Is buying a property in a seller’s market a good idea?

Property Management Blog

Investors must keep in mind many different things when buying a property. One of these pertains to the demand for homes in a housing market. Should an investor buy a property in a seller’s market or should he go for a property in a buyer’s market? Let us try to answer this question.

A housing market is described as a seller’s market when demand for homes among buyers exceeds the inventory of homes. It is this high demand that allows owners to get not only multiple offers but also to get a price equal or even more than their asking price. These housing markets also witness many bidding wars among potential buyers. On the other extreme are housing markets where demand for properties is low and the buyer knows he can negotiate with the owner on the price of the property.

How do you know if it is a buyer’s or seller’s market?

If you want to know whether a housing market is a buyer’s market or a seller’s market, all you have to do is to take a look at the ratio of sales to new listings in the area. If this ratio exceeds 60%, you know that it is a seller’s market. A ratio less than 50% indicates it is a buyer’s market. Another thing to look at is length of inventory. If there is 4 months inventory or more available in a market, it is a buyer’s market. If this is inventory is for less than 4 months, you know it is a seller’s market.

If you come to know that the housing market is a seller’s market, you know that you have to face fierce competition from other potential buyers. Also, you do not have chances of negotiating with the seller on the price of the property. However, these things should not deter you from buying an investment property in a seller’s market. There is a great chance of finding a bargain deal even in a seller’s market. Here are some tips to strike a deal in a seller’s market.

Be prepared financially to make a move

As there is fierce competition for limited numbers of properties in a seller’s market, it is prudent to remain prepared with pre-approval from a lender and enough savings in the bank account. Pre-approval letter signals your seriousness as a buyer and cash to pay token money as an advance helps you in keeping you ahead of other buyers.

Find a reliable and experienced realtor

The experience and skills of a reliable realtor come handy when you are trying to buy a property in a seller’s market. If he is familiar with the pricing trends and the market value of properties in various neighborhoods, he will guide you in the right direction and keep you away from seemingly attractive but deceptive deals. His negotiation skills also help you in saving a lot of your hard-earned money.

Get rid of unnecessary contingencies form your offer

In a seller’s market, making an attractive offer is crucial to compel the seller to choose you over other buyers. The seller has the liberty to choose from several offers he gets. Therefore, you should prepare an irresistible offer that is free from unnecessary contingencies. Sellers tend to reject offers with contingencies that can be used to walk out form the deal later. Your realtor will help you in drafting an offer that is simple and attractive for the owner. You can make the offer sweeter by promising to pay a large down payment and showing willingness to close according to his liking.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.

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