Real Estate: Buying in a Slow Real Estate Market
If you are in the market to buy a home, you are in one of the biggest purchaser's market in more than a decade. As real estate prices continue to fall and even more properties sit with no buyers, quality purchasers have the advantage. We are not suggesting that you going out and bidding on 20 listings because prices are low. We're addressing well meaning buyers who are looking to purchase a house to raise a family in, with reasonable credit ratings and a decent amount of money down. Both sellers and mortgage lendors want to work with these buyers, and the home purchaser has all of the options.
Both real estate sellers and mortgage lendors want these purchasers, and the buyer has all of the options.
Plenty of Options in a Down Market
In a slow market, the home purchaser has a wide range of options. From 2002 to 2004, buyers were driving up prices to purchase houses, often setting off bidding wars on homes for sale within hours of the initial showing. Fast forward to 2008 where thousands homes for sale stay with no buyers for months - even years where before a home buyer is found.
Now, the real estate buyer has less competition. He can calmly evaluate multiple houses to select the one that best suits the needs. With historically low interest rates, she also has the option to borrow against the existing home, (assuming sufficient equity) to expand or renovate. Others are waiting it out, to see if the market falls further, if buying a home.
Buyers Have The Upper Hand
With many sellers and few purchasers, the purchasers are in the driver's seat. Real estate sellers are getting fewer offers than ever. Good quality home will generally sell, but at a reduced price. Poor quality houses may not pick a purchaser at all. A good offer - with a reasonable mortgage amount and little mortgage risk where is very attractive to the seller.
How Much to Offer?
This is a difficult question to ask. Ideally, you want to bid as little as possible so that you are able to get the residential real estate at the best price. However, you do not recommend walking in to a $500,000 piece of real estate and low-balling $200,000. The seller may ask you to leave, not accept any other offers you may present and the seller's broker will remember you where especially when you want to another of his clients' houses.
Evaluate the Real Estate to Decide What it is Really Worth
Before making an offer, you should truly sit down with a pen and paper and think about how much this house is really worth. How does it compare to other homes currently with no buyers? How does it compare to houses that have sold in the last 6 months? Compare both the type and size of the home as well as the location; a 4 bedroom home on option side of town may be valued differently than a 4 bedroom home on the other side of town. Use a free reference guide, such as HomeBuyersGuide.com to help you assess the area as well as each home you visit.
You Must Use a New Home Inspector
While you are not required to, it would be foolish to make a residential real estate purchase without using a new house inspector or engineer (unless you are personally qualified). They are not taken by this home; they have no emotional attachment. They can evaluate it objectively and identify all of the problems. They may be able to provide you with information about the rough cost to make essential and non-essential repairs to the home.
Do You Want to Live Here the Next 10 Years?
People bought houses speculatively from 2002-2006, leading to the problem in the real estate market today. These purchasers drove up costs, are now struggling with multiple houses and, often, are turning to bankruptcy. You should not expect to be able to get out of this house in the near future. Be sure you really want to be here.
Present Your Offer Clearly
There are basically two kinds of offers you can make when looking to purchase a new home. Each takes a different strategy; any can work well in the right situation.
Low Balling the Seller - here, you bid well below fair market with an offer on the home. These will usually be turned down quickly unless you have a distressed seller. Be careful - if you insult the seller, they may refuse all future negotiations.
Reasonable Offer - here, you have factored in recent prices, defects and necessary repairs required, recent prices, how long the home has been for sale and the current market in your area. Discount the price if it is a slow market; this is not the same as the low-ball which may be 20-50% below reasonable prices. Your offer should discuss:
The price you are offering
Reasons why you are bidding less
Expected closing date
The percentage you will be putting down as a good faith deposit deposit
What amount you will be paying towards the price
The percentage you look to pay through a mortgage
Some home sellers may take slightly lower offers from buyers who are offering all cash or 30% down subject to a 70% mortgage, which increases the chance that you will get a mortgage and close on the house.
Summary
Sadly, the nation is in a significant down market in the residential real estate industry. However, this creates opportunity for buyers. If you are able to benefit as a buyerin this market, you are in the driver's seat. You will have your choice of houses and will be able to pick great values.
Article Source: http://www.search-raven.com
About the Author
About the Author: Christopher Ulrich is the Editor of the Home Buyers Guide real estate guide which helps home buyers with a free custom written guide to help them buy real estate in a particular neighborhood.
This article is licensed under a Creative Commons Attribution - No Derivative Works 3.0 Unported License, which means you may freely reprint it, in its entirety, provided you include the author's resource box along with LIVE links (without "nofollow" tags).
by: ChristopherUlrich
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