If you are in the market to invest in a home, you are in one of the strongest buyer's market in more than a decade. As prices drop and more homes sit on the market, ready purchasers have the upper hand. We are not promoting going out and buying 15 properties for "no money down." What we're addressing genuine purchasers seeking to purchase a new house to live in, with reasonable credit and a reasonable amount of money down. Both sellers and mortgagors are looking for these purchasers, and the buyer has all of the options.
Both real estate sellers and mortgage lendors want these purchasers, and the buyer has all of the options.
Plenty of Options in a Depressed Real Estate Market
In a depressed real estate market, the home buyer has many choices. From 2002 to 2004, buyers were driving up prices to invest in house, often getting into bidding wars on homes within days of the initial showing. Jump ahead to 2008 - hundreds of thousands houses remain with no buyers for months and months - before a buyer is found.
Now, the real estate buyer has less competition. He can calmly evaluate multiple houses to select the one that best suits the needs. With historically low interest rates, she also has the option to borrow against the existing home, (assuming sufficient equity) to expand or renovate. Others are waiting it out, to see if the market falls further, if buying a home.
Buyers Have The Upper Hand
With a wide range of sellers and few purchasers, the purchasers have the upper hand. Real estate sellers are getting fewer offers than ever. Good real estate will still sell, but at a reduced price. Poor quality home may not pick a home buyer at all. A reasonable offer where with a sufficient down payment and lower mortgage risk - is very attractive to the seller.
What Should You Offer?
This is a difficult question to ask. Ideally, you want to bid as little as possible so that you are able to get the residential real estate at the best price. However, you do not recommend walking in to a $500,000 piece of real estate and low-balling $200,000. The seller may ask you to leave, not accept any other offers you may present and the seller's broker will remember you where especially when you want to another of his clients' houses.
Evaluate the Home to Decide What it is Really Worth
Before making an offer, you should truly sit down with a pad and pen and think about how much this house is actually worth. How does it compare to other houses currently unsold? How does it compare to listings that have sold in the last 9 months? Compare both the type and size of the home as well as the location; a 4 bedroom home on one side of town may be priced differently than a 4 bedroom home on the other side of town. Use a free reference guide, such as HomeBuyersGuide.com to help you assess the area as well as each piece of real estate you visit.
You Must Use a New House Inspector
While you do not have to, it would be crazy to make a residential real estate purchase without using a home inspector or engineer (unless you are personally qualified). They are not falling in love with this home; they have no emotional attachment. They can evaluate it objectively and identify all of the problems. They may be able to provide you with guidance to the rough cost to make essential and non-essential repairs to the home.
Make Sure You Will Be Happy Here for the Next 5 Years
People bought houses "on spec" from 2002-2006, which led to the problem in the real estate market today. These purchasers inflated prices, are now struggling with dozens homes and, in many cases, are filing bankruptcy. Don't expect to be able to get out of this house quickly. Make sure you really want to be here.
Think Your Offer Through
There are basically two kinds of offers you can make when looking to purchase a new home. Each takes a different strategy; any can work well in the right situation.
Low Ball Offer - here, you bid below fair market with an offer on the home. Even considering repairs, recent sales and other items, you are generally underbidding on the home. If the seller is distressed, the house has been for sale for an extended period of time or the seller no longer resides in the home, you may have a chance with a low ball bid. Keep in mind where it is one thing to come in with a low offer; it is an entirely different situation to insult the seller.
Reasonable Offer - here, you have factored in recent prices, defects and necessary repairs required, recent prices, how long the home has been for sale and the current market in your area. Discount the price if it is a slow market; this is not the same as the low-ball which may be 20-50% below reasonable prices. Your offer should discuss:
Your bid
Justifications why you are offering less
Target closing date
What % you will be putting down as a good faith deposit deposit
The percentage you will be paying towards the purchase price
The percentage you look to pay through a mortgage
Many home sellers may take slightly lower offers from buyers who are offering all cash or a high down payment, instead of a higher bid where the home buyer wants to put "no money down" and get a mortgage for the entire purchase price. The initial will stand a better chance of actually following through and buying.
Summary
Sadly, the country is in a significant down market in the homes industry. However, this creates opportunity for buyers. If you are able to benefit as a buyerin this market, you are in the driver's seat. You will have your choice of houses and will be able to select great values.
Both real estate sellers and mortgage lendors want these purchasers, and the buyer has all of the options.
Plenty of Options in a Depressed Real Estate Market
In a depressed real estate market, the home buyer has many choices. From 2002 to 2004, buyers were driving up prices to invest in house, often getting into bidding wars on homes within days of the initial showing. Jump ahead to 2008 - hundreds of thousands houses remain with no buyers for months and months - before a buyer is found.
Now, the real estate buyer has less competition. He can calmly evaluate multiple houses to select the one that best suits the needs. With historically low interest rates, she also has the option to borrow against the existing home, (assuming sufficient equity) to expand or renovate. Others are waiting it out, to see if the market falls further, if buying a home.
Buyers Have The Upper Hand
With a wide range of sellers and few purchasers, the purchasers have the upper hand. Real estate sellers are getting fewer offers than ever. Good real estate will still sell, but at a reduced price. Poor quality home may not pick a home buyer at all. A reasonable offer where with a sufficient down payment and lower mortgage risk - is very attractive to the seller.
What Should You Offer?
This is a difficult question to ask. Ideally, you want to bid as little as possible so that you are able to get the residential real estate at the best price. However, you do not recommend walking in to a $500,000 piece of real estate and low-balling $200,000. The seller may ask you to leave, not accept any other offers you may present and the seller's broker will remember you where especially when you want to another of his clients' houses.
Evaluate the Home to Decide What it is Really Worth
Before making an offer, you should truly sit down with a pad and pen and think about how much this house is actually worth. How does it compare to other houses currently unsold? How does it compare to listings that have sold in the last 9 months? Compare both the type and size of the home as well as the location; a 4 bedroom home on one side of town may be priced differently than a 4 bedroom home on the other side of town. Use a free reference guide, such as HomeBuyersGuide.com to help you assess the area as well as each piece of real estate you visit.
You Must Use a New House Inspector
While you do not have to, it would be crazy to make a residential real estate purchase without using a home inspector or engineer (unless you are personally qualified). They are not falling in love with this home; they have no emotional attachment. They can evaluate it objectively and identify all of the problems. They may be able to provide you with guidance to the rough cost to make essential and non-essential repairs to the home.
Make Sure You Will Be Happy Here for the Next 5 Years
People bought houses "on spec" from 2002-2006, which led to the problem in the real estate market today. These purchasers inflated prices, are now struggling with dozens homes and, in many cases, are filing bankruptcy. Don't expect to be able to get out of this house quickly. Make sure you really want to be here.
Think Your Offer Through
There are basically two kinds of offers you can make when looking to purchase a new home. Each takes a different strategy; any can work well in the right situation.
Low Ball Offer - here, you bid below fair market with an offer on the home. Even considering repairs, recent sales and other items, you are generally underbidding on the home. If the seller is distressed, the house has been for sale for an extended period of time or the seller no longer resides in the home, you may have a chance with a low ball bid. Keep in mind where it is one thing to come in with a low offer; it is an entirely different situation to insult the seller.
Reasonable Offer - here, you have factored in recent prices, defects and necessary repairs required, recent prices, how long the home has been for sale and the current market in your area. Discount the price if it is a slow market; this is not the same as the low-ball which may be 20-50% below reasonable prices. Your offer should discuss:
Your bid
Justifications why you are offering less
Target closing date
What % you will be putting down as a good faith deposit deposit
The percentage you will be paying towards the purchase price
The percentage you look to pay through a mortgage
Many home sellers may take slightly lower offers from buyers who are offering all cash or a high down payment, instead of a higher bid where the home buyer wants to put "no money down" and get a mortgage for the entire purchase price. The initial will stand a better chance of actually following through and buying.
Summary
Sadly, the country is in a significant down market in the homes industry. However, this creates opportunity for buyers. If you are able to benefit as a buyerin this market, you are in the driver's seat. You will have your choice of houses and will be able to select great values.
About the Author:
Author Christopher Ulrich is the Editor of the Home Buyers Guide real estate guide which helps home buyers with a complementary guide written for them to help them buy real estate in the area they choose.
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