As you noted from the title, I did not say the best “price”, I said the best deal! Big difference.
Is it a good deal to buy a cheap house located in a bad neighborhood which requires thousands of dollars to rehab?
What about a really good priced home which consumes all your savings, because you had to give a hefty down payment, which then needs extensive repairs to be habitable?
When I talk about a good deal, I mean a very well priced home, in a decent neighborhood which needs minimum repairs, where you can negotiate the price & terms of the transaction and which requires the least of your savings in order to buy it.
Today most buyers are not aware that to get everything they want, have a say in the transaction (with banks you have no control & no say –no matter what the Realtor says, he/she doesn’t have control either!) and really negotiate the home of your dreams, the regular sale is the way to go! Yet, it is the most ignored!
This graphs shows you an example from Jacksonville, Florida where home prices have declined a little less than 50%.
On a regular sale the Buyer has the most flexibility, he or she can negotiate the price, get concessions, etc… it is however the most neglected, least used & ignored.
As a Buyer one tends to be lured by marketing & words such as: Distressed Property, Foreclosure & Short Sales. These words promise a better deal or the deal of a lifetime, however as we have seen above they offer the least flexibility and chances are you are going to have to OVER BID!
Banks having to foreclose & accept short sales, have pushed the price of real estate down! In other words though we may not necessarily find a good deal on a foreclosed, distressed or short sale, these types of listings depress the price to such a point that regular sellers have to come down in order to compete.
On a regular sale, each offer, no matter how high or low is going to receive the full attention of the home owner. The owner of the listing is usually worried about price, not so much about ability to close. This provides you with more flexibility and allows you to use an FHA loan, which significantly lowers down payment requirements.
Usually banks ignore and discard FHA-type offers for foreclosed, distressed or properties offered through a short sale. (as we have seen the reason is these loans take the longest to close, FHA is very picky about the condition of the house & buyers are usually not as strong financially)
On a regular sale, most of the time you can speak directly to the homeowner and therefore increase your chances of making a deal. On distressed, foreclosed or short sales there is no one at the bank who would listen to you.
The home owner is not profit only motivated, he may have family or psychological/sentimental reasons which would compel him/her to accept a deal that a financial institution would not care to look at.
Most importantly, the regular home owner in most cases would do repairs or throw in extra money for repairs while the financial institution gives you an AS IS deal, they don’t pay for anything extra.
A regular sale provides the most flexibility to a Buyer; the best chances at negotiating the price and these properties are usually the best kept ones. In addition, because of the strong competition from distressed, foreclosed and short sale properties, prices of regular listings are nearly as low, but on the average for a better home.
Another topic that worries Buyers today is discussed on this link Timing the Market.