In a down market, prospective buyers have an edge, but it doesn't mean they are guaranteed to make money on the properties they purchase. When there is an excess of homes for sale, buyers have an opportunity to buy a house on the cheaper side. There are times when you should pounce on a purchase and times when you should show restraint. Knowing the difference could save you thousands of dollars. Therefore, I have some tips and advice that may help you along the way.
Tip 1 - Homework
You should search the internet for listings, inquire with a real estate agent and check the local listings in newspapers to gain insight on a particular area. National and local agents make their listing available on the internet. Do your research to gain the knowledge of price ranges in that area. You need to get a feel for what a low price would be for your desired area.
Tip 2 - Ducks in a Row
Make sure you are ready to pounce on a deal at a moment's notice. Get pre-approved for a mortgage and have an attorney on retainer to handle the closing. Have a home inspector available as well as an insurance agent. These professionals will provide valuable information about what parts of the home might need repairs and what it will cost.
Tip 3 - Motivated Sellers
Sellers provide additional bargaining power for potential buyers. If the home has been on the market for several months, has had several price reductions and is vacant, this may suggest the seller is looking to sell as soon as possible. Ask questions as to whether the seller will throw in furniture or fixtures that you like. Ask the seller to cover the closing costs in full or in part. Don't forget that the listing price is negotiable as well.
Tip 4 - Bargain with the Realtor
Houses are selling at a slow pace and REALTORS® are struggling as well. In this type of decline, both agents and firms may be inclined to knock a percentage point or two off of commissions to get the deal done.
Tip 5 - Is the Title Clear?
In this trying time, sellers are looking to unload their homes because they are in over their heads. Sometimes the property may be encumbered by a lien, a service provider, bank or other lending institution. This is the reason it makes sense to use a title insurance company and to have a lawyer perform a title search to ensure that the title can be transferred. You don't want to have to absorb any of those liabilities. Lenders may require title insurance and a title search, but cash buyers should use these services as well.
Tip 6 - Bidding Wars...Avoid Them
When shopping in a down market, don't let your emotions get the best of you. Bidding wars are usually a waste of time and, in the end, a waste of money. An ego-driven desire to win is foolish. When in a down market, it's all about getting a really good deal. The best way to avoid a bidding war is to set a price limit and stick to it. There are plenty of homes and other deals to be made.
Tip 7 - Walk Away and Don't Be Afraid
Prices drop as inventory increases. Down markets provide many houses to choose from. If you are not getting the deal you feel you deserve, don't be afraid to walk away. In a down market, the buyer has the power. Sellers may refuse to understand that the market is down and will not accept any offers less than what they feel their home is worth. Stick to the price you decided the home is worth and, if you can't close the deal, move on and try again.
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