Making a home purchase in a buyer’s market
As the housing market continues to cool, we see that the odds are now definitely in favor of the buyer as opposed to the seller.
There is a surplus of homes on the market, and prices are predicted to fall even further as the market continues to stall.
In a buyer’s market, the potential purchaser has a lot of room for negotiation in the sale, as opposed to a seller’s market, where the homeowner has total and complete control, as buyers fight for homes in hot-markets.
But when a buyer’s market comes around, there are many questions that come up. Potential buyers wonder whether they should buy now, or wait until sellers become even more desperate and slash prices even more.
An October 5, 2006 article by Holden Lewis of Bankrate.com, “Four tips on buying a house in a buyer’s market,” gives some advice on making a purchase in this ever-changing market.
“In many places, it's a buyer's market in real estate, with sellers outnumbering potential purchasers. The resulting downward push on prices makes buyers happy. But it complicates matters for buyers, too. In some markets, there are too many choices to sort through. Even more bewildering, buyers wonder if they should wait a few months.”
The first tip that the author gives is that if you find the right house at the right price then you should by it and not worry if the prices are going to drop more, because you really never know what is going to happen and you don’t want to lose out on a good house.
You should also utilize all of the technology and various people that are out there to assist in your real estate transaction; a good place to start in the Internet. But always compare what you find on the internet with an experienced agent.
“If you find a house you like, ask the agent to perform a comparative market analysis -- basically, to do what Zillow does, but with the addition of human judgment. Do your own analysis online, using Zillow, Homekeys or a similar site if you can find one. Compare your research with your agent's. If they corroborate each other, fine. If something seems amiss, find out why. (An experienced agent is almost surely more accurate than Zillow.)”
In a buyer’s market, buyers have room to negotiate; they just must be smart about it. Some people want to “low ball” the homeowner, which is fine, but they must be careful not to offend them with a ridiculously low offer, or else all negotiations could be off.
“Right now, ‘there's more room for negotiation’ in most housing markets because the sales pace slows in autumn, and prices have been falling, says Steve Habetz, president of ARCServ, a network of real estate attorneys. Villena counsels buyers to avoid the temptation to toss out lowball offers, because sellers won't negotiate if they feel insulted.”
Finally, when shopping for a house in a buyer’s market, be careful to avoid any gimmicks, incentives or promotions; unless they involve discounts off of the price of the home itself.
“If there's an incentive, make sure it has something to do with the dwelling -- upgraded countertops, decorating allowances, payment of mortgage closing costs, that sort of thing. ‘If they're willing to subsidize it with a $500 TV, ask for $500 off the asking price,’ she says.”
Overall, just follow your heart when making your home purchase, because when you find the right house, you will definitely get that feeling right when you see it.
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