Whether you’re a seller competing for open house traffic or a buyer with a huge list of homes to view, approaching a buyers’ market with a plan will get you faster results.
When there is an abundance of homes for sale in a particular market, buyers and sellers both need to adapt their strategies. Here’s how to proceed from either side of the transaction in a buyers’ market.
How to sell in a buyers’ market
It’s not impossible to sell a home in a buyers’ market. For the right price and the right house in the right condition, there will always be a buyer. But the home’s true value may not be in line with the seller’s expectations. Most sellers refuse to believe the reality of a buyers’ market, and a struggle ensues.
If you need to sell your home in a buyers’ market, you must put your best foot forward from the start. Only the most serious of sellers should list their homes for sale in a down market.
Why? If you don’t need to move, but would just like to, then you aren’t a motivated seller. This means you probably won’t be pricing your home in line with recent comparable sales. It is likely to sit on the market for a long time, creating a big stain on your home and your listing. When it does come time to get serious, buyers will discount you.
Be a seller, not a lister
The better option is to stay in the home as long as you can, and wait to list it until you are really ready and motivated to sell it. At that point, it’s imperative that you price the home correctly from the start. Also, make the necessary cosmetic improvements: clean, clear and declutter to get the home in its best possible condition.
Following this path will ensure your home sells in a timely manner. And you will ultimately net more, having held out, than if you listed the home and had a series of price reductions over a one-year period. Of course, many sellers want to list and see what happens. But living in your home while it’s on the market gets tiring. It will never show well after those first few weeks, and many sellers give up trying to present their home well. The better option is to wait it out until the market turns around.
How to buy a home in a buyers’ market
Being a buyer in a buyers’ market is a rare treat. You have the pick of the litter, lots of options and time on your side. But it does come with risks.
There are few buyers and lots of inventory for a reason. Perhaps the economy is down, credit is hard to get, or your local market is slow (and it could get worse). It’s hard to time the market, but often maverick buyers do fine in the long run.
When you first get into the market, do your research. Understand pricing across the different towns, neighborhoods, and school districts. Buying in a buyers’ market just might afford you the opportunity to get into the best area. Once you’re in, you’re in. It may not be possible to get into the best area six months or a year later.
Once you’ve identified the location or locations you prefer, hit the ground running. Check out the existing inventory. In a buyers’ market, there tend to be many homes for sale, and they may sit on the market for six months to a year.
Know upfront that not all sellers are created equal. Some simply list their homes for sale but are not serious, motivated sellers. Don’t waste your time on them. If you find a seller who’s just not that into your offer, make your best and final offer, and move on.
Identify the motivated sellers
If you are a true bargain hunter and value is more important than the home’s floor plan, location or lot size, identify the most motivated seller. Often this is the person whose listing has been sitting around forever. Work with your real estate agent, find out why the seller is selling and what their motivation is.
The seller’s agent can be a great source of information. When you find a motivated seller, make a low offer but make it clean. Complete your inspections quickly, get fully approved for a loan, and make the timeframes fast. A foolproof offer, even if low, will motivate a seller to bite the bullet and move on.
Look for the value add
Markets will turn around eventually. Buying in a slow market all but ensures you some equity once things take a turn. And that is a great feeling.
But take it one step further. Identify a home in a down market that needs some work, and you have an additional layer of value add or equity. While you don’t need to find a total fixer-upper, be open to a kitchen or bathroom renovation. These renovations will add value, and you can make the home yours, instead of buying someone else’s choices.