What To Do in a Buyer’s Market

B. A Buyers Market

If you’re in a buyers market (lots of homes on the market and not too many buyers), here’s some tips that will help you.

Tip #1: Take Your Time.

If you see a house that meets your criteria today, it’s generally safe to take some time to think about it (unlike a seller’s market where you have to move fast). But don’t take too much time to think about it. No one can predict if or when someone else will make an offer.

Tip #2: What Price Should You Offer & What Terms?

Your Realtor® has already done a comparative market analysis, CMA. She knows how long the house has been on the market and she’s going to find out why the seller is selling. Knowing why a seller is selling can help you with your negotiation strategy.

Example:

House listed at $140,000.

Market value between $140,000 – $160,000.

The house has been on the market for 9 months.

The seller wants to move because she’s divorced and can’t stand living in the same area as her ex-husband.

You want the house and you’re willing to pay $150,000.

Discuss strategies with your Realtor®.

If I was your Realtor®, I’d suggest writing an offer for $135,000 and ask the seller to pay for some of your closing costs.

The reason I suggest offering $135,000 and asking the seller to pay some of your closing costs is because I’m speculating the seller will make a counter-offer.

One, the market value is $140,000.

Two, you’re willing to pay $150,000.

Three, if the seller makes a counter-offer at $140,000 and pays half of your closing costs, you’re going to accept the offer. The seller feels like she “won,” and so did you.

It’s impossible to describe everything that can happen in a real estate negotiation. There are many scenarios that are possible with this example. The main point is you have a great Realtor® who works for you and will get you the best possible deal.

Tip #3: Write a Letter.

Although you are in a buyer’s market, it’s still a good idea to write a letter to the seller. Refer to the “Tips” section in this Chapter – A Seller’s Market.

C. A Balanced Market

Making an offer in a balanced market or healthy market, meaning the supply of homes on the market is meeting the demand of buyers, is done by using a combination of the techniques used in both a buyer’s and seller’s market.

Tip #1: Time.

If you see a house that meets your criteria today, it’s generally safe to take some time to think about it (unlike a seller’s market where you have to move fast). However, in a balanced market, it is impossible to predict when a house is going to sell. You can take some time to think about it, but don’t take too long.

Tip #2: What Price Should You Offer & What Terms?

Your Realtor® has already done a CMA and knows the fair market value. She also knows how long the house has been on the market and she’s going to find out why the seller is selling.

Example:

House listed at $150,000.

Market value between $140,000 – $160,000.

The house has been on the market for 3 months.

The seller isn’t in any hurry to sell.

Submit a reasonable offer. I would suggest offering $140,000, maybe $143,000 and ask the seller to pay some of your closing costs. This gets the negotiations started.

You know the seller’s isn’t in a hurry to sell. If you make the mistake of submitting an offer for $125,000, it’s going to make the seller angry and if I was the seller’s agent, I’d recommend they reject the offer – no counter-offer, no negotiations. You’re not a serious buyer.

Listen to your Realtor®. She knows what’s she’s doing. She will advise you how much to offer and discuss the terms of the offer with you. you can also educate yourself by browsing over the web here

Tip #3: Write a Letter.

Write a letter if you really want the house and you want to tell the seller why. See “Tips” when you’re in a seller’s market.

A lot of Realtors® don’t like it when a buyer writes a letter to their seller and I’m probably going to get flack from Realtors® for suggesting buyers write letters. In some cases, I believe it is appropriate. And I don’t work for other Realtors®, I work for my clients.

Now that we’ve covered tips and negotiation techniques, you’ve got a contract and a closing date set. Let’s get your loan closed!

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