Tips for Buying in a Buyer's Market
When is the best time to buy a house? It may be right now.
With the abundance of homes for sale, and interest rates remainig at near 45 year historic lows, now might be one of the best times in recent memory to buy.
Don't Try to Time the Market: When home prices are lower; it is very tempting for potential buyers to "wait" as long as possible before submitting an offer, in the hope that prices will decline even further.
This strategy can hurt you. Once a home is priced to what the market will bear, other buyers will make offers.
It is best to work with your sales associate to make an offer based upon the prices at which similar homes in the market are selling for. In a buyer's market, there are more opportunities for negotiations, but making an offer is an important step. If you find a house you love, put your bid in and negotiate. Don't let it sit for another buyer to make an offer.
Take Your Time...To A Degree: Although each local market is unique, the National Association of Realtors (NAR) reports that the national home inventory is at 6.8 months. The increased supply of homes on the market gives homebuyers a great opportunity to evaluate a variety of properties.
So how does this tie in with the first tip? It doesn't mean that homebuyers should procrastinate. Gauge your timing wisely, by asking your sales associate how long properly priced homes are staying on the market before going into contract.
Recognize that Homes are Selling, and Why: Don't think you are the only one looking for a new home. Properly priced homes are selling. NAR predicts there will be more than six million home sales in 2007, expected to be the third-best year in history.
Recent studies revealed that the majority of people move based on lifestyle changes, such as a new job or promotion, marriage, divorce or family expansion.
Analyze Mortgage Rates: While mortgage rates have risen over the past two years, the increase has not been so dramatic as to significantly impact a monthly mortgage payment.
Consider the following example: about two years ago, mortgage rates were at approximately 5.85 percent, which translates into a monthly payment of $1,769.82 on a $300,000 loan. The current mortgage rate of 6.32 converts to a monthly payment of $1,860.32 on the same loan, a difference of $90.50. Be sure to watch the rates and do your math carefully, because changes in mortgage rates are not necessarily cost prohibitive.
Negotiate on the Incentives: Sellers eager to move their homes may offer you a variety of incentives such as cars, trips, clearing credit card bills for you and other deal sweetensers. If you accept an incentive, make sure it makes sense for you. Instead of having your bills paid, you may opt to have the seller renovate the master bathroom or install new flooring. Of course, you can always ask the seller to just deduct that amount from the list price.
Article from the Cape May County Herald Newspaper (page A44) - 02/07/2007