5 Tips for Buying a Home in a Cold Real Estate Market
Although many regions all over the country are enjoying excellent real estate growth, this does not apply to every city. As a buyer, you may appreciate the benefits of buying a home in a definitive buyer's market. A cold market can feel like a seller’s market where buyers get to compete for homes, so it’s common for buyers to use the same strategies they would while buying in a seller’s market.
With these tips, you may be able to zero in on a good deal and remain focused on what really matters to you, whether you’re buying in a cold market or buying a home in a seller’s market.
1. Consult an Agent For Advice Before Bidding
In a cold real estate market, you can make an offer somewhat lower than the seller's listing price and expect that the seller could possibly accept. However, you do not want to make your offer so low that the seller rejects it out of hand. Ask your real estate agent about details concerning the home, including:
- Time the home has spent on the market
- Current comps for the house and neighborhood
- The homeowner's urgency to sell
With this information, you can decide what kind of offer is more likely to be accepted. Consider adding enticing features, such as the willingness to fix minor problems, as an incentive for the seller to accept a lower offer.
2. Make Sure the Home is Good Quality
When a particular real estate market is struggling compared to the rest of the region, it can be tempting to look at lower-than-low asking prices and think that you have hit a gold mine. People are frantically trying to sell their homes, which gives you a great selection of homes at lower prices than you would pay elsewhere.
Real estate market fluctuation may make you think you must make a decision quickly, before the region rebounds. However, like any real estate purchase, you want to make sure that what seems like a good deal is a wise investment for you. Take a careful look at each property you are considering, as well as the neighborhood. Compare these details with your expectations, and confirm that you are getting more than just a low price for the home.
3. Prepare to Negotiate the Terms
Buying a home in a cold market means that you hold a lot of the cards, but probably not all of them. You still need to negotiate with the seller on a number of things, including the sale price. View homes that have been on the market for several months or over a year with a degree of caution. This is not to say every home that has been on the market for a long time, especially in a colder market, should not be considered.
A home that has been on the market a long time may mean that the sellers are choosier than you might expect. They could be desperate to sell, but they could also be complacent about their inability to sell. In either case, pick your battles and make sure that the things that are most important to you come first.
4. Remember To Consider the Home’s Future Potential
Some experts recommend that you plan to live in a home for at least five years before selling, to recoup your closing costs and accrue a useful amount of equity. Although most homeowners live in a house much longer than that, not many people buy a home they intend never to sell.
Regardless of the price you pay now, you should confirm that a property and its general area have some growth potential for the long term. That way, you are not stuck with a home that has appreciated little and is difficult to sell when you decide to do so.
5. Make Your Offer Appealing
Whether the market is hot or cold, one way to help purchase a home is by making your offer as appealing as possible to the seller. This can be done in a number of different ways that buyers can pick and choose from to select the ones that are best for their situation. Here are some of those strategies:
- Be preapproved for a mortgage.
- Pay cash if possible.
- Offer more than what the seller is asking.
- Offer to pay for fees like closing costs.
- Limit the amount of contingencies used.
- Increase the amount of earnest money.
- Write a letter to the home seller about how much you love the home.
Because it’s possible for the seller to be particular about who they sell to, using one or more of these strategies can help convince them that you are the right buyer for them. For more personalized advice, you can also consult your real estate agent to get the best opinion possible.
Just like buying a house in a seller’s market, buying a home in a cold market seems like it ought to be easy, but it still requires careful consideration. By following these tips, you can take advantage of the benefits of a cold market and make a practical investment for the future.