How to Low-BallFair and Square

SPECIAL TO THE TIMES; Ellen James Martin is a syndicated real estate columnist

Molly and Daniel Blair can hardly believe their good fortune.

First they discovered the Yorba Linda house of their dreams--a half-acre Garden of Eden on a private road, complete with a small orchard of fruit trees and a pool. Then they bought the place at $75,000 off market value.

The couple--he's a Hughes Aircraft systems engineer and she's a homemaker--proved the principle that it's sometimes possible to win at "low-balling," the realty industry's term for trying to buy a property well below comparable prices for like homes.

Does a successful low-ball deal mean breaking rules of fairness and ethics? Does it mean taking improper advantage of an innocent seller? Not in many instances, real estate experts insist.

In fact, the owner of the Blairs' home was a veteran real estate agent. The couple credits their good deal to their agent, John Rygiol, who owns an independent brokerage based in Seal Beach. The couple--both in their mid 30s--found Rygiol's name on the World Wide Web.

The Blairs made it clear that $250,000 was their limit. But the couple's initial search for homes priced between $225,000 and $275,000 proved discouraging. They had visited at least 35 properties--and driven by another 65--when Rygiol decided to try a different tactic.

He sent out 50 faxes to realty firms in the Yorba Linda area, announcing that the Blairs had been pre-approved to finance a home and that they could close escrow within a matter of days. He also defined what they wanted and made their $250,000 price limit clear.

The message reached a retiring realty agent who had recently cut the list price of his home from $375,000 to $325,000. He immediately phoned Rygiol to say he would entertain the Blairs' bid. That same evening--after the Blairs toured his five-bedroom house--the salesman agreed to the Blairs' $250,000 offer.

"We got a super, super deal," Molly Blair said.

Unlike some opportunistic buyers and their agents--who search out the names of desperate homeowners, calling on bankruptcy attorneys, divorce lawyers or even funeral parlors--the Blair deal was an agreement between two consenting parties.

"It's wrong to kick people when they're down. But a deal is fair and square if it involves a seller who is willing and aware," said Douglas Bregman, a real estate lawyer and co-author of the book "The Common-Sense Guide to Successful Real Estate Negotiations" published by HarperCollins.

Ultimately, the "right price" is what's settled upon between buyer and seller. In some instances, you can pay less than market value for a property and still do the sellers a favor--especially if they're facing an immediate out-of-town move or a financial crisis, said Marty Rodriguez, one of the nation's top-selling agents, who recently opened a Century 21 office bearing her name in Glendora.

Do you have the patience and fortitude to seek out a below-market property? Then these pointers could help:

* Act quickly and aggressively when a potential bargain appears.

A boxing trainer working with Rodriguez got a terrific deal on a 1,500-square-foot house in West Covina, partly because he put in his bid the very day he spotted the property. The three-bedroom stucco home, with a two-car garage, was listed for $170,000 and was well worth the price, Rodriguez said.

But after discovering that the tenants living in the property had made it tough for the agent to show the home--and that they were on the verge of vacating--Rodriguez sensed that the home's investor-owner would be willing to bargain.

When the deal was done, the trainer got the property for $154,000--a cool $16,000 discount off the list price.

Many prospective low-ballers fail to persevere when their first bid is rejected, Rodriguez said. "You've got to beat the dead horse--give that deal CPR, she stressed.

* Offer a "cash contract" as a low-balling strategy.

One reason the owner of the West Covina home accepted the boxing trainer's low-ball offer was because he offered a "cash contract."

The term is actually a misnomer because it doesn't mean you must have the cash in hand to buy the house. But it does obligate the buyer to go through with the purchase even if the financing plans fall through--which makes it very appealing to a seller.

Actually, as Rodriguez noted, the boxing trainer knew he would be financing the home through a private mortgage lender. But he was so confident he would get the mortgage that he was willing to offer a "cash contract."

* Seek mortgage pre-approval to make yourself a more attractive buyer.

Smart low-ball buyers can make themselves more appealing to a seller by gaining full pre-approval for a mortgage from a reputable lender. Pre-approval means the buyer has the credit rating and income to close quickly, said Frank Dakides, an agent for the Coldwell Banker Real Estate office in Coto de Caza.

"The faster the escrow, the more confident the seller feels about the buyer," he said.

* Try to overlook a home's cosmetic problems.

If buyers can see beyond dated wallpapers, dirty carpets or a cluttered garage to the potential of a perfectly solid home, they may be able to bag an exceptional deal, realty experts say.

That was the lesson learned by Lolly and Franklin Burns, who recently bought a spacious Palm Springs condo for $80,000--far below the sellers' rock-bottom list of $109,000 and still a steeper discount off the original list price of $119,000.

The Burnses zeroed in on the one-level condos in an area near the mountains of southwest Palm Springs. There they found the essential elements of what they were seeking in an 1,800-square-foot condo: an open floor plan, two atriums and a large patio.

Like most potential buyers who visited the condo, the Burns were turned off by its flocked and metallic wallpaper and "popcorn" ceilings. They were also dismayed at the condo's worn carpeting. Still, the Burns' agents--Bob and Felicity Binkow, who own their own Palm Springs realty firm--encouraged the couple to consider the condo, which was part of an elderly woman's estate and was being sold by her children.

"We put in what we thought was a ridiculously low offer and they took it," Lolly Burns said. "My first reaction was, 'Oh, thank God, we got a great deal.' "

Not everyone is willing to do an extensive make-over. But if you're such a buyer, you can often do extremely well, Felicity Binkow said.

Why? Because outdated homes often go unsold for months on end. And after a home goes "stale," the seller must often accept far less than its true market value, Binkow said.

* Look to banks and other mortgage holders as sources of bargains.

Kris Conrad, a sales manager for Prudential California Realty of Long Beach, points out that the Southern California landscape is littered with properties where the mortgage balance exceeds the current value of the home, making banks very fertile ground for bargains.

* Look to corporate relocation specialists for sellers seeking a quick sale.

Many long-distance moves--whether they involve a corporate transfer or a new job--are untimely events. Many transferees would rather take a low offer than leave a vacant house behind, said D. J. Doss, an agent for Century 21 Country Club in Mission Viejo.

How can you hook up with sellers making long distance moves? Ask your agent to phone other agents who are "relocation specialists." Some have treasure chests full of names of hurried sellers willing to bargain, Doss said.

* Never try to insult the seller into giving you a low price.

Banks and other organizations are unemotional about a home sale. But the opposite is true of most homeowners, who view their properties as an extension of their egos.

You may think that by telling the seller that his carpet is dirty or that his appliances are outdated you would humble him into accepting your low offer. But just the opposite is true, said Dakides, the Coldwell Banker agent. "You alienate the sellers when you insult them," he said.

Many sellers who receive low offers will automatically reject them, Doss said. But your odds of being accepted can be improved if you attach a personal letter to your offer telling the sellers what you like about the place. Sellers who have taken special pride in their property--and feel a kinship with their neighbors--will sometimes take a lower-than-market offer if they're convinced the buyers will use their home well.

A city of Long Beach municipal worker and his wife, an elementary school teacher, were successful in landing a bargain on their first home in the Los Altos section of Long Beach with a personal letter drafted by their agent.

The agent, Richard F. Gaylord of RE/MAX Real Estate Specialists in Long Beach, told the sellers--a couple in their 40s who had lived in the contemporary home for 10 years--how much his clients liked their remodeling work. The walls had been painted a light tan and new Berber carpeting was installed.

The letter also explained that the buyers--a couple in their late 20s with a 10-year-old daughter--had definite limits on what they could afford. In addition, the letter noted, they liked the Los Altos neighborhood for its proximity to Cal State Long Beach, where their young daughter took drama lessons. Their letter put a human face on the buyer's low initial bid of $175,000 on a house priced at $225,000. After several rounds of negotiation, the sellers finally accepted $190,000.

* Make sure your low-cost deal is not a false gold.

You could think you're getting a low-ball deal on a house and actually overpay for it, cautioned Tom Sturman, an agent for Giller & Griffin, a realty brokerage based in Westwood.

A house may look like a sterling deal and then--upon further investigation--prove a false bargain, said Sturman, who recommends that low-ball buyers chat with neighbors who live around a property they're considering before committing to make an offer.

You may discover, for instance, that a noisy rock band lives three doors away, that the neighborhood is drug-infested or that jets roar overhead, Sturman said.

Since there are so many surprises in real estate, "research is the key to getting a good deal," he said.

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