How To Survive In Slow And Booming Market Conditions
The simple strategy that home sellers need to follow while selling their property is to offer discounts when the market conditions are down and demand their price when the real estate market is flourishing. In a buyer's market, the first thing that the sellers should consider about compromising on is the price. To make the offer more lucrative to the buyer, the seller may also consider allowing some buyer enticements, such as inexpensive take-back financing and include additional goodies with the property - for instance a car or a boat. On the other hand, in a seller's market the seller can always charge his or her property a bit lower than the prevailing market value. In addition, in this case, the sellers may even set up a public sale situation and accept offers only at a precise time of a particular day.
Irrespective of whether real estate market conditions are down or booming, the worst thing that a seller may do is to list his or her property above its prevailing value. It may be noted here that the best attempt to sell a house is within the first few days of listing it in the market. However, if the market presumes that the property has been overpriced by the seller, the listing will remain for a long time making it stale and soon agents and their buyers will start ignoring the listing. Nevertheless, it is ironic that the only authentic manner in which the seller may renew the interest of the agents and their buyers is by lowering the asking price - sometimes substantially below the market value of the property. In other words, surviving in a hot or cold real estate market is the same tale that says bulls survive, bears survive, but pigs get butchered. In fact, life is no less complicated for the buyers, particularly at a time when the market bustling with cut-throat competition. Below are a few tips or undying guidelines regarding ways to attain success in a highly competitive real estate market.
- SWOOP DOWN
- It needs to be noted here that when the market conditions are booming or hot, sellers are often able to dispose off their homes within a few day, or sometimes even within hours of listing their property. In fact, there have been instances when homes have been sold even through cell phone calls from an agent's car, without even the buyers setting their foot on the property! In other words, this indicates that one needs to be prepared to swoop down or pounce in just some hours. In addition, they also need to be mentally equipped to be able to make on-the-spot and possible unqualified offers. When the market conditions are booming, there isn't enough time to spend on profound contemplation or indecisiveness.
- BE READY
- In order to be able to collect a realistic offer within a few hours of listing a property denotes that it is basically pre-approved for a mortgage loan. Such a situation will help you to get rid of making your offer provisional on financing - a situation that will virtually kill your offer in an environment where there are numerous bids. When we mean you should be prepared, it also indicates that you should choose your legal representative to represent you in the transaction, as you will need his or her services to appraise your offer promptly before presenting it, as well as a home inspector who will assist you in scrutinizing the real estate asset before your close the deal. Last, but not the least, you should also possess sufficient amount of cash on hand to be able to make the largest possible down payment.
- BE SIMPLE
- It is important to mention here that in a seller's market all offers ought to be free of any conditions. In effect, an offer that does not include any condition is considered to be the best - it should not impose any provisions on the seller in order to sell his or her property. Actually, sellers are not concerned about this aspect and, hence, you ought to put on stake whatever you are able to. If truth be told, sell the property for the price you desire and not be in a position where you would be found holding mortgages on two properties. If this is not acceptable to you, you may as well sell your existing home first, with a prolonged closing, and then purchase a new home from a builder. In such a situation, the only difficulty you may encounter is that the new home may not close before the closing of the existing home. In other words, this may require you to put up in a motel for a few weeks or few months before you are able to move into your new home.
- BE ACCOMMODATING
- In a seller's market, the seller is virtually a demigod and, hence, may insist on what they want vis-à-vis the price of the home as well as the closing date. Hence, it is advisable to be accommodating to the seller's demands or else you may end up losing the property that you desire to buy. In order to avoid such as risk, you may always organize a bridge financing if you have your own house to sell and if the closing dates of your existing home and the one you want to buy do not correspond.
- SKIP INSPECTION
- Some time back, the situation was such that no sensible buyer would have made an offer that was not conditional upon an agreeable home inspection or scrutiny. However, such home inspections were arranged at the expense of the potential buyer. The market conditions have undergone a sea change since then. These days, if you desire to make an impression on the seller, first write down the home inspection clause and then scrape it on the offer before presenting it. This will enable your agent to emphasize on the fact before the seller that you are really keen to buy the property and, hence, are also willing to take the risk of skipping the usual home inspection procedure. What is, however, unknown to the seller is the fact that when you had first gone to see the property, you had taken your home inspector along. Interestingly, he was not your brother with a flashlight, as you had introduced the person accompanying you to the seller!
- OFFER PLENTIFUL
- In order to make the best attempt possible by offering as much money as you are able to afford right at that top. This approach may help you to win or even steer clear of a bidding battle. If your agent is competent enough and is familiar with the business tactics, you will be able to have an excellent concept regarding the market value of the property you want to buy. In addition, you may also be able to estimate the value of the property two years hence. All these aspects will help you to decide on your offer price provided you are ready to occupy the particular home for a minimum of three to five years.
- FIX A LIMIT
- When we mean fix a price, it means that put a limit on the price that you want to pay and stick to it. Utilize your down payment amount, add to this the highest amount of pre-approved mortgage you are able to arrange and use this as your estimation. If even all this is not adequate for you to buy the house you want to, then you need to adjust your desire for buying real estate asset and it would be wise to look for a house in an inexpensive locality. Although the bidding wars are thrilling, many a times those who win the bids are people who will perhaps never get the total return on their investment.
- APPLY PRESSURE TACTICS
- Although the seller may be a demigod, you may still use pressure tactics on him or her as they often do to extract a quick decision from you. Tell the seller that your simple, unrestricted, moneyed and liberal offer is only valid for a few hours - in any case, not more than 24 hours. In addition, if there are any sign-back periods, ensure that each of them takes lesser and lesser time in order to enable you complete this transaction as fast as possible.
- WALK OUT
- In case, the matter goes beyond your control and the seller is under a false impression or misunderstanding you, you should always walk out of the business. Every day, plenty of houses are listed in the Canadian real estate market and in different cities. Remember, that the situation can change very fast. Hence, don't be under pressure surrender to too much compromise or pay excess money for buying a real estate property. There are numerous people who bought real estate assets under compulsion or pressure in 1989 and they are yet to recover the investments they made.
When it is a buyer's market, the whole thing is different and the buyer is in total and absolute control of the process involved in buying homes. Below are a couple of tips that would help you to operate successfully in a buyer's market.
- BE FIRM
- When you are presenting an offer to buy a property, it is possible that your offer may be the only one that the seller would be receiving on that particular day and, hence, it is essential the offer is drafted in a manner that goes in your favor completely. While preparing the offer, include all aspects that you would like to. You may include things such as drapes, appliances, carpet, pieces of furniture, pool accessories, small deposit, the closing date suitable to you, take-back financing, home inspection and also the low price for the property. It is very much possible that an enraged seller will sign the offer and send it back to you, as you have even included his or her beagle and laptop. While the seller may be enraged, but you are certainly aware that when the seller signs the offer and sends it back to you, you have managed a technical victory. Now, you are able to buy the house, provided you accept the seller's response.
- BE PRUDENT
- Before you decide to buy a particular home, first try to find out why the property has been listed for sale. You will find that some sellers are keener to dispose off their property at the earliest for reasons like a divorce or job relocation. In such circumstance, you can afford to be even tougher vis-à-vis the price of the home and other conditions. In fact, the best ones are the powers of sale.
Having discussed on how to survive in a buyer's and seller's market successfully, here are a few guideline on the appropriate time to buy a property and when it is most suitable for you to borrow for your new home.
- Try to stay away from buying residential real estate during when the markets are hot or the prime time. The prime time periods for houses is between February and May and then again between September and November, while the prime time for cottages are between March and July. Purchasing a residential real estate during the prime period will put you in intensive competition, but, it is around this time, when you will find the maximum number of properties being listed for sale in the market.
- In the same manner, try to keep away from obtaining a mortgage assurance during the RRSP (an account that provides tax benefits for saving for retirement in Canada) season that lasts from the New Year to the first day of March every year. GICs (Guaranteed Investment (Interest) Certificate) worth billions of dollars mature during this time every year and the banks, keen to keep hold of this money and with a view to vie with savings bonds, are inclined to offer higher interest rates.
- It is best to try to buy residential real estate during the slum periods, especially during the statutory holidays and long weekends. This is because if you happen to be the only buyer who visits an enthusiastic and eager seller of a holiday Monday or Tuesday, it is more likely that you will receive a very warm welcome.
- If you are looking for buying a residential real estate, you ought to keep the school year calendar in mind, as this particular aspect governs the lives of loads of people for whom it is essential that they shift home between the end of June and Labor Day (the first day of May). Keeping this particular aspect in mind may turn out to be very helpful when you are bidding for a house of people having school-going children. Similarly, try to make the closing date as expedient as possible and this will help you in completing the deal without any hiccups.