Sept. 28, 2007: Looking for a bargain-priced home in the Phoenix area? If you don't Flinch!, the seller will
Let's talk a little bit about buying strategies. Last week's rate adjustments by the Federal Reserve Bank may have scared up a few buyers. I'm taking a lot of calls from Canada, and investors seem to be trying to time the bottom of the market.
Here's a simple idea: If you were to buy a newer three bedroom, two bath stucco-and-tile suburban tract home for $160,000, putting 20% down, it would be cash-flow positive at $850 a month rent. That includes everything, mortgage, HOA, taxes, maintenance, vacancy -- everything. The positive cash-flow would net out to about $5 a month after taxes, but the point is that the Phoenix real estate market is back to the point where a rental home is self-amortizing. If home values go up in the future, so much the better, but the home will pay for itself either way.
Here's a better idea, one that has been making me crazy for more than a year. The name of this game is Flinch!
Normally, when buyers are looking for a home, they're looking for that one unrepeatable masterpiece, the only home they could even consider buying.
What if, instead of looking for one ideal home, they resolved to look for three -- or five -- that might fill the bill? Now they've got bargaining power.
The game works like this: Make multiple low-ball offers on all the houses that might work for you, with all of those offers being subject to your final approval. Make it plain to all of your sellers that the first one to salute goes under contract, and the others go home empty handed.
This is exactly what sellers were doing to buyers two years ago, with multiple counter offers. By now there are at least eleven homes for sale for every qualified buyer. It's time buyers exercised their incredible negotiating power.
What happens if it doesn't work? Try again in a different neighborhood. Or try same neighborhood six weeks from now. Here's the trick to winning at Flinch!: If you don't Flinch!, sooner or later someone else will.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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