Everyone likes finding a great deal, and a great deal can be life-changing when it comes to real estate.
But this can be like finding a needle in a haystack. After all, if deals were easy to find, everyone would get them.
So, what can you do to step out of the crowd and find the real estate deal you want?
To answer this, we spoke with Sonoma County REALTOR® Mike Hansen, MBA, about his cheat code for finding unbeatable bargains on local real estate.
Mike Hansen: There will always be pockets of value when you’re searching for a home.
Before you start looking at neighborhoods, though, you need to start with your goals.
For example, an investor looking for a rental property will be looking at real estate with a different lens than someone looking to buy their family home. Once you get clarity on what you’re looking for, you’ll be better equipped to know when a house is a good fit for you.
If you’re looking for a family home, understand your lifestyle and what a good fit will look like for your unique situation.
That’s the first way to start finding a deal.
From there, opportunities will pop up.
When it comes to neighborhoods, it’s wise to consider homes in close proximity to new real estate developments.
These developments can create ‘forced appreciation,’ essentially increasing the property value in the surrounding areas.
Buying a home near one of these trending new areas, like SOMO Village, before appreciation occurs can have a good payoff in the long run.
The phrase “buy the worst house in the best area” still rings true for finding a great deal.
Consider buying homes that are outdated but structurally sound in good neighborhoods with a strong community.
All of these factors will help keep the value of your property stable.
Another major consideration for finding a deal is timing. Real estate is a cyclical market, meaning people tend not to buy or sell homes in the holidays, and things heat back up in the springtime. We see the most sales between May and August.
Finally, consider how motivated the buyer is. Some of the best deals I’ve ever seen happen off-market. If you’re renting in a nice neighborhood and hear through the grapevine a neighbor needs to sell for personal reasons, you might be able to get a deal without competing in the market.
Older homes that have been with one owner for a long time and have appreciated in value can also be a great target. If the owner has already paid off the mortgage, they might not be as concerned about milking another hundred thousand dollars out of the deal.
If you’re deal hunting, working with an agent is the best way to go because they tend to be more plugged into the market with an established network. Real estate agents have other off-market channels that could present some options, like working directly with other Realtors.
On a more granular level, there are factors you can look at to determine if a home is undervalued.
Looking at “days on market” is a great indicator.
Sometimes, we see homes that have been on the market for an extended period of time—60 to 90 days or longer—and people assume there’s something wrong with it.
When a seller’s property has been on the market too long, they tend to become more motivated, which might provide an opportunity for a great deal.
Another important consideration is what’s happening in the economy.
Lower interest rates improve your monthly cash flow, giving you more purchasing power. Paying attention to what interest rates are doing can help you find the window of opportunity when interest rates drop, but housing prices have not gone up yet.
The way that you write your offer might help you land a better price on a property.
For example, if you’re pre-qualified for your mortgage, you can waive the condition of financing. This means the money is guaranteed to be available to you.
If you’re comfortable moving forward without a home inspection, you can also remove this condition—but make sure you’re confident in doing so.
Both of these can be a sign of good faith to the seller that you want to move quickly, which is sometimes enticing to motivated sellers who need to sell fast.
Another thing to consider is emotionality.
From the outside, real estate is looked at transactionally, but it’s actually very emotional.
Sellers care about what’s going to happen in their neighborhood. Some buyers even write ‘love letters’ to the sellers with their offers to express their interest and intention with the property.
Some realtors advise their clients not to read these letters when selling their homes, but some certainly do. They don’t always work, but they’re worth a try.
As I mentioned, you might have to make concessions to land a good deal on a property.
Before doing this, though, it’s important to understand the level of financial risk you’re willing to take. Make sure you have the finances in case something unexpected happens.
For example, if you don’t do a property inspection and you find out the house needs the roof replaced, are you prepared to absorb that cost?
If you buy something that is a hundred thousand dollars less than market value, but you’ll need to sink that much into the property to make it safe and livable, you’re not getting much of a deal.
Should you stay connected with a realtor to time the market for a deal?
If you’re even considering buying a home within six months to a year, you should definitely connect with a real estate agent. You might have a general idea of what’s happening in the market, but a Realtor lives and breathes real estate every day. They have their finger on the pulse of the economy, government, and market conditions that could impact home buying.
You should also contact a mortgage broker. Finding a great lender is critical. It’s important to know what you can afford and to get qualified before you start shopping for homes and looking for deals.
You don’t want to stretch yourself too thin for a home, even if it is a great deal.
If you’re considering purchasing a home in Sonoma County or Wine Country in the near future, don’t hesitate to reach out to an experienced expert.
You can visit Mike’s website, contact him by phone at 805-503-8552, or send him an email.
If you’re interested in living in a sustainable community that fuses the best of city living with the country lifestyle and all the amazing things that Sonoma County has to offer, we invite you to visit SOMO Village. To learn more, download our residential project brief or get in touch with us today.