July 9th, 2014 6:07 AM by Jackie A. Graves
Buyers have the advantage in this shifting market
Buyers are finally being
able to take advantage of cooling trends in previously hot markets. Multiple
offers are no longer being thrown at sellers as soon as the For Sale sign hits
the front yard.
Competition has dwindled in many areas as investors disappear and buyers take
to the sidelines. Unless a buyer thinks his local market is headed for a big
downturn, this could be the pause that allows him to get into the market with a
few perks unheard of in recent years as a bonus.
So how do you know what
shape your market is in? Economists believe that real estate is closely tied to
employment, so if you’re in an area of growing employment, don’t expect to see
double-digit depreciation anytime soon. In areas such as the Midwest, where
auto manufacturing is king, prices have fallen sharply and will likely continue
until the industry rebounds.
Here are 10 things buyers
need to know to negotiate the best deal in a market shifting to their favor:
1. Human nature is the
biggest problem for sellers and buyers to overcome in a changing market. Prices
stagnate or drop a few percentage points and it’s amazing how different buyers
and sellers react. Sellers still think their house is “special” and immune to
the market. Buyers figure every seller is about to be foreclosed on and make
ridiculous low-ball offers. Smart buyers do their homework, know what size home
they need, how much they can afford and then search the market for what they
want and negotiate fairly.
2. When you make an
offer, know the recent comparable sales; it’s the best bargaining tool. “See
what’s going on out there,’’ says Beverly Durham of ReMax Gold Coast Realty in
Camarillo, Calif., where entry-level single-family homes begin at $500,000. “Make
an offer $10,000 to $15,000 under what the last one sold. Even in this market,
if you insult your seller, they won’t want to deal with you. Sellers know what
the last one sold for. You want them to at least look at your offer.”
3. Find out as much as
you can about the seller’s motivation -- retirement, job, divorce, wants to
move up but only if he gets the right price. Durham says if a buyer knows the
seller’s motivation they can negotiate a better deal or move on to the next property.
4. Multiple Listing
Service (MLS) properties usually state what the seller owes. If not, your agent
should be able to track down the figures. There’s a big difference in
negotiating with an owner who owes more than the house is worth and one who has
a lot of built-up equity.
5. “After 45 to 60 days
the seller is usually absolutely sick of keeping their house spotless and sick
of people walking through,’’ said Durham. This is when a seller may be the most
anxious about selling their house as traffic to their house has likely fallen
6. Unless you’re
incredibly handy and have time and cash, go after houses that are as updated as
you can afford. This is easier to do in a stagnant or falling market and fixers
aren’t usually discounted enough to be worthwhile.
7. In a tighter market,
it’s not too much to ask the seller to add the closing costs to the price of
the house. It’s better to put 20 percent down and add the closing costs to the
loan than put 15 percent down and pay the costs upfront.
8. Items to ask for that
shouldn’t offend sellers are paying for new kitchen appliances or washer and
dryer. Most sellers will be willing to do so to close the deal. Durham also
says it’s OK to ask sellers to pay up to the first year of homeowner
9. Don’t request anything
that requires quality workmanship. “Don’t ask them to paint,’’ Durham said.
“They won’t do it the way you want. They’ll do a lousy job.’’ Also, don’t get
carried away and ask for the entire store. Be reasonable.
10. Make sure to look at
the big picture. In changing markets you should be planning to stay for at
least five years, so don’t get caught up in a $2,000 price difference.
Remember, the goal is to get the house you want to live in for some time, not
to impress friends with how you worked the previous owner.
By Rick Hazeltine – To view
the original article click here