A Challenging Market for Buyers
November 10, 2008
The challenge faced by prospective home buyers in today's real estate market is the amount to offer a seller. Listing prices of homes being offered for sale are influenced by the seller's motivation. A lender that has taken a property back through the foreclosure process is usually very motivated to sell quickly. Hence foreclosed properties are often listed at very competitive prices. Traditional sellers who list their property because of job transfers or other personal reasons, may not be so anxious to sell quickly. Often it is more difficult for traditional sellers to understand just how much real estate values have declined.
So....what is a buyer to do? The answer, as always, is, it depends.
A Real Estate agent can provide a buyer with recent sales of similar properties. These properties will represent what has occurred to prices, but not what will occur in the future. A look at current list prices may give an indication of price trends.
From the range of value suggested by this data, a buyer might consider:
1) Seller's motivation and debt position. (Does the seller owe more than the list price? What does the bank say about a short sale? )
2) Before a buyer makes an offer to purchase, it is important to meet with a lender and determine exactly how much loan the buyer can qualify for.
3) Another factor in determining a purchase price is psychological: How much do you want this property? A buyer will be willing to pay more for a property that suits both needs and wants. (Generally, the appraiser will determine if the purchase price is appropriate for the current market.)
4) The psychological factor can also play a part when a property is priced so competitively that there are multiple offers. Multiple offers are one of the frustrations for buyers in today's market.
(On some bank-owned properties we have seen as many as ten offers.)
Bottom line - Make your offer fit your desire to live in the property and make it fit your pocketbook.
The challenge faced by prospective home buyers in today's real estate market is the amount to offer a seller. Listing prices of homes being offered for sale are influenced by the seller's motivation. A lender that has taken a property back through the foreclosure process is usually very motivated to sell quickly. Hence foreclosed properties are often listed at very competitive prices. Traditional sellers who list their property because of job transfers or other personal reasons, may not be so anxious to sell quickly. Often it is more difficult for traditional sellers to understand just how much real estate values have declined.
So....what is a buyer to do? The answer, as always, is, it depends.
A Real Estate agent can provide a buyer with recent sales of similar properties. These properties will represent what has occurred to prices, but not what will occur in the future. A look at current list prices may give an indication of price trends.
From the range of value suggested by this data, a buyer might consider:
1) Seller's motivation and debt position. (Does the seller owe more than the list price? What does the bank say about a short sale? )
2) Before a buyer makes an offer to purchase, it is important to meet with a lender and determine exactly how much loan the buyer can qualify for.
3) Another factor in determining a purchase price is psychological: How much do you want this property? A buyer will be willing to pay more for a property that suits both needs and wants. (Generally, the appraiser will determine if the purchase price is appropriate for the current market.)
4) The psychological factor can also play a part when a property is priced so competitively that there are multiple offers. Multiple offers are one of the frustrations for buyers in today's market.
(On some bank-owned properties we have seen as many as ten offers.)
Bottom line - Make your offer fit your desire to live in the property and make it fit your pocketbook.
posted by shirley harry at 8:13 AM
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