Happy New Year my friends!
The time has come to put 2009 behind us once and for all, and what a year it's been! Financial tumult and market buckling have continued to haunt many of us and has persisted to dampen consumer confidence. Thankfully the housing stimulus package did well to, well, stimulate housing. Due to its success, it has been not only extended but expanded (see entry below for details). As the economy seems to be stabilizing a bit, with some industries being more or less out of the woods, others bracing for a late hit, now can be a phenomenal time to buy or sell a home in specific price points.
If you're buying your first home, or maybe a second or third move up, you have a great opportunity for savings. Understanding in what form those savings are going to come, though, will make you a more prepared and realistic consumer. Because the market has not hit these sub-$300k properties the way the high dollar values have dropped, and because the stimulus package has brought so much activity to the area, you are simply not going to have much luck with well-below-market offers. We have experienced clients who want to offer 10-20% below asking on homes that are already accurately priced and need few repairs. While the scuttlebutt may lead you to think in a buyers market, anything goes, this simply isn't going to be true.
Consider taking a look at the public records. When did the subject property get purchased by the current owners? How much did they pay, and how long ago? As you will probably observe if they purchased after 2002, their asking price is probably not much more than what they paid. In some cases it will be less. This will significantly impact the negotiating leverage you will have. Remember also that from their "profit" they also must pay their Realtor and yours, as well as transfer tax and possibly repairs (based on a home inspection contingency). The truth is, if you really believe in low-balling because the asking price is out of line, by all means, proceed with swagger. However if you're low-balling only because you've heard from friends or family that you should be able to get whatever you want "in this market" you may want to soften your stance.
How can you get a great deal if you don't get a deeply discounted price?
Location. Consider how accessible the areas are where you may actually WANT to live. In recent years --during the "go-go times" of real estate-- a first time buyer in a sub $200k price range was forced to look in rural areas or poorly ranked school districts. Because of the price adjustments and short sales available, this is no longer true. This is a huge bonus and absolutely cannot be overlooked. I have a client who is purchasing a condo in Unionville-Chadds Ford school district for $125k. Not a typo. That's an amazing investment, and was a full price offer. Sometimes it pays to look at the big picture.
Interest Rate. My generation is somewhat spoiled with interest rates. We weren't old enough to be securing credit lines when things were sky high back in the 80s and early 90s. But money is still very cheap, especially for housing. Even if your credit is less than perfect, if it's good enough to get approved, you're still going to get a relatively good rate. Fill out a pre-approval here to get some ideas of what you're working with: http://larryflick.tridentmortgage.com/apply.cfm Larry and his team will provide prompt feedback and guidance for you first-timers especially if you mention I referred you.
Tax Credit. Maybe it takes hitting hard times for someone to realize that the government does not actually hand out money like it's going out of style. That all the things we hear about public assistance being easy to come by is complete bologna, especially for honest people who don't exploit the system. This housing package is probably one of the only times you and I are going to squeeze a dime out of the government, and I think it would be foolish not to seize that. If they're projecting an end of social security and the US being knocked out of first place as financial super power, this could realistically be the last chance for us to milk the cow. Reach out and start squeezing baby, get that money!
Activity. As a seller this is the single most important aspect of today's market. People are looking, people are buying, people are going to open houses. And if there's one thing I learned from my time in new home sales, it's that activity begets activity. You've never seen people more anxious to put a deposit down on a new home than when there are other families in the model home at the same time. It may be oversimplifying, but this argument is true: No one wants to look like an idiot. We conform so that we have a sense of security that our decisions aren't dumb, because other people are making the same decisions. This is the biggest key to consumer confidence, and will be, in the stable Greater Philadelphia area, the key to re-building the real estate market.
People see their friends looking at new homes, going through the open house listings in the classifieds and they get excited. "Honey, if Jess and Chris can do it, we can do it." The excitement spreads throughout their social network and just like that, Lisa, Sam, Brian and Tim....they're all thinking they can do it, too. This is why you need to get your home listed NOW. You want to catch that building sense of enthusiasm and urgency before some other unforeseen financial hailstorm hits the media and scares everybody right back into their apartments. To understand more about the ebb and flow of consumerism and what drives people to buy, read The Tipping Point by Malcolm Gladwell. The Division President of my former employer recommended it years ago, and I strongly urge all of my associates to check it out. As someone who intrinsically "gets" trends and patterns, it was all second nature to me, but the thoughts were well-constructed and helped me identify certain trending signals I would have once missed.
If you have specific questions about listing your home or buying in this market, I'm happy to answer them. Whether you're ready to make a move now or you're just feeling curious, I never consider client education a waste of my time! sarah.alderman@prufoxroach
The time has come to put 2009 behind us once and for all, and what a year it's been! Financial tumult and market buckling have continued to haunt many of us and has persisted to dampen consumer confidence. Thankfully the housing stimulus package did well to, well, stimulate housing. Due to its success, it has been not only extended but expanded (see entry below for details). As the economy seems to be stabilizing a bit, with some industries being more or less out of the woods, others bracing for a late hit, now can be a phenomenal time to buy or sell a home in specific price points.
If you're buying your first home, or maybe a second or third move up, you have a great opportunity for savings. Understanding in what form those savings are going to come, though, will make you a more prepared and realistic consumer. Because the market has not hit these sub-$300k properties the way the high dollar values have dropped, and because the stimulus package has brought so much activity to the area, you are simply not going to have much luck with well-below-market offers. We have experienced clients who want to offer 10-20% below asking on homes that are already accurately priced and need few repairs. While the scuttlebutt may lead you to think in a buyers market, anything goes, this simply isn't going to be true.
Consider taking a look at the public records. When did the subject property get purchased by the current owners? How much did they pay, and how long ago? As you will probably observe if they purchased after 2002, their asking price is probably not much more than what they paid. In some cases it will be less. This will significantly impact the negotiating leverage you will have. Remember also that from their "profit" they also must pay their Realtor and yours, as well as transfer tax and possibly repairs (based on a home inspection contingency). The truth is, if you really believe in low-balling because the asking price is out of line, by all means, proceed with swagger. However if you're low-balling only because you've heard from friends or family that you should be able to get whatever you want "in this market" you may want to soften your stance.
How can you get a great deal if you don't get a deeply discounted price?
Location. Consider how accessible the areas are where you may actually WANT to live. In recent years --during the "go-go times" of real estate-- a first time buyer in a sub $200k price range was forced to look in rural areas or poorly ranked school districts. Because of the price adjustments and short sales available, this is no longer true. This is a huge bonus and absolutely cannot be overlooked. I have a client who is purchasing a condo in Unionville-Chadds Ford school district for $125k. Not a typo. That's an amazing investment, and was a full price offer. Sometimes it pays to look at the big picture.
Interest Rate. My generation is somewhat spoiled with interest rates. We weren't old enough to be securing credit lines when things were sky high back in the 80s and early 90s. But money is still very cheap, especially for housing. Even if your credit is less than perfect, if it's good enough to get approved, you're still going to get a relatively good rate. Fill out a pre-approval here to get some ideas of what you're working with: http://larryflick.tridentmortgage.com/apply.cfm Larry and his team will provide prompt feedback and guidance for you first-timers especially if you mention I referred you.
Tax Credit. Maybe it takes hitting hard times for someone to realize that the government does not actually hand out money like it's going out of style. That all the things we hear about public assistance being easy to come by is complete bologna, especially for honest people who don't exploit the system. This housing package is probably one of the only times you and I are going to squeeze a dime out of the government, and I think it would be foolish not to seize that. If they're projecting an end of social security and the US being knocked out of first place as financial super power, this could realistically be the last chance for us to milk the cow. Reach out and start squeezing baby, get that money!
Activity. As a seller this is the single most important aspect of today's market. People are looking, people are buying, people are going to open houses. And if there's one thing I learned from my time in new home sales, it's that activity begets activity. You've never seen people more anxious to put a deposit down on a new home than when there are other families in the model home at the same time. It may be oversimplifying, but this argument is true: No one wants to look like an idiot. We conform so that we have a sense of security that our decisions aren't dumb, because other people are making the same decisions. This is the biggest key to consumer confidence, and will be, in the stable Greater Philadelphia area, the key to re-building the real estate market.
People see their friends looking at new homes, going through the open house listings in the classifieds and they get excited. "Honey, if Jess and Chris can do it, we can do it." The excitement spreads throughout their social network and just like that, Lisa, Sam, Brian and Tim....they're all thinking they can do it, too. This is why you need to get your home listed NOW. You want to catch that building sense of enthusiasm and urgency before some other unforeseen financial hailstorm hits the media and scares everybody right back into their apartments. To understand more about the ebb and flow of consumerism and what drives people to buy, read The Tipping Point by Malcolm Gladwell. The Division President of my former employer recommended it years ago, and I strongly urge all of my associates to check it out. As someone who intrinsically "gets" trends and patterns, it was all second nature to me, but the thoughts were well-constructed and helped me identify certain trending signals I would have once missed.
If you have specific questions about listing your home or buying in this market, I'm happy to answer them. Whether you're ready to make a move now or you're just feeling curious, I never consider client education a waste of my time! sarah.alderman@prufoxroach
No comments:
Post a Comment