The Art of the Deal

I was communicating with a client who has been "gauging" the market by sitting on the sideline and just watching for nearly a year. He just wrote to me asking about the impact of the sub-prime market on the local market. In responding to him, I asked him a question about his plan, since we hadn't communicated in a while.

My response was edited to leave out personal detail.

Buyer:

I've been hearing a lot about the "crisis" with the sub-prime lenders/borrowers... has that started to effect the market yet? Negatively? Positively? I haven't seen any prices going down recently or a real flurry of activities; just a lot of panic. Any feedback you can provide would be appreciated.

Silicon Valley Realtor:

..... I know you are trying to gauge the market and figure out when is the best time to buy. The answer to when is the best time and how do you get a deal? Depends on your plan.......

Let's take an example from your world. Which customer gets the best overall deal? A customer who comes in with no formal plan and just asks about prices of piecemeal step motors and controllers every few months without giving you a plan of what he is trying to accomplish? Or a customer who has a written plan with all the details, including time frame, drawings, and budget showing what he is trying to accomplish? With all that information aren't you even able to provide solutions that the customer did not even consider?

What is your plan?.....

After I sent out the response, I realized my buyer was not alone in his thinking, there are many people out there who want to buy a home and are trying to gauge the market, but have no plan set up to facilitate a good deal. Buyers think they can simply wait and jump in any time when a "deal" accidentally falls into their lap. They want to benefit without doing any of the prep work in the form of a plan. Unfortunately, that is not how good deals are found in the real estate marketplace. Far from it: No pain, no gain.

Let's use another analogy: Do you go on vacation without a plan? Does simply trying to "wing it" make sense in this situation? Hoping you will get a great deal on plane fare and then hope to get a great deal on hotel when you get to wherever you my end up; and then again hoping to get a great deal on the return fare? How enjoyable, relaxing and full of value will that vacation be?

Great deals do not simply fall into a buyer's lap by accident (even if they did, the buyer with no plan will be unable to respond in time). Deals happen as a direct result of well thought out plans. This is especially true in the real estate market, they are the by products of a well thought out plan which takes into consideration 1) timing, 2) finances, 3) market conditions and 4) seller situations. The amalgamation of these elements, results in a unique situation for each property, or the so called "deal." A buyer must be fully prepared to react if a "deal" comes his/her way; they cannot hope to delay the deal until they get their act together; it will have simply passed them by. The next buyer in line who was prepared with a plan will be the beneficiary of that deal.

What have we learned? Real Estate market is no different than any other industry or market. The people who benefit the most are the same people who are well prepared with plans. If a buyer wants a real estate deal in Silicon Valley, they must be fully prepared with a plan and be able to react. Remember, there are many engineering and technocrat types who have their plans laid out and are waiting on the sidelines ready to pounce. Who do you think has a better chance of facilitating the deal?

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/