Buying Strategy in Slow Real Estate Markets
The general rule in real estate is determine your price range and stick to it when buying. In a slow market, however, this rule can be bent if not outright broken.
It happens to all of us. We go house hunting and suddenly see the perfect place. It has everything we are looking for. It is in a great area. It is priced on the low end of the market in the neighborhood. If we have kids, it is in a great school district. There is only one problem. It is prices above our pre-determined price range. We know we shouldnt stress out our finances by overreaching, but it is perfect. So, do you have to walk away from the home? You generally do, but an exception may occur in a slow market.
One of the key factors in the pricing structure found in the real estate market is demand. When there is a lot of demand, prices go up because buyers are competing against each other for properties. When demand drops, so do prices. The smaller pool of buyers means there is much less competition for properties. In such a situation, buyers can be picky and swing for the fences on home prices.
If you find the perfect home, but it is a bit out of your price range, you might still be able to get it. Since the current market is showing weak demand, a lot of motivated sellers are sitting on properties they cannot move. The longer they sit, the more frustrated and motivated they become. It starts to occur to them that they are not going to get the price they want. Once this occurs, the price of the property in question can become very flexible.
If you are considering homes above your price range, dont be afraid to make offers on them. When evaluating which sellers might be ripe for a price readjustment, try to get a feel for how long the home has been on the market. If it has been listed for 30 days, you probably are not going to get a bite. If it has been listed for 120 days, it just might be your lucky day!
Go ahead and make that offer. The worst that can happen is the seller rejects it. If that occurs, do you really care? On the other hand, you are going to be mighty happy if the seller agrees to your general price range.
Raynor James is with FSBOAmerica.org - houses for sale by owner.
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