Tips to help home buyers get the best bargaining position
By Erik J. Martin
CTW Features
In the current real estate market, sellers hold most of the good cards and have been able to claim near top dollar for their properties for sale. But that winning streak can’t continue forever. In fact, new data by Redfin indicates that the climate may be shifting gradually toward buyers.
Consider that, according to the Redfin report, home prices in August increased at the slowest rate of the year – up merely 4.4 percent from a year earlier – in spite of robust sales and decreasing inventory. The average residence sold for 93.8 percent of its list price, a decrease from 94.4 percent observed in 2015. Many experts say that’s a signal that bargaining power for buyers is slightly improving.
“Redfin’s national findings aligned with what I have been seeing in the Washington, D.C. market While it’s still firmly a seller’s market, we are seeing slightly less competition and final sale prices that are closer to the asking price,” says Steve Centrella, a Redfin agent in Washington, D.C. “In a majority of homes, we aren’t seeing the same dramatic price escalations that were common over the prior two years. Where the most desirable homes in our area were selling within 5 to 7 days, now we’re seeing a couple of additional days added to that timeline.”
When properties sit on the market a bit longer, it gives decisive buyers a better chance to claim a property close to or at list price without having to compete against multiple offers, Centrella says.
Anthony Piccone, president of 7th Level Mortgage LLC in Cherry Hill, N.J., agrees that buyers have slightly stronger bargaining positions today, but not by much.
“There are fewer home showings occurring and, in my experience, homes have stayed listed on the market for a bit longer than usual,” Piccone says. “Sellers are a bit more eager to make concessions and sell after extended periods of waiting.”
In Denver, the market is stabilizing and buyers no longer have to come in way over asking price or engage in ultra-competitive bidding wars, says Nicholas Bowman, broker/owner of House Calls Realty in Denver.
“However, this is mostly due to the seasonal situation. No one wants to move in the winter in Colorado, so there’s always a surge of buying in the summer months,” Bowman says. “But with rents skyrocketing in our area, interest rates at record lows, and strong job growth, I believe more buyers will jump into the market and it will remain a strong seller’s market in 2017.”
Rick Sharga, chief marketing officer for Irvine, Calif.-headquartered Ten-X, an online real estate marketplace, says the nationwide seller’s market has persisted for so long because the inventory of existing homes for sale continues to languish far below normal levels.
“Six months’ supply is considered a balanced market, and we continue to see supply of four to four-and-half months nationally and even less in some of the hotter markets across the country,” Sharga says. As employment continues to improve, wages finally start to increase, and more households are formed, were likely to see demand for homes increase, which suggests that we are not going to see a bigger shift to a buyer’s market anytime soon.”
For the latter to happen, prices need to rise enough to minimize the number of homeowners in negative or near-negative equity positions; home builders must start breaking ground on new construction in meaningful numbers; and interest rates will have to remain at historically low levels, notes Sharga.
Meanwhile, buyers can help their cause by following a few suggested strategies.
“Make sure you monitor both your credit score and your debt-to-income ratio – these two factors are responsible for more mortgage declines than anything else. And start working with a mortgage expert 3 to 6 months out from your expected move-in date, which is plenty of time to fix any credit issues that need to be addressed,” Piccone says.
Additionally, “keep an eye on properties that have been on the market for an unusually long time or were listed, pulled back, and re-listed. Those sellers may be ready to sell for a reasonable price,” Sharga says.
Centrella recommends waving any contingencies, including an escalation clause in the real estate contract, offering to pay some of the transfer taxes or a portion of the brokerage commissions, and appealing to the seller’s emotions by writing a personal letter to the seller.
“Ultimately, be patient. There are always more homes, and the right situation for you will present itself,” Centrella says.
© CTW Features