The Wall Street Journal

By Dan S. Barnabic, March 30, 2015

Before making an offer on any condominium, check with other local realtors to find out how much the unit would fetch on the open market if offered for sale.

Buying a condo? Always make a low offer

By Dan S. Barnabic

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Before making an offer on any condominium, check with other local realtors to find out how much the unit would fetch on the open market if offered for sale.

Also make sure that the monthly maintenance fee is in line with comparable financially sound buildings in the same neighborhood. Knowing that you’re not overpaying for your unit will provide you with additional peace of mind.

Notwithstanding market conditions, always start with a low offer — say, 75% of the asking price. Don’t feel embarrassed or intimidated by your real-estate broker. If the broker doesn’t want to present your offer, find another one who will. You may think an offer that’s so far below the listing price won’t stand a chance of succeeding. Not true.

As in so much of life, you will eventually succeed if you are persistent. Even during healthy market conditions, there are unit owners experiencing financial difficulty, looking for a way out. You owe it to yourself to obtain the best possible price for the unit you’re shopping for.

If there are multiple offers for the condo unit you’re interested in, don’t let your broker get you into a bidding war. As outlined last year in an article from Real Estate Economics magazine, “Bidding Wars for Houses,” bidding wars could be part of a scheme that some brokers or developers may employ to hype up the market and maximize their commissions or profits. If you agree to up your price just to beat the other guy who wants the same unit, you will probably end up overpaying for the unit. Walk away and consider another unit.

Some of the most successful real-estate investors routinely search for properties that can be bought for less than the current market commands. These are solid and resalable properties, whether condos or other types of real estate — not to be confused with a bargain-priced, high-maintenance condo, as discussed in rule No. 3.

To succeed in buying at below the market price, you have to monitor available condo units patiently and persistently over time.

Spending time to find a unit at a good price may pay good dividends long into the future. Smart real-estate investors usually create equity in their unit at the very time of the purchase, realizing increased value right off the bat.

  • Always place offers substantially lower than the asking price.
  • Never become part of a bidding war
  • Be patient. The right opportunity will present itself over time
  • Strive to create equity right from the start

This column is the fourth in a series of forthcoming articles on the “10 golden rules of condo buying”: