How to Maximize Your Homebuying Power in a Buyer’s Market
Many parts of the U.S. are seeing homebuyers have the upper hand at last. Here's how you can make the right deal during a buyer's market.
Even in a buyer's market, be financially prepared to make an offer as you start the house hunting process.(iStockPhoto)
Market conditions have never been stronger for buyers in most of the country, which means there are lots of homes for sale with many sellers looking to make a deal. It has never been a better time to buy a home, and here are a few strategies to capitalize on a housing market that is tilting in the buyer’s favor.
To buy a house in a buyer's market, follow these recommendations:
- Organize your finances.
- Consider fixer-uppers.
- Check out up-and-coming neighborhoods.
- Manners matter.
- Utilize agent intel.
- Be patient.
- Remember: penny wise, pound foolish.
Organize Your Finances
Make sure you have a clear handle on your finances in advance of your home search. What is your realistic budget? Cash is always king, but for those who plan on financing the purchase, get a loan preapproval letter from a mortgage banker. The buyer who has done his or her homework and is prepared and ready to move fast is more appealing to a homeowner who is in a hurry to sell.
Are you open to doing work on the home you buy? This is where the deals are. Most buyers do not want to invest the time and energy in a fixer-upper. These are the listings that linger on the market and could be an opportunity for the savvy buyer.
Check Out Up-and-Coming Neighborhoods
Urban sprawl has created more and more great neighborhoods. Expanding your radius might open you up to an opportunity. Real estate agents are generally very knowledgeable about neighborhood trends and new opportunities in their markets.
Agents take careful note of the customers who come in to view properties. Respectful and polite behavior from the prospective buyer goes a long way. Homes are personal – sellers want to get top dollar, but they also like to sell to people who love their home. In a recent listing with multiple buyers interested in purchasing the home, the seller ultimately chose the buyer who said he loved it just the way it was, as opposed to another buyer who said he was going to gut renovate it. It's not that a new owner is not entitled to renovate a home as they please, but if the home is not in obvious need of repair, it may be best to keep these plans to yourself.
Utilize Agent Intel
Real estate agents have the pulse of the market. Ask them where the deals are. They also are in touch with new developments. For example, sponsors of new developments in New York City advertise deals to agents that a buyer might not be aware of.
It is OK to make a lowball offer, but if you don’t get the counter you had in mind, be patient and wait it out. Over time, the seller may see the light and change his tune. Many sellers in a buyer's market soften and come back to offers that were made months prior. Sometimes sellers just need more time to face the reality of the current marketplace. After all, it may be a harsh reality for some, and take a bit of time to process psychologically.
Remember: Penny Wise, Pound Foolish
Do not get so focused on winning every aspect of the deal that you lose sight of the big picture, which is buying a dream home for a great price. Many buyers are so worried about leaving money on the table that they don’t realize they are getting a home that is already deeply discounted. They have already “won.” Keep your eye on the prize and don’t get nitpicky.
Everyone is looking for a good deal, and for today’s buyer, this is the market to get it. In much of the U.S., buyers have never had a market this good. It's important to remember that one only knows the perfect time to transact in the rearview mirror. If you can find a home that you love at a great price, buy it. It is not a stock or commodity, it is your home where you live, and it will hopefully bring you many years of joy. More importantly, nothing remains this good forever. It is only a matter of time before the pendulum swings and real estate is back to being a seller’s market again.