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Buying real estate right now isn't for sissies. Financing is a struggle, prices will almost surely keep dropping, and who knows what will happen to your job.
But if you have the money and can hang on to a home for five years or more, there's a huge inventory of properties priced at levels not seen since 2004.
"You could argue that everything is on sale today," says Amy Bohutinsky, a spokeswoman for Zillow.com, which offers online listings, research and home-value estimates.
The question for anyone brave enough to buy is: Can you ever really be confident you're getting a bargain?
Analysts at Redfin, an online discount brokerage, think so. Crunching data from sales of 9,053 single-family houses in Los Angeles County; Fairfax County, Va.; and King County, Wash., between April 15 and June 15, Redfin found most homes fetched within 3% of asking prices.
But a good many sold for more than 10% below asking prices. Studying these sales, Redfin came up with a formula. The recipe includes some tactics that savvy buyers use instinctively and others that run counter to prevailing wisdom.
Of course, not everybody agrees that homes selling well below list price can be considered discounted. Maybe they were just overpriced, says Barry Nystedt, the president of the National Association of Exclusive Buyer Agents.
"Home buying is not an exact science," Nystedt points out. "Discount," he says, "implies savings from actual value, as opposed to a price reduction from an unrealistic asking price."
Patient as a spider with a flyJeannine Daggett couldn't sleep one night in mid-September, so she got up and surfed Internet real-estate listings for waterfront homes, a longtime dream.
By the time her husband, Dave, woke up, she'd compiled a list of addresses not far from their Seattle home. A week later, the Daggetts persuaded the seller of a two-bedroom, two-bath house on a double lot with 210 feet of lakefront to drop the price from $595,000 to $540,000 -- a 9% discount. Other discounts -- $5,500 off at closing for electrical work and an $11,000 rebate on the agent's fee from their online broker, Redfin -- saved them $71,500 in all, effectively a 12% price reduction.
Their new home's value may drop still further; after all, it was originally listed at $675,000. But the Daggetts plan to stay "probably for the rest of our lives," so they took the plunge.The trick to spotting vulnerable listings is research. While Sherine Wright was stuck at home last spring with a toddler and a risky, late-term pregnancy, she conducted her family's home purchase almost entirely online. She'd been researching the market in Loudon County, Va., intently since January 2007. "I knew that the longer I waited, the more I would get for my money," she says. Her budget was $1.15 million.
On Redfin, she subscribed to e-mail notifications of changes in listings, comparable sales, square-footage prices, open houses and neighborhood sales trends. Other real-estate sites good for intensive research include MSN Real Estate, Propsmart, Terabitz, Retrove and Trulia. Patient as a spider with a fly, Wright watched as price reductions pushed previously inaccessible listings into her price range.
Finally, in September, she and her husband, Martin, a tech-company chief information officer, offered $1.1 million for a 9,500-square-foot, 5-year-old, four-level home on 3 landscaped acres in a golf-course community. She had watched the house since its market debut at $1.6 million. It has six bedrooms, six and a half baths and many luxuries, including a second kitchen, high-end appliances, hardwood and marble flooring, and a home theater with $40,000 worth of equipment. The sellers made no attempt to negotiate -- although, as Wright knew from her research, they'd purchased the house in 2003 for $1.2 million.