Sunday, January 15, 2012

What A Buyers Market Really Means

The spring selling season is coming upon us and it is coming sooner than most homeowners may think, we have already had a rush of new buyers begin their search!  There are some very important things you should know as a homeowner to sell your home in this market, and buyers should be aware of the realities of what it means to purchase a home in today's market! 

Let's start of by explaining exactly what causes a buyers market. 
  • Large Inventory Of Homes On The Market
  • Homes Taking Longer To Sell 
  • Smaller Pool Of Buyers  
Important Information For Buyers 

You can get a “steal” on every home on the market

Let’s me just take a minute and clarify what I mean by “steal”.
If a home is listed for $250,000, is in move in condition with no liens, offering the homeowner $180,000 will do nothing but insult them.   Always be realistic when you put in your offer, pick your Realtors brain find out what the value of the home actually is, and put in an offer based on that information.   

Now if the home is a short sale, than a low offer may still get you the home, but remember the current homeowner has the “right of first refusal”, they will be trusting their agent to guide them that the offer reasonable.    

There are times where you can get a home for a “steal”, and that is with a foreclosure. Many of these homes have been sitting, and require work before they can even be moved into, in some cases they might be missing heating and plumbing. The banks have to recognize they can’t expect full market value.

A foreclosure sale is not for everyone, I usually find that it is easier to get my buyers into the ones that were already bought, renovated, and re-listed by investors. 

The buyer looking at the home decides what the value of the home is. 

A homes value is actually decided by the home buyers that have purchased in the previous 6 months.  You as the prospective buyer will actually be deciding the value of the neighboring homes for the next 6 months worth of buyers that buy a home AFTER you!
Another common misconception is that the house is worth the same as the neighbors!  This again is about the value of your home.  If your neighbors house is comparable to your home, than it might, but even than it will only be usable if it is sold in the time table that works to your advantage. 

I can find a better home, and it will be cheaper prices are still dropping! 

I always tell my buyers, if you find a house and you fall in love with it don't miss out on it! I will tell you if the home is overpriced or not, but if the home is really a great value it will not last! Don't lose a home that you love, for a house that you aren't sure it exists!

Important Information For Buyers 

You can sell your house quicker without a Realtor or I can use a discount brokerage to sell my home.  

The most common answer I hear when I ask someone why they chose to sell their home without the assistance of a Realtor, is they think the buyers will see it as a "value" that they don't have to pay "extra" for a home.  Now I am not saying that it is never happened, but it is not very often that a home sells without the help of Realtors, especially here in Suffolk County.  

The very first thing a homeowner should take into consideration is that most buyers have a "Buyer Broker" which means they have a Realtor that they will need to pay, because they will still be doing their job if they buy your home.  Now what you thought would make your home seem like a value will now mean extra money they will need to pay to buy your home.  

Now I have written countless blogs on staging, photography, virtual tours, home warranty, and really using technology to get your home sold. The reason I constantly reiterate this information is because it really is what will get your home sold.  

With the cost of not only doing these things, but spending the time to do them properly is usually a much harder undertaking than most homeowners expect it to be.  When you hire a Realtor, it is important to remember you are the boss! The other common reason I hear is they had a bad experience during a previous time they listed their house.  I reference this in another blog, about what you should be asking the potential Realtors who want to list your home.  

Always remember you want to list your home aggressively the first time it is on the market, that is what will set your house apart.  You need to be sure your home is priced right, it is advertised everywhere, it is easy to show, and you have a reputable company representing you! That is the way to sell your house in a buyers market! 

I am only going to list my home for 3 months, this way my Realtor works harder! 

Unfortunately this is the one misconception that is completely off base, the market does not allow for a home to be sold within 3 months when the average time to sell a home is 6 months to a year! The best analogy I can use is this: If I told you to go to Florida on 1 tank of gas, and you knew it would take 2 tanks, would you go? Market conditions is what you should be basing your decision on, again I wrote a blog specifically on how long you should list your home for.

I understand that as a homeowner you don't want to be "stuck" with a Realtor or a company that is not doing what you may want them to, but again remember YOUR ARE THE BOSS! My company has a sellers services guarantee that if we are not doing our job 110% you have the right to withdraw your listing from our company.

My home isn't getting offers, because banks just aren't lending! 

Banks are absolutely lending money! They didn't lower their interest rates because they wanted to prevent buyers from getting a mortgage! Coldwell Banker Mortgage Company can work with a credit score as low as 615, and I work with other mortgage companies that only require a 625 credit score! Down payment requirements are as low as 3.5%, compared to what many people may think is still 20%.  The key to knowing if someone is a qualified buyer is to make sure their pre-approval are thru a mortgage company who puts their pre-approvals thru underwriting!

If you are interested in seeing exactly how many homes were sold be sure to take a look at some wonderful charts provided by my managing broker on his website The Real Estate Guru.

I hope this helps clears up some of the myths & questions that go along with a "Buyers Market", if you have any questions feel free to email me! 

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