When a home has been on the market for a while, sellers might decide to slash the asking price to attract an eager buyer. But you can’t exactly slap a sign that says “10% off” on a house. Instead, when a property is headed to the bargain basement, the industry term “price-reduced” pops up next to the online listing. Finding a price-reduced home that fits all your criteria can be a boon for an industrious buyer. So how can you best take advantage of such a gem? Our experts explain.
What is price-reduced real estate?
Price-reduced real estate simply means the original listing price of a house has been lowered to entice buyers. This could be because the initial asking price was too high to generate interest and offers. Or maybe the house was priced correctly but the seller is eager to move the property quickly , says attorney John R. O’Brien of Chicago. Sometimes the seller is reducing the price for both reasons.
What price-reduced real estate means for buyers
Price-reduced real estate indicates that the sellers have finally realized that they really do want to sell, says Kathryn Bishop, a real estate agent in Los Angeles. The bottom line for buyers? When the asking price is reduced, it almost certainly means that the seller is motivated to sell the house ASAP—and that potentially means the buyer will get a great deal.
How to find price-reduced real estate
The perfect place to find price-reduced real estate is online. (Price-reduced homes on realtor.com® have a green arrow pointing down next to the price.) A good agent can easily help you with your search because it’s easy to find these deals from their back-end system, says Samuel A. Pawlitzki, a real estate agent at Beach Cities Real Estate, in Malibu, CA.
To take full advantage of price-reduced real estate, Pawlitzki advises buyers to research why the price of the house has been lowered. First, find out if the house has been sitting on the market for months with no interest or if the seller has simply been unlucky with failed escrows. If the seller had an escrow, ask why the buyer dropped out. Also see if you can get the inspection report. If you can’t, ask whether the inspector found anything alarming that the seller might like to share with you.
Next, find out how many price reductions there have been. (This information is readily available on the listing page.)
“If the seller has already done three price reductions, they might not have any flexibility in reducing the price any further,” says Pawlitzki. However, if this is the first reduction, or if the house has any serious problems, there might be more flexibility in price. This information will help you formulate your offer.
Making an offer
Go see the property as soon as possible. If you like the property (along with its new, reduced asking price), go for it! Make an offer that you and your real estate agent can back up with a list of sold comparables, the recent sales prices of similar properties in the area.
“Your Realtor should send the comps in with the offer,” says Bishop. The offer amount can be a bit lower than the comps indicate, but beware of going too low.
“You don’t want to anger the seller and have them refuse to counter your offer,” says Bishop. Your goal is to negotiate a fair price.
What if there’s a bidding war?
Sometimes a price reduction can start a bidding war between multiple interested buyers. In this situation, Pawlitzki advises buyers to figure out the maximum they’re willing to pay for a particular home. This will stop them from getting caught up in an emotional bidding war and spending more than they had originally planned.
“Remember, the thing that drew you in in the first place was the low price of the home,” says Pawlitzki.
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