Some tips to take advantage of a buyer’s market

We are currently experiencing what many, both in the media and in industry circles, refer to as a buyer’s market. Very simply, it is the first lesson of Marketing 101; when demand is high and supply is low, prices rise, but when demand is low and supply is high, prices fall. If you want to increase your price, you must either increase demand or reduce supply. The challenge we face today revolves around the sheer number of people who are forced to sell for various reasons and the perceived consequences of lax lending practices.

As a potential buyer in this market, you have a number of advantages over the seller that are not normally available. Before I continue, I want to address a common misconception that the buying public learns from the media and certain market gurus… A Buyers Market It is not It means that you will receive any price concessions from a seller, and you may still end up paying the highest retail price for your next home. Nice homes in great locations will always fetch the highest prices, and if you think otherwise, you may be easily outbid by another, more aggressive buyer. We’ll get back to the price in a moment.

In this buyer’s market there are other significant ways you can save money and increase your buying power, and that is the focus of this article. First, let’s look at some options from a seller’s perspective. The seller’s goal is to earn the maximum amount of money in the shortest time possible with the least investment in the property he intends to sell. To make any type of investment in the property, the seller will need access to capital resources to finance any updates or repairs. A seller can avoid spending the cash or use a line of credit for this business and offer the buyer credit on the price or in the form of a decorating allowance, if desired.

What often happens, however, is that the seller will not do the repairs or updates and will leave it up to the buyer to accept the house as-is or ask for some concessions in the purchase contract. My first advice to you in this buyer’s market is therefore ask the seller to give you a credit for a decorating allowance or to make any necessary repairs before closing. Now you may think I just wasted your time and gave you useless advice, but you’d be surprised how many buyers are too timid or afraid to be aggressive with these types of concessions. If you don’t ask, you will never receive. The worst that can happen is that sellers say no.

Another way to save money in a buyer’s market is to include a provision in the purchase contract that requires the seller to pay all or part of the buyer’s closing costs and/or prepayment. This can have a tremendous impact on your purchasing power because these costs associated with buying a home are what make the first few years of home ownership unprofitable. By saving this money, you will more quickly realize the benefits of appreciation and a reduction in your debt obligation to the lender. It is very important to coordinate with your lender, real estate agent, and financial advisor to determine exactly what to request to receive the maximum benefit. It’s also critical that the contract be drafted accurately to ensure that the seller can’t avoid paying certain costs because of a loophole.

Let’s review the price and see why the buyer’s market hype won’t affect an educated seller. Most sellers who have chosen to list their home with an agent will have access to very detailed market data. It will be obvious to even the most novice seller what the market indicates his home is worth. If sellers take the time and effort to properly prepare their home for sale, and pay attention to market data, they will most likely set a price that a competent buyer will pay fairly. This means that you probably won’t receive any price discounts from this type of seller.

But you are a smart buyer, fully informed about the market and fearless in your negotiations. You will find that the asking price is fair for the market and will try to save money in the other ways mentioned above. Sellers are fun… They will settle for a price, but turn around and give thousands of dollars worth of concessions when faced with a strong, motivated buyer and a signed purchase contract.

While my suggestions are general, you can easily adapt these ideas to your specific situation and confidently save money, order and receive repairs or upgrades, and increase the value of your purchase. Never forget that quality and location bring value to sellers, so don’t make the mistake of downgrading your dream home and then losing it because you offended sellers. Be fair with the price, but get your concessions and savings in other, more creative ways. That’s how I think you can best take advantage of this buyer’s market.