Buying in a Buyer’s Market
If you are in the process of buying a home or have talked to a realtor, you might have heard of them saying that “It’s a buyer’s market right now, now would be a good time to buy” or “It’s a buyer’s market, there would be lots of inventory to choose from”. The real estate business is a very volatile industry, it is influenced by multiple uncontrollable factors. The market can be influenced by factors such as a lot of homeowners trying to sell their home, the timing and time of the year, and even major economic and financial reasons like a big company and employer closing down or a spike in lending and mortgage interest rates.
As a prospective homeowner, some cues you can watch out for to know if it’s a Buyer’s Market are: houses take longer to sell, seeing a lot of for-sale signs in the neighborhood, decrease in property values and asking price, and delinquent mortgages, these are just a few signs indicating a Buyer’s Market. What exactly does this mean for you, as a buyer? Here are a few things that can make purchasing a home in a Buyer’s Market advantageous for you.
1. Increased Negotiating Power
One of the indicators of a Buyer’s Market is there is more inventory available in the market. This gives you, the buyer, a lot more space to maneuver during negotiations. Whether it’s requesting little extras like throwing in the amazing patio chair set that you saw on the lawn or arranging for lower closing costs or faster turnaround on closing and escrow, you can always ask. More often than not the sellers would agree, this is a small price to pay for being able to finally close on a property they placed on the market a long time ago.
However, one of the best things to negotiate on is the price. Offer less than the asking price, since there is more inventory, sellers might be willing to sell at a lower price especially if they are in rush to sell. Be prepared to negotiate, check comps so you are ready when you start talking price expectations with the seller.
2. Less Competition
Since there are a lot more inventory and fewer prospective owners at this time, you do not have to rush into making an offer for the first house that you see. Take your time, look at other properties.
3. Be Firm On What You Want
Given the ideal conditions in the market, there would be a lot of great deals that would really make you drool and throw your plans out the window. There would also be sellers out there that would sweet talk you into buying their property. Selling you on the idea of unique features and amenities of their home. Being firm on what you want would make it easier for you and a happier purchase in the long run.
4. Prepare Financially
Although, generally, a buyer’s market would be a good time to buy, having your financials in order would still be a good starting point. Make sure you have enough saved up for a down payment and your credit is ready especially if you are planning to take out a loan.
5. Contingent Offers
Circling back to increased negotiating power, another advantage that can be gained is the sale or closing on escrow being contingent on one or even a few items. With the urgency of a sale or even the desperation of some homeowners, they might and would be willing to sign and accept an offer but the sale to be contingent on things like home inspection, repairs, or update of property taxes. This means that you would only be able to finalize the sale if requests are satisfied.
One of the most common scenarios is the sale being contingent on a home inspection or approval of a loan. This is something that you, as a prospective homeowner can take advantage of. There may be cases wherein you’ve been house hunting for a while or after looking at multiple properties you found the home that you really wanted, you can make an initial offer even though you are still waiting for the results of your loan application or you really like the place but just want to be thorough and ask for an inspection before you close on the deal.