.

 

So which “DEAL” are you looking for? 

www.leesellsmore.com

Share and Enjoy:
  • Digg
  • del.icio.us
  • Facebook
  • Google
  • StumbleUpon
  • Twitter
  • Reddit
  • Technorati

If you enjoyed this post, make sure you subscribe to my RSS feed!

Filed Under Frequently Asked Questions, Local Real Estate Trends, Real Estate Finance, Real Estate for Buyers and Sellers

Tags: , , ,

Comments

3 Responses to “DEAL or NO DEAL”

  1. Michael Monozon on September 23rd, 2008 10:47 am

    Lee, very well stated, thank you
    Michael http://www.prucal.com

  2. Shokoofeh on September 23rd, 2008 11:26 am

    Lee, It’s a deal!!!
    I beleive buying real estate at today’s market value is definietly “A DEAL.”

  3. Rehana Hafiz on September 26th, 2008 9:33 pm

    Lee, VERY well said. I agree completely. I just wrote six offers with a client looking for that “deal”. All the offers we wrote were well below asking and market value. Obviously we have not ratified any of them; one was completely rejected. My client is learning the hard way, that there is still a very competitive market out there. A few of the offers were submitted on the very 1st listing day and had multiple offers with in hours. Although it took a lot of grueling hours and some heart ache, our last offer was above asking. We have not yet ratified but we are still in the game. YEAH!

    Although there are some great deals out there, I think a lot people have a false impression of the market, and do not realize the fact that when you purchase a beautiful 3 bedroom 2 bath home anywhere in the Bay Area for $550,000, it’s a GREAT DEAL!

    The Bay Area prices have come down some but I don’t believe they will ever be 200k like many people are offering or waiting for. Unfortunately for all those who are waiting or “low balling”, they will be left behind once again. Before we know it, the prices will be back to $800k plus.

    We don’t know when rock bottom hits until the prices go up, at that point, it’s too late.

    Thanks Lee for a great lesson on what is a “Deal”

Leave a Reply