Currently, we are experiencing what many media and industry circles call a buyer’s market. Very simply, this is the first lesson of Marketing 101; when demand is high and supply is low, prices go up, but when demand is low and supply is high, prices go down. If you want to increase your price, you must either increase demand or reduce supply. The challenge we face today revolves around the high number of people forced to sell for various reasons and the perceived fallout from loose lending practices.
As a potential buyer in this market, you enjoy a number of advantages over the seller that are not usually available. Before I go any further, I want to address a common misconception that the buying public learns from the media and some market gurus… A buyer’s market does not This means you won’t receive any price concessions from a seller, and you may end up paying the highest retail price for your next home. Beautiful homes in a good location will always command high prices, and if you think otherwise, you could easily be outbid by another, more aggressive buyer. We’ll get to pricing in a moment.
In this buyer’s market, there are other great ways to save money and increase your buying power, and that’s what this article is about. Let’s first look at some options from the seller’s perspective. The seller’s objective is to make the maximum amount of money in the shortest possible time with the least possible investment in the property he intends to sell. To make any type of investment in the property, the seller will need access to capital resources to finance updates or repairs. A seller can avoid spending money or running a line of credit for this business and offer you the buyer credit on the price or in the form of a decorating allowance if they choose.
What usually happens, however, is that the seller won’t make the repairs or updates and will leave it up to the buyer to either accept the home as is or ask for certain concessions in the rental agreement. purchase. So my first piece of advice for you in this buyer’s market is to ask the seller to give you a credit for a decoration allowance, or to make the necessary repairs before closing. Now you might think I just wasted your time and gave you useless advice, but you’d be surprised how many buyers are too shy or afraid to be pushy with these kinds of concessions. If you don’t ask, you will never receive. The worst that can happen is that salespeople say no.
Another way to save money in a buyer’s market is to include a provision in the purchase agreement that obligates the seller to pay some or all of the closing costs and/or prepayments of the Buyer. This can have a huge impact on your buying power, as these costs associated with buying a home are what make the early years of home ownership unprofitable. If you save this money, you will realize the benefits of appreciation and the reduction of your debt to the lender more quickly. It is very important to coordinate with your lender, real estate agent and financial advisor to determine exactly what to ask for so that you receive the maximum benefit. It is also essential that the contract is accurately drafted to ensure that the seller cannot avoid paying certain fees on a technical point.
Let’s review the price and see why buyer hype won’t affect an educated seller. Most sellers who have chosen to list their home with an agent will have access to very detailed market data. It will be obvious to even the most novice seller what the market indicates their home is worth. If sellers take the time and effort to properly prepare their home for sale, and consider market data, they will most likely settle for a price that a knowledgeable buyer will pay fairly. This means that you are unlikely to benefit from any price breaks from this type of seller.
But you are a savvy buyer, fully informed about the market and fearless in your negotiations. You will realize that the asking price is fair for the market and try to save money in the other ways mentioned above. Sellers are funny… They will settle for a price, but turn around and make concessions worth thousands of dollars when faced with a strong, motivated buyer and a signed purchase contract.
Although I’ve kept it general in my suggestions, you can easily adapt these ideas to your specific situation and confidently save money, request and receive repairs or upgrades, and increase the value of your purchase. Never forget that quality and location bring value to sellers, so don’t make the mistake of undervaluing your dream home and then losing it because you offended the sellers. Be fair with the price, but get your concessions and savings in other, more creative ways. That’s how I think you can make the most of this buyer’s market.