April 28th, 2014 5:30 PM by Gregg Mower
The National News Media is now just starting to report that Real Estate sales have slowed to near recessionary lows. This is not news for those of us that live this business every day and try to make a living at it. But what does this mean to those that are trying to sell or buy Real Estate? Well to put it simply, it is moving towards a Buyers’ market, which is where potential home buyers will be able to get more out the price of a home and terms than they could have before. Real Estate prices are set by supply and demand so when the demand for Real Estate is high that will drive up prices of homes. Conversely, when demand is low or supply is high prices will have to come down to attract those buyers into buying homes.
So what should a potential home buyer do when deciding that it is time to buy a home, either their first home, or move up, or re-enter after being beat up by the recession? Well it will be different for everyone as each person or family has their own unique financial situation. After you have been Pre-Approved for your home purchase by a reputable lender like MAE Capital Mortgage and you have chosen a highly qualified Real Estate Agent to represent you need to be picky. As a home buyer in this market you can look at homes without the worry or stress that it will be bought up quickly, as you know there are plenty of homes on the market to look at, so be picky. Buying a home is like buying a pair of shoes, when you know they are right you just know it, same goes for Real Estate. You should go by the rule of, “if it is meant to be it will be”. So when you find the right house and you want to make an offer on it go ahead and ask the seller to pay for closing costs, fix those little items that may bug you, get a home inspection and a termite report. All of these items will set you at ease that the house is in sound condition for a long time to come and that you won’t have large repair bills when you move in. Also by asking the seller to pay your closing costs your out of pocket expenses of purchasing the home will be greatly reduced and you might even be able to lower your interest rate at the seller’s expense. In a buyer’s market you can ask for these things and get them if the seller is motivated to sell.
Now if you are trying to sell a home in this market you too have to be patient and make sure you have done your homework. After you have picked one of our skilled agents (selfless plug) you need to make sure your home is priced competitively to other homes in your neighborhood. You might also want to be proactive and get a termite report so you know what is wrong with your home and what it will cost to repair it and get it done before you put it on the market so it can be advertised as a home with a clear termite. This will allow FHA and VA buyers to look at your home which will increase the visibility of your home to the public and increase the number of potential buyers. If you have the resources, have a professional home stager come in and tell you how your house will show the best and follower their instructions and remember that once you have decided to sell you have to make your house look like a house someone else will be interested in to make their home. So if you have a pink wall you just love because that is your taste, you might want to paint it a neutral color and let the potential new home owners look at your home as a house they can make their home with their tastes. Also be prepared to either lower your price, if you have priced the home at the high end of the market, or pay closing costs for buyers or both. In order to sell your home in a buyer’s market you have to make it look more attractive than the rest of the homes on the market in your neighborhood. To do this you either have to have the most beautiful home with all the upgrades in the neighborhood or you have to make it attractive with the price and terms. Either way, keep it in mind your home to you is your palace; to a potential home buyer it is just inventory that they may have seen before.
Ok, It’s a buyer’s market but for how long? Good question and the answer will lie in the economy and more specifically jobs. The more jobs an area has the better the Real Estate market is. When I say jobs I mean career type jobs in industries that will be here for a while. We all hear the unemployment reports and they appear to be getting better according the mainstream media, but are they really? I say no as there are so many Americans that after the recession had to take jobs outside of their chosen field and for less than they were making. Just because the un-employment statistics are going down does not means that the economy is improving it simply means that fewer people are filing or have been kick off due to unemployment running out. The numbers do not reflect those self-employed folks that have to pay for their employees but they themselves are not doing well and do not have unemployment benefits for themselves. If I were to look at the economy and the factors driving it I would have to say that Real Estate will be in this buyer’s market until 2016 at the earliest. I don’t say this as it is an election year, I study the economic cycles and with a 2 year recession/depression (2008-2010) the earliest we can possible to start to see improvements in Real Estate will be 2016 maybe 2017 whereas we should be seeing the improvements in 2014 in a normal business cycle. Ok comments are appreciated as usual.