PROVE IT! It's the best time to buy

Pacita - I try and overcome the buyers fears by taking the pressure off. I tell them right up front that their needs are of utmost importance, and if they don't need to buy right now, then they shouldn't!

I do demonstrate (through a market analysis) that quality homes are selling every day - the best ones rather quickly in fact! My approach is to lay out the risks and rewards of multiple scenarios  - buy now and pay more vs. wait out the market and miss a great value, or an ideal home for their needs.

I always try and educate first, then put the decision back in their hands.

Using mortgage rates as a way to convince someone to buy is a weak argument - just ask anyone doing a short sale. If they are upside down, the rate doesnt matter if they have to sell.

A simple way to put it in perspective for a buyer asking that question is to look at when they can expect to break even vs their time frame. If in the next 12 months, the market drops another 5%, then goes flat for a year, you need at least 10% appreciation after that to break even factoring in a 5% cost of sale.

Let them plug in their own numbers and years.

I can not tell someone else of it is a good time to buy.  I personal plan to buy another home in the near future though.

Great discussion here... their is always good deals out there...as the Realtor we work hard to find the buyer the best deal for their money as that is our job!  I focus on helping my customers save money no matter how rough the market is!

Thanks,

Tom Davis

World Class Delaware Realtor

Pacita,

Yes but, now of course they have crept back up and I believe unfortunately the market and then ergo the fed are waiting for the election for any large movement.

There are many reasons that thi is a great time to buy. Rates are one of them. The great inventory and high incentive is some of the others here in SC.

Pacita - Just recently, I blogged about this exact situation.  I go into greater detail on my blog about low-ball offers.

I went through this exercise with two particular clients; one I've been working with for almost nine months and the other one almost four months.  With the first client, I showed him how his particular strategy of low-balling REO's/short sales way below the comparative sales for our area (Ventura County, CA) has actually cost him a considerable amount of time and now money.  He's also been dropped by Realtors who won't work with him because he refuses to listen to their advice.

Even if home prices continue to fall and he does end up buying a cheaper priced home, he will end up paying more for his loan than he would have if he bought that higher priced home that he made an offer on back in January when rates were lower.  When I showed him that he's actually going to be spending more on his loan for that lower priced home - he simply didn't get it and now thinks he should make his offers even lower below market.

However, when I ran the same scenario for the second client - he got it.  He was actually thinking of putting his home search on hold for a couple of months to see if home prices got any lower but when I showed him that he may actually spend more for his loan on that cheaper priced home, he has actually decided to continue looking.  He's also decided that his strategy of making extremely low-ball offers is not working and he's decided that he needs to listen to his realtor and start making better offers.

Moral of this really long comment - some buyers will get it if you "do the math" for them and others will never get it.  It's a coin toss but don't disregard the "numbers"; I, personally, don't consider it a weak argument.  For some buyers, that is what it's going to take for them to understand that waiting is not necessarily in their best interest.

Nice chart, Pacita, and great info. Seems where it cuts off in May of 2008 is where things are beginning to start upward again. Time will tell. Hope your having a fine day.

Rates do matter in this argument.  We have no idea if rates will stay stable or move upward with inflation.  However the additonal $5,000 or $10,000 you may save by waiting, may be eaten up with higher rates in the near future.  It isnt any different than it was in 1990.  You can not time the upward cycle any more than you can tell when it is at its peak.  All we know if prices have dropped in most markets.  If the market you are in has a strong economy, in net migration, job growth and past cycle of appreciation, then buy the darn thing.  If rates rise, you simply will not qaulify or have to pay more for you mortgage which in turn will cost the buyer more money over the next 3 to 5 years, than what they planned to make off low balling a seller.  No where is it more obvious than Seattle.  Im sure it is the same in many cities across the nation. 

Pacita - thx for the info on your other blogs.  I will definately check them out.  I like to share with my clients stories and scenarios of other real estate professionals on their experiences with the market.