What To Do In A Buyer’s Market
In a buyer’s market, you will have more choices when it comes to the types of homes you can purchase. Depending on how long the market favors the buyer, you will also have the luxury of taking your time because bidding wars are much less. When buying your first home, you should check out all your options. That home you couldn’t afford a few years ago may be in your price range today.
When looking for a home in a buyer’s market, you should do the following:
- Stay current with the listings in your area
- Sign up for free email listings and newsletters
- Check out homes that have recently been reduced
- When making an offer, ask for closing fees to be paid for by the seller
- See if there are other offers, such as appliances that come with the home
- Ask for certain allowances (carpeting, roofing, siding, ect.)
- Do not be afraid to offer a lower price, and
- Ask for a shorter response time
In a buyer’s market, homeowners may offer these options to you as incentive to buy their homes. They may also offer warranties on appliances that you should take advantage of.
There are dangers that you should consider when buying in a buyer’s market, however.
- If you are not planning on living in the home for more than three years, you may want to wait until the market changes or plan to live in the home longer. Many times, market trends can last for a few years. If you need to move after a year or so, you may have difficulty finding a buyer and you may have to sell the home for less than what you paid for it.
- While most homeowners stay in their homes for at least two years in order to save money in taxes, marketing trends have been known to last longer. You should be prepared for this when buying your first home.
- Make sure a thorough home inspection has been completed before buying the home. If you decide you cannot live there after you have bought the property, you may have difficulty selling it and you will have to spend more money making repairs.
Even though you cannot predict how the market will change, you should consider a home that you can afford, that you will want to live in for a long time, and one that can be improved upon while you own it.
What To Do In A Sellers Market
In a sellers market, you will have to play the game slightly different than you would in a buyer’s market. In this type of market, there are many buyers who will want to buy homes that are attractive and priced within their budget. Homeowners will have their pick of offers to choose from so your offer will have to stand out in more than just price.
When looking for a home in a seller’s market, you should:
- Make an offer that is close to the asking price or slightly over
- Send a pre-qualification letter from your lender with the offer
- Choose a closing date that is sooner rather than later
- Do not ask for too many contingencies
- Send a personal letter
- Promise more of a down payment, and
- Use a real estate agent that gets things done quickly
In a seller’s market, you may also want to think about the dangers of buying a home. If you make an offer that is too high and you find out later on that the mortgage payments will be a struggle, you may have to sell. Depending on changes in the market, this may be more difficult than when you were looking for a home.
Buying your first home during this time may also be difficult because you will not be able to put much down, you may only qualify for a certain amount of money which may not be enough to compete during a bidding war, and you may be out bid by those who have more experience than you do.
When you decide to buy a home, you should be looking at your finance situation, the market, and the asking price for the homes you are interested in making an offer on. If you can wait a few months to see where the market is headed, then maybe this is the best way to save more money and find a home that is affordable. This is a waiting game that no one wants to play, but may be necessary, especially if this is your first home purchase.
Seller’s markets and buyer’s markets have their advantages and disadvantages, but in the end, the offer that you make will determine whether your offer will be accepted.