Blog_photoMore and more, buyers are realizing that the mounting inventory of housing equates to killer deals on better homes.  Take, for example, my clients who recently purchased their dream home.
This couple was pre-approved with a 20% down loan, had no home sale contingency, could close in less than 30 days, and was including $10,000 in earnest money along with their offer to purchase.  They realized they were ideal prospective buyers.  They were well aware of the current state of market.  And they knew an awesome deal could be found.
My opportunistic clients began their adventure about four weeks ago, confining their search to the South Meadows area.  They were looking at homes priced in the $350K - $450K range.  During this time, we embarked upon four outings where we visited nine to eleven homes per outing for a total of forty houses.  Yes, forty houses!  Considering that the South Meadows presently has well over 200 active listings, viewing forty homes in a short time frame is certainly feasible.
My buyers sincerely wanted to buy a home. However, they also didn’t want to lock into a price that they would watch decline for the remainder of the year.  So, they set out to negotiate aggressively until they found their killer deal. 
I’ll spare you the details of the forty homes we visited.  But I will say that, at the end of every outing, my buyers submitted an offer on their favorite home that day.  Each offer was then countered by the seller and accompanied with the verbiage “do not counter the counter” (in other words, the seller indicated this was as low as he or she would go).  If the counter-offered price was not satisfactory to my buyers, they would simply walk.
What follows is a summary of our adventure.

Outing #1
Home listed for: $416,800
My buyers offered: $350,000
Seller countered:  $399,900 ($173 / Sq Ft)
Outcome:  My buyers walked

Outing #2
Home listed for:  $465,000
My buyers offered:  $380,000
Seller countered with: $445,000 ($188 / Sq Ft)
Outcome:  My buyers walked

Outing #3
Home listed for:  $510,000
My buyers offered:  $440,000
Seller countered with:  $485,000 ($157 / Sq Ft)
Outcome:  My buyers walked

For the record, in each of these instances, my buyers instructed me as to what price to offer.  I must admit that I was somewhat uncomfortable with these offers.  I felt that they were borderline embarrassingly lowball and that my buyers risked not getting a counter offer at all.  However, my buyers knew what they wanted; they had a strategy, and they planned to continue to search until they achieved their goal.
Up until now, we had viewed only homes on the resale market.  But, because many of the floor plans we viewed were also being offered by area builders as standing inventory or new construction, we decided to investigate these.
We learned of one builder who had recently decreased prices on all models by nearly 20%!  We chose to start there.  My buyers fell in love with a particular model.  It was attractively priced. In fact, this model was priced well below a year-old resale unit with the same floor plan down the street that is listed on the MLS.  The builder was including upgrades and other incentives such as paid HOA fees and transfer taxes.  The upgrades totaled thousands of dollars and made the homes offered by the builder even greater values than the resales.
My buyers were very excited about this home and were fully prepared to purchase it at its listed price of $437,000–they wanted the house and they liked the price. However, the wife suggested we try to negotiate a lower price with the builder.  The husband responded with, “Honey, let’s just pay what they’re asking.  You can’t negotiate with builders anyway.  The price is set, and that’s it.”  The wife rebutted with, “That’s not true–you can negotiate anything.”  At this point they both looked at me for guidance.  I responded that there was no harm in asking and queried, “What do you have in mind?”
The wife asked me to try to get the price down to $420,000.  I replied, “I’ll see what I can do.”  The next day I met with the builder.  I presented a profile of my buyers, emphasizing their ability to close quickly and the fact that no home sale contingency was needed.  This carried considerable leverage, as the builder is understandably eager to clear the remaining homes from his inventory.
Next, I stated the listed price was more than my buyers wanted to pay.  I then asked, “How close to $416,000 can you get the sales price?”  My thought was that, if some haggling over the price were to ensue, I’d have a bit of a cushion.  I was very pleasantly surprised when, after making a couple phone calls, the builder responded with, “You’ve got yourself a deal!”

Outing #4
New construction listed for:  $437,000
My buyers offered:  $416,000
Builder accepts offer. ($149 / Sq Ft).
Outcome:  My buyers purchase their new dream home at an incredible value.

My buyers were extremely pleased with the news when I phoned them.  The builder clearly stoked to have one less home in inventory.  And I was happy the builder was cooperating with agents.  Win-win-win.
I would also like to add that, thanks to my clients’ hard bargaining, I learned a couple things from this experience.  As noted above, initially, I was not entirely comfortable with some of the very low offers we were making.  But not once were we rejected out of hand.  Each of our offers was met with a counter offer; sometimes substantially lower than the listed price.  By the time I was asked to negotiate with the builder, I presented an offer feeling fairly certain that a discount off the current list price could be had.  And it was.  I am now excited to find another killer deal for my next buyers.