The recession has made bargain hunting trendy, as well as necessary, for most consumers. In the real estate business, finding a great deal is a must to keep your clients happy and your business booming. Although the definition of a good deal changes with each agent and client, the essential elements of a deal – including how to find one and identify one to your clients — remain basically the same regardless of where you look.
By Morgan Phelps
It’s All about the Search
It’s unlikely you will find a good deal if you’re not out there looking for one — and since nothing ever comes from sitting around and waiting, searching for good deals must be a priority in your business.
“The only way to know a good deal is to be out there in the market,” says Celeste Barr of Keller Williams Barrington. “A good deal isn’t always obvious.” Barr says she has seen a lot of good deals in the market recently, but if the right buyer isn’t available, then those deals can disappear.
Jason Pietrucha of Koenig & Strey in Glenview, who identifies himself as a researching broker, says he spends five hours each day on the computer deciphering data on a micro and macro level, and then presenting the property performance information to clients. He says he works more as a coach would — by researching and presenting a “game plan for success.”
Claudia Langman of Real Living Helios drives around and uses Web-based search services, among other tools, to locate unique properties with unique floor plans, which she believes sell better than run-of-the-mill homes. All her searching requires a willingness to be patient and persistent, since finding a good deal takes time.
Agents also stress the importance of connecting with other agents and the community, since you never know where a great deal will come from. It also comes in handy to have the right connections when you have a good deal you’re trying to get sold.
Where to Bargain Hunt in the Area
Once you’ve made finding a good deal a top priority and started your search, it helps to know where in the city and the suburbs to look, although some agents say this isn’t as important, since the entire area has been discounted. “The entire Chicago market is a good deal right now; I wouldn’t qualify it to one specific area,” Barr says. “The month of April, everything has been on sale.”
Some agents were more specific — citing certain towns and areas in the city in which good deals abound. Pietrucha notes Park Ridge, River North and Skokie as areas with “outstanding opportunities,” while Eddie Mateja of Downers Grove Baird & Warner says Downers Grove and Oak Brook are ripe with deals, since “you can afford more house in towns where the property taxes are low.” He cites Naperville and Elmurst as cities with higher property taxes where clients are not as likely to get the most bang for their real estate buck.
In the city of Chicago, Langman says areas such as Humboldt Park, Wicker Park, portions of Bucktown, Ukranian Village, Lakeview, Andersonville, Edgewater and Lincoln Square have the best deals at the moment. Marginal neighborhoods are seen as riskier right now, meaning they are not doing as well as they did two years ago, says Langman.
Essential Elements of a Great Deal
According to Langman, a good deal means everyone “walks away from the table feeling like they gained something.” She says if a seller can get out breaking even or making some profit, it’s likely they reached a good deal, while a buyer should have about 80 to 90 percent of the needs on their wish list fulfilled. Also, a good deal should close without too much stress, meaning the buyers’ and sellers’ agents must work together in the interests of both clients.
Mateja says the seller should walk away feeling like they’re not getting ripped off, while a buyer should feel as if they are making a good investment. The definition of a good deal has changed recently, as sellers are seeking to move on more quickly and buyers’ requirements for a home have changed, he notes.
Langman also identifies a good deal as one “where comparables match what you’re paying or [your deal] is slightly better,” a point that was reiterated by several other agents, including Mateja. An agent must prove that the deal’s price and amenities match comparables on the market, and demonstrate this to the client by providing a complete market snapshot. This will help the clients feel satisfied that they have gotten away with a steal.
Some agents note that the importance of upgrades and seller-performed, pre-sale home improvements have faded in the recession. “The price of a home is taking precedence over extra features,” says Celeste Barr, noting that many upgrades such as granite countertops and decks have not held their expected value because “everyone is looking for a deal.”
However, Mateja feels upgrades are still important, since buyers do not want to do the same amount of work as was formerly required. He notes that upgrades will often seal the deal when properties’ prices are comparable.
Ensuring Your Client is Aware of A Deal’s Caliber
Once you’re convinced you’ve found the right deal for your client, you now must figure out how to assure them that they are truly getting lucky. If a client doesn’t realize what they are getting, the sale might just fall through. Education is key, since the market is ever-fluctuating and clients’ expectations must be matched to the reality of the industry.
“The toughest conversation for a Realtor to have with a seller is current market value and performance,” Pietrucha says. “Understanding property performance and all the intangibles that come along with it is an education process on a micro and macro analysis.”
The most basic way to educate your clients is to provide them with a snapshot of the market and show how their deal compares. “If you aren’t coaching and educating your buyers, you will be writing a lot of bad deals that will not produce results,” Pietrucha says. “Education is so critical in meeting buyers’ needs. Buyers want to be educated and be presented with accurate data, now more than ever.” Pietrucha says agents must be the “x-factor” for their clients by providing education and a well-presented, accurate analysis of data.
Finishing Off a Great Deal
Once you’ve found a great deal and received your client’s stamp of approval, the final step is to ensure a relatively stress-free close for both the buyer and the seller, as well as both agents involved. Preparation is extremely important — particularly in the case of buyers’ agents, who must be keenly aware of how qualified buyers are given the current state of the market, according to Langman.
Although financing can be particularly tricky in this day and age, proper preparation and education will ensure you see a great deal through to the close. Some agents say the market has made them take on the role of counselors, more so than just sales agents.
“[There is] one last element that brings this full circle,” Pietrucha says. “Be consistent — plan your work and work your plan.” He notes that offering your clients opportunities and information on a consistent basis makes you “the source,” meaning you’re increasingly more likely to find and seal your next great real estate deal. CA
Baird & Warner
Real Living Helios
Koenig & Strey