If you have been reading my Market Updates recently you are probably aware that:
However, as I´ve mentioned many times, there are always motivated sellers at every price range.
What Every Buyer Should Understand
The asking price, previous price reductions, and how long the property has been on the market may or may not be reflective of the home’s or property’s current value.
I had clients a couple of weeks ago who told me they only wanted to purchase something if they could get 30% to 40% off the list price. Although I understand what they are looking for, stated in this way, this goal won´t serve them well. Let me explain why.
So what should your buying strategy be when you are looking to purchase a home in San Miguel de Allende this fall and winter season? The answer somewhat depends on your own personal situation. To individualize your strategy, let me share three different experiences and results from clients from the past few months.
Dream Home
We had some clients who fell in love with a particular home and really didn’t like any of the others that they saw. We explained to them that the home was probably 20+% overpriced. Their first offer was reasonable and perhaps 5% below the real value, but $100,000 less than the asking price. The seller countered only reducing $5,000 from the asking price. The buyer’s second offer was probably at the current real value of the home. Again the seller countered only offering another $5,000 reduction and explaining that he had overpaid for the house in the first place. After a couple of weeks and many conversations, the buyers decided that since they planned on keeping the house 15 to 20 years that it wouldn´t be horrible to overpay a little to get the home that they loved. In the end, they purchased their dreams and paid perhaps 6% to 8% more than the real value. (Not recommended for buyers who only see holding the property for a short time period.)
Multiple Attempts
These clients were not strapped for cash but were feeling the need to be conservative and purchase wisely. They weren’t necessarily looking for the best bargain, but neither were they willing to overpay for a home. After a couple of days viewing various homes, they came up with their list of two “dream homes” and one “this will work for us.” In our opinion, all three of them were still priced around the peak mid-2018 price and had not been reduced to reflect current prices.
We helped them make an offer on the first dream home, with an offer a little below what we thought was the real value but 25% below the asking price. The seller didn´t budge on his price. A second offer was made at the real value of the home. Again, the seller only countered with a minimal price reduction so the buyers gave up on that one and moved on to their second choice.
A similar process happened for the second dream home with two offers and two unrealistic counteroffers. So the buyers move on to their third choice.
In making an offer on the third home, the seller seemed very reasonable and in the end, the buyers got the house at or a little less than the current value of the house. Unfortunately, the sellers of both of the dream homes weren’t willing to be realistic on price. The buyers ended up happy but had to make three attempts before they found a suitable home.
Bottom Feeders
We’ve have successfully helped several clients in the past few months who really only wanted to purchase if they could find an extreme bargain. Although there are several listings that are priced 25% to 45% below the mid-2018 peak prices, only a few of them are in choice areas and most have some other stumbling block getting to, near to, or within the house. Few are within close walking distance of Centro and most need at least a little if not a lot of work. My best guess is that half of the clients have been very happy with their results and the other half a little disappointed that they couldn’t find a great buy within their price range and in the condition they were hoping for.
Every month that passes a few more sellers will become more motivated and willing to negotiate on price. Motivation can come from a change in plans, family circumstances, financial pressures, and the list goes on. The point is, in every market, there are sellers willing to make a win-win deal. No matter what your circumstances, our agents can help you find a buying strategy that best suits your needs and find the buyers who are looking for a deal that reflects the current market conditions.