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Before sweetening bid, think carefully

Posted by Scott Van Voorhis July 30, 2013 08:28 AM

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Cash buyers are king in this market.

And that's putting the squeeze on ordinary buyers looking to do something really retro, like paying for a house with a mortgage. Imagine that.

In fact, 40 percent of all condo sales in Massachusetts were all cash deals in April, while a quarter of all home sales also did not involve a mortgage.

So says U.S. News & World Report in this piece, which cites data from The Warren Group, the local real market publisher and data firm.

So how do you compete with all those cash-rich buyers, especially when you are just struggling to save enough to put 20 percent down?

The U.S. News piece, citing an Atlanta broker, offers some unconventional advice: Go after "overpriced" listings.

Really?

Well yes, advises one of our country's major news magazines. Cash buyers are looking for deals, so if you are looking to buy with a mortgage, homes that are sitting idle because their listing prices are too lofty might actually be a better bet!

Get in and then try and negotiate downward, the piece advises.

OK, well good luck with that. In that case, you are likely dealing with a seller ready to hold out for that dream price. Given the price increases we are seeing - and you would have to be living under a rock to have missed all the breathless reporting about it out there - that is only likely to make sellers more stubborn.

I don't know about you, but it suddenly feels like we are seeing the return of the kind of rah-rah advice that got so many buyers into trouble during the bubble years.

Does that mean you should never raise your bid in order to snag the right house? Of course not.

But your first priority should be finding a home you can afford long-term, not doing whatever it takes to land something, whatever the price.

Before you start hitting open houses and getting excited, you first need to figure out a price range you can truly afford.  And that should  include a price you won't go above, whatever your broker is telling you.

Be true to your finances, not to your inner real estate yearnings.


This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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