Tips on Buying/Selling a Home in a Cool Market
Whether you are looking to buy a house or sell a house, a slightly different strategy applies in a post-boom market. Some are calling it a “correction” – when prices drop, but don’t plummet; homeowners with years’ worth of equity still hold onto much of that equity; and buyers discover they have a chance to buy a home again.
Both buyers and sellers must adjust to the market’s new climate. Kendra Todd, the first and only woman to win Donald Trump’s smash hit NBC show ‘The Apprentice’, has some top tips for both buyers and sellers in a cooling market:
1. For the Seller – In general, sellers have to avoid the pricing "hangover" from the boom market, when they could throw a For Sale sign in the yard, slap any price they liked on the house, and get twenty offers in as many hours.
First of all, ask yourself if you need to sell right now? If not, don’t. Don’t get upset by daily market reports of falling prices and try to unload your property hastily. Prices will rise again. Instead, consider a longer-term exit strategy, like renting out the property.
If you must sell, focus on curb appeal. Don’t dump tons of funds into redoing the kitchen or bathroom. The number one feature of a home, in terms of cost versus effect on saleability, is front yard landscaping.
2. For the Buyer - If you find your dream home, stick to your price and play hard to get. The days when you had to be desperate and throw money around in a panic to avoid losing a house are gone.
When everyone thought home prices would rise forever, many buyers abused interest-only, adjustable-rate “creative financing”. Now they owe more than their home is worth and are unable to make rising payments. Now is the time to take advantage of pre-foreclosures, foreclosure properties, and distressed home sales.
Comments
Now is the time to buy?
That's terrible advice. Why? Because prices are still *way* out of line with average household income. Now that prices have begun to drop in earnest, "flippers" have all but disappeared from the scene (except as increasingly desperate sellers).
Today's buyers are people who are looking for a home to actually *live* in (as opposed to a can't-lose short-term "investment"), and most of them will know that they won't be able to count on refinancing six months down the road to bail them out of any financial hole they dig themselves into by buying more house than they can afford. That can't help but put strong downward pressure on prices.
I don't have a crystal ball, but my gut tells me that when prices have adjusted in your market to the point that monthly payments for an average home (on a 30-year-fixed mortgage) are down to about 30% of an average family's income for that area, THEN it will be a good time to buy.
In my area, that would be an adjustment of about 20% from current asking prices.
Highly questionable advice. No data whatsoever to back up the assertion that now is a great time to buy, and that prices won't continue to fall if sellers delay.
You should have pointed out that while your advice may be good for folks living in your area, in other areas it will definitely NOT apply. In my neck of the woods we never had the crazy double digit appreciation that many cities experienced and are still seeing steady appreciation--all be it a bit more modest then before. Today is a fine time to buy or sell! With inventory a little on the high side it is more of a buyer's market than a seller's market. I would certainly not hold back selling my house if I wanted or needed to move. The housing market is very regional and what may be great advice in your area is terrible, terrible advice in mine. Better yet, get a Realtor you can trust and ask them for their honest advice. Ask for referrals from friends and family if you don’t already have someone you can trust and advise you.
jonny727