Thursday, August 14, 2008

Net's Ease Doesn't Guarantee Bargains

Browsing for housing on the Internet has become just about as important has having a real estate agent help find a home to buy, but the ease of finding a home on the Net does not guarantee a bargain.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Browsing for housing on the Internet has become just about as important has having a real estate agent help find a home to buy, but the ease of finding a home on the Net does not guarantee a bargain.

According to National Association of Realtors data culled by,
in 1997, 50 percent of all buyers found their homes through a real estate agent. By 2007 that number had fallen to 34 percent.

During the same period, the percentage of buyers who found a home on the Net soared from 2 percent to 29 percent.

More homebuyers than ever are using the Internet to find the homes to buy because most real estate agents put their listings on the Net, more real estate Multiple Listings Services have gone public thanks to information technology and more and more listings Web sites are popping up to make the online search easier and more complete.

In 2007, the other ways buyers found homes were a yard sign, 14 percent; home builder and friend or relative, 8 percent each; newspaper ad and direct from sellers, 3 percent each; book or magazine, 1 percent.

"With millions of online real estate searches done monthly, it's no surprise that the Internet is so effective at helping people find their ideal home, condo or vacation property," said Greg Healy, VP of Operations.

"This data, which comes from the National Association of Realtors, provides more evidence that real estate consumers are very successful in finding homes on their own," he added.

Finding homes easy, finding deals, not so much

Nevertheless, the lack of uniformity in quality control, geographic coverage and search methods from one Web site to another, still often renders the online search less than complete.

And, according, buyers shouldn't confuse finding a home quickly with finding a hot deal. That still requires some work.

"Homebuyers have begun crawling out of their bomb shelters hungry for big
discounts off the asking price," said Redfin CEO Glenn Kelman.

"Often, their expectations are unrealistic, as many sellers have already aggressively priced their homes. But when conditions are right, we've found that a small but significant number of sellers concede $50,000 or more at the negotiating table. We've tried to take the mystery out of when a seller will give ground and when she'll stand firm," Kelman said.

Redfin's "Science of Real Estate" center studied the differences between homes that sold for a large discount and those that didn't, and came up with guidance for buyers looking for large discounts.

The recommendations aren't negotiating tips but "what-to-look-for" tips.

Redfin says:

Look for languishing listings. Heavily discounted homes are 83 percent more likely to have been on the market for 90 days or more. Most sellers will hesitate to accept a low offer if the property has been on the market for only a few weeks.

Find fixer-uppers. Heavily discounted homes are 73 percent more likely to need some fixing up. People who sell homes before fixing them up are usually more concerned about speedy selling than peak price. Get the home inspected before you buy so you know exactly what needs work.

Retreat from remodels. Heavily discounted homes are 20 percent less likely to feature a noteworthy remodel. This also means sellers who sink money into major remodels before they list could be missing out on certain buyers.

Pick properties with pared prices. Homes that are already heavily discounted are 28 percent more likely to already have price reductions. Duh.

Hunt homes with long-time owners. Heavily discounted homes are 52 percent more likely to have been seller-owned for 20 years or more. The longer a seller has owned a property, the more equity he has likely accumulated, and the more likely he is to make significant price concessions.

Put your finger on a flip. On the other hand, heavily discounted homes are 9 percent more likely to have been owned for less than five years. A home owner or investor in trouble may be motivated by the need to quickly reclaim capital, rather than wait for equity growth.

Don't bank on bigger bargains from bank-owned homes. Heavily discounted homes are 9 percent more likely to be a short sale or bank-owned. Banks lower prices as much as possible from the beginning to unload distressed properties as quickly as possible, but no so much to take more of a loss than is necessary.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's where all the news really hits home.

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