Falling home prices have unleashed bargain hunters offering to pay well below the price listed by sellers.
These bidders see an opportunity to pay a fair price after years of spiraling home values or to get a good deal from a desperate seller. But sellers might view those offers as annoying or even insulting if they are convinced of their homes' value.
The article told the story of a bond investor [more likely, a trader] who was able to buy a condo at the Madrigal Lofts for $60,000 less than the listed price.
As a bond investor, Matt Watson, 26, said he found the lowballing strategy naturally appealing when he began searching for a home. "The way you make money on bonds is by buying it for a low price and making money on the yield. It is the essence of lowballing -- buy low, sell high," Watson said.
Amazing insights, eh?
Watson's first try failed. He attempted to buy a one-bedroom condominium in a new building in Southeast Washington for $270,000, nearly $60,000 off the list price. The developer was willing to negotiate and lowered the price by about $11,000, but Watson decided to move on when it became apparent that he could not wrangle the price below $300,000.
Next he set his sights on the Madrigal Lofts, in a trendy neighborhood near downtown Washington. The condo he wanted was originally listed at $343,900, including a parking space. Watson signed a contract for $283,900, including the coveted place to park his car. He also got $5,000 in closing-cost help.
But it was not an easy process. It became a part-time job as Watson endured four rounds of counteroffers and negotiations, he said. "You have to look for desperation because with desperation comes a willingness to negotiate," he said.
Essentially, this fellow couldn't afford more than $300,000 and he tried a few places before he found one desperate enough to close a sale that it would sell him a new unit within his price range. It was tough slogging, though - he had to "endure" four torturous rounds of counteroffers and negotiations - but he got the place for 17.5% less than the listed price. A tip of the hat to this intrepid young fellow.
Now that Madrigal Lofts [811 4th St NW, 20001] has opened the door for more lowballed offers - I don't see how they can close the barn door now that the bond trader, er, horse has left - here's some information about the building courtesy of these folks:
Madrigal Lofts is a new 12-story condo in Mt. Vernon. Currently priced from low $300k's (Jr. 1 BR) to mid $800k's (penthouse), but prices were dropped by about 10% in January '08. Sales, by Mayhood, began June, 2005, many units still available. Delivery was delayed when contractor Glen Construction went belly-up, but the first units finally settled in December, 2007. This corner building will have a glass front, balconies, and 10' ceilings. The Mt. Vernon area, 4 blocks from Judiciary Square Metro, was once barren, but once contained as many as 9 construction cranes. Development continues nearby, but the status of vacant lots, where the developer was going to build another condo, is uncertain. The city plans to remake K Street into a commercial boulevard, making this at one point the biggest construction zone in DC (now eclipsed by the ballpark). One-beds start at $371,900, two-beds start at $452,900. Developed by Wilkes Co. & Quadrangle; Designed by Davis, Carter, Scott Ltd.
I'm unsure whether the prices quoted reflect the Madrigal Lofts Bond Trader Discount™. However, since according to the District only 48 of the 259 units have sold, I think some negotiating room remains. Call now - maybe you won't have to go through four torturous rounds of counteroffers and negotiations.