Are You Prepared for a Good Deal?

When I speak with buyers, people tend to believe that prices have gone too high for our current market. These same people are the ones who then go on to say that instead of making their move now, they’re going to wait things out in the hope that prices will drop.

As someone who consistently purchases properties and is always in the market to buy, I can tell you that timing the market is more difficult than it sounds. Not only is it difficult to know when the market is at its peak, but it’s also hard to be sure it’s at its lowest. It’s true that corrections are easier to spot—but you can never really know when one is going to happen. A correction can happen at any moment, whether that’s today or 10 years from now. 

Instead of trying to time the market, my real estate strategy is to act. There’s a good deal in every market. Instead of trying to wait, I think it’s smarter to find out how best to take advantage of any given situation. Homes that sell quickly tend to be the best deals. Being in a place where you are always looking will better position you for success than waiting around for the right timing. 

I spoke once with a client who believed prices were too high for him to put his home on the market. However, when the market drops, your value drops too. Waiting around because you think the market is too high for you to sell will ultimately cause you to make less on the sale of your home. 

 

 

What I proposed to this client is that instead of waiting, he should remain ready to make the best of any opportunity that could come along. The market drop of 10% to 15% would ultimately be cancelled out by the resulting value drop, which would be approximately the same percent. 

To help illustrate my point, I gave this client the example of a property I’m in escrow on in Oxnard right now that was listed at $260,000. When I ended up closing, I did so at $275,000. My final closing price actually closely mirrors what properties were selling years ago. This proves my theory that there is a good deal in every market. None of us have a crystal ball that will tell us when the market is going to crash. 

So what can you do to make sure you’re ready when the right opportunity comes along? First of all, you must know that you are qualified for a loan. You need to understand how much you’ll need, what your terms would be, and whether you can realistically achieve your goals. 

A couple of weeks ago I got a call from a woman who I was trying to work out a deal with a year ago. At the time, she wasn’t ready to sell. When she called me recently, she told me she was ready to sell. In case an opportunity like this ever arose, I had already met with a commercial loan officer. I ended up closing on this property for just $110,000. Good deals truly do exist on the market, but they don’t last. You absolutely can’t hesitate.

If you don’t make a move on a good deal, someone else will. You can’t focus on the little costs. $1,000 or $2,000 isn’t worth worrying about. In the end, a good opportunity and a good investment will be worth it. 

In 2012, people were predicting that a lot of shadow inventory would be coming on the market and causing it to drop. Interestingly enough, the opposite happened. The market took off with limited inventory. Just last year before the election, a similar thing happened. People were predicting corrections that simply didn’t come.

Personally, I never make any decisions based on what the market is doing. The market is cyclical and always will be. Investment decisions should be based on the numbers. Last year I bought a rental property that I felt I paid a little too much for. A couple years later, though, I ended up buying another property at a similar point. After analyzing the numbers, I realized it still made sense. The numbers on a month-to-month basis made sense and were ultimately what I based my decision on. 

If you’re still renting because you’re waiting for the market to correct, you could actually be losing money from what you’re paying in rent. Instead, you should always be on the market looking for a better deal.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.