Eight Ways to Not Buy a House in Greenwich

Low Balling the Opening Bid – Some people are sure that if they make enough lowball bids that eventually somebody will be desperate enough to actually accept their bid. The problem with lowball bids in  Greenwich is that majority of the time the the seller won’t even respond to the bid. This leaves the buyer with two bad choices; he can bid against himself and raise his bid or walk away from a house that had he made a more reasonable initial bid he would have had a good chance of buying. The median list price to sales price ratio in Greenwich is around 93% and has stayed fairly constant. Making a bid that is only 75% of list price is a waste of time. The one exception is high-end and particularly, the ultrahigh-end. In those rarefied airs the 93% ratio gets much lower.

Focusing on Foreclosures – Foreclosures are another popular way not to buy a house in Greenwich. Some people have to have the best bargain (read lowest price possible) and see a foreclosure as being the answer. The problem in Greenwich is that there are very few foreclosures that are actually foreclosed. Connecticut is one of the most homeowner-friendly states when it comes to foreclosing on a property. The process often takes two years even though multiple foreclosure auction notices are printed in the newspaper. In Greenwich they are usually canceled and most of the properties never actually go to foreclosure. Even if an auction actually happens, the buyer needs to realize that he or she is bidding against professionals who know all the ins and outs. You do meet an interesting group of people at foreclosures. If you are really looking to buy an investment property via foreclosure you’re going to have a lot more success where foreclosures happen more often, in the larger cities of Connecticut.

Lower-Priced, Brand New Houses – Another unsuccessful strategy is to focus only on brand-new houses. So far this year we have had 630 single-family home sales. Of those 630 houses, only 13 were built this year. Of those 13 new spec houses, only two were under $2 million. It’s very unlikely you’re going to find a new house for under $2M in Greenwich. If you do want new for less than $2M, then consider buying a teardown and building.  

Taking a Vacation – Another surprising way that buyers end up not buying a house in Greenwich is by taking a vacation in the middle of negotiation. You would think if someone was going to be spending a lot of money on a house and they’re in serious negotiations that that’s not the ideal time to take a vacation. Almost every year however I get involved in a situation where we end up emailing or faxing stuff to cruise ships, remote tropical islands or countries you have to google to find just where they are. Being out of town isn’t the deal killer that it was even five years ago but if you’re in a competitive bidding situation being unavailable during an entire afternoon scuba trip or expecting uninterrupted sleep in a time zone 12 hours ahead of Greenwich means there’s a good chance that you’ll lose out on the deal.

No Money Down – There is a book out there about how to buy real estate with no money down and even to get the bank or the homeowner to pay for the improvements. You don’t see buyer trying this very often in Greenwich and I have never seen it work. The one time you can do this is if you are veteran who qualifies for the VA’s 100% mortgage.

In Your Face Negotiating – You also occasionally see the buyer who comes from a whole different world of negotiation and tries to bring a rough-and-tumble style of negotiating to Greenwich. Unless the seller is also part of that world the odds are that the seller will just take a pass on negotiating. (I did once see two NYC building contractors screaming at each other on a conference call even to the point of threatening to have each other’s building permits for NYC projects cancelled. They ultimately decided not to do the deal, but did go out to dinner together with their wives, all of whom were friends.)

Insulting the Seller – Nine out of 10 times insulting the seller is the kiss of death. I have seen sellers take substantially less just so they can keep that “jerk” from getting the house. And, it doesn’t have to be a direct insult, showing up late at meetings, not doing what you say you are going to do, inappropriate jokes, even mispronouncing the owner’s name can hurt or kill a deal.

In Zillow We Trust – Another way that a buyer can kill a deal before it’s even started is by trusting some of the estimates that the big real estate websites such as Zillow generate. Zillow has the Zestimate. Greenwich has very few tract houses and a variety of housing styles, topography, ages, and floorplans. In addition, our square footage may or may not include the basement or attic space so this number can vary a great deal even if the houses have the same floorplan. Trying to estimate price in Greenwich via a computer model leads to some really bad price estimates. The problem is that some buyers believe these estimates and let them control their house hunting and bidding. Some buyers won’t go see a house where the Zestimate says the house is “overpriced” even though it is in their price range. Sometimes they don’t even tell their agent that’s why they rejected a house. Zestimates can also screw up bidding, as buyers refuse to bid over the Zestimate. It’s no way to buy a house.  

 How to Buy a House in Greenwich – In reality all of these things come down to doing your own research, being prepared, focusing on areas with good prospects and acting respectful to the seller. Also there are times to break these rules. Sometimes sellers just won’t budge and stepping back from negotiations can get them to step forward. Just make sure you have cell service where you are vacationing.

2 thoughts on “Eight Ways to Not Buy a House in Greenwich

  1. average sale price to list at 93pct seems much too high. is that the “last list”? I track many properties that have seen price cuts of over 50pct when tracked from the original time and through different on and off listing and different brokers. seems like the same sale process to me. Thus 25pct off seems reasonable given unreasonable seller expectations and weak original pricing management by brokers.

  2. You are right that is a little high for the average. I should have been clearer. The 93% figure is actually the median of the sales price divided by the original list price for the present listing. In 2016 that figure is 92.0% which is a little lower than what we have seen. The average of the 2016 SP/OLP is 90.6%. Now as I said in the article at the high end the sales price to the original list price is percentage is lower.
    We also have some homes which are significantly overpriced initially and as you tracked there are some large percentage drops. We actually had one property sell for 36% of its OLP, however, only 35 of 521 properties sold for 75% or less of their OLP, but that is the original list price for the current listing, so once again you are right that many properties sell for much less than their original list price, if you use the list price from their first listing 2 or 3 listings ago. Unfortunately, there is no easy way to track that without going to each listing and the real issue is how low you can go on the present listing when you are determining an opening bid.

    BTW: We’ve had 92 out of 521 properties sold this year went for list or over list price.

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