In market conditions where there is less than 6 months of inventory in the market, it is known as a Seller’s market. We’ve been in a Seller’s market for many months now. So when you’ve found a home that’s right for you, it’s time to make an offer, and quickly, before another buyer steps in front of you.
When deciding what to offer for a property, current market prices are the most important factor. Your Realtor can provide valuable assistance in this regard – counseling you on market conditions, price ranges and negotiating strategies – as long as you have signed a Buyer’s Agency Agreement with your Realtor. To help you make a more informed decision on price, your Buyer’s Agent should do a Comparative Market Analysis (CMA) on the property you are interested in buying. This will give you a better sense of whether the seller’s listing price is higher or lower than comparable properties, and help guide your decision of how much to offer for the home.
Your goal should be to buy the home you want to live in at a fair market price supported by an appraisal, rather than to get an amazing deal. If you hold out for the amazing deal in this market, two things are most likely to happen: 1) you will not buy a house because others are willing to pay a market price, 2) you will repeat this “make an offer, get a rejection, disappointment” cycle repeatedly until you decide you are ready to buy a home, rather than get a deal. Remember also that if you were able to get a “deal”, the price that you pay becomes the value of the home, and future buyers will know the price that you paid.
So, what to do if the if the property seems overpriced? The CMA will help you determine a more reasonable price, however even if the CMA is much lower than the listed price it is rarely advisable to present an excessively low offer on any property, and especially in a low-inventory seller’s market . This strategy is more likely to backfire, causing strong negative reactions from the seller and reducing your likelihood of successfully negotiating a purchase. Better to walk away and look for a house that’s more fairly priced. If it’s truly overpriced, it won’t sell and you can consider it again when or if it falls into the fair price range.
If the CMA doesn’t come close to supporting the listed price, there may be reasons the seller cannot or will not accept a lower offer, especially if they do not have much equity.
If the CMA supports the listed price, you will need to make an attractive offer so that the Seller wants to work with your offer rather than take a better one. Rarely is there no competition in this market. Price is the obvious first consideration but other terms can make or break it for you. An experienced Buyer’s Agent knows how to help. The Cornelius Team is ready to help you succeed in this low inventory market. Call us today, Scott at 616-558-5166 or Trisha 616-558-8927.