You put a lot of effort into finding the right house, and now that your closing is just days away, you're finally ready to start calling your new place home. Before this can happen, however, you
Buyers Or Sellers Market Know The Difference And Use It To Your Advantage
Buyer’s or Seller's Market? Know the difference and use it to your advantage.
These days, depending on your local market, most homeowners trying to sell a home have the upper hand—the seller’s market means home prices are high, inventory is low, and sellers can afford to be choosy with the offers that are presented to them.
But that isn't the case in every market. Certain places in the North East, paralyzed for weeks by a brutal winter, are already bucking the trend and moving toward a buyer’s market, when potential home buyers hope to leverage their bargaining power.
When the number of homes on the market outnumbers the number of buyers, sellers may be more willing to negotiate on the price of their home and offer concessions to seal a deal. But potential buyers would be wrong to assume they’ll be able to find bargain-basement prices.
Follow these five tips to make sure you don’t make mistakes when trying to take advantage of a buyer’s market.
1. Know the market
It’s important to understand what the market you’re looking at is offering. When everything is overpriced, you are under-pricing everything.
If you think everything is too expensive, it’s time to move on to another neighborhood. Trying to make offers substantially below market value is usually a waste of time.
If you’re looking for the best kind of deal, do your homework and look for a place that’s been on the market for a long time. The longer a house is on the market the more favorable or open the seller will be to making a deal
2. Lowball the right way
It’s common for buyers to pitch a lowball offer in a buyer’s market—in fact, it’s a good strategy. But keep your expectations realistic.
Check to see what houses have sold for in the area, and pay attention to the appraiser’s assessment or you may end up missing out a great opportunity to buy a great home at a great price.
3. Know when to ask for upgrades and discounts
It’s a buyer’s market, so you’ll have more leverage to ask for things you want. But do you ask the seller to make the repairs, or deduct those repairs from the asking price to shape your offer?
Sometimes it makes sense to take the property as is and discount all the issues you have. If the seller just wants to walk away from the property and you start complicating it, you may end paying more than you would if you just addressed those issues yourself. Plus, fixing it yourself gives you the opportunity to make all the choices and customize the work to your taste.
Keep in mind this strategy won’t work for some loans, such as those offered by FHA, which can have stricter qualifying requirements than other loans. If that’s the case, the repairs need to be made before the loan can be approved. However some lenders offer creative 203K programs that allow the borrower to finance the work into their mortgage.
4. Show you’re serious
When you’re factoring the price of repairs into the cost of the home, don’t talk in generalities. Be specific. This helps everyone understand you are serious and not just floating guesses.
Discuss with your Realtor or builder how much certain projects will cost to fix or update and use those numbers. If you can provide a quote, that’s even better.
5. Talk closing costs
Closing costs typically amount to about 1% to 2% of the sale price. But when it’s a buyer’s market, you might be able to get those costs reduced. You might ask your lender to reduce costs that seem too expensive, and you might ask the seller to pay for certain home-selling fees.
Bottom line: Don’t be afraid to negotiate. And don’t be afraid to drop the deal.
Remeber: Be willing to really walk away, once you emotionally have to have that house, the seller has additional leverage
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