Making a home purchase in a buyer's market
By Melissa Wirkus
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.