A couple in their early 30s have pondered homeownership since moving in together three years ago. In the past, they’d scour websites for listings and occasionally stop by open houses. But so far, rising prices and cutthroat competition have discouraged them from making any serious bids.
Now, new numbers on real estate sales are giving cheer to the couple in this true story, and they’re planning to head into the market in a serious way very soon. That’s because the pace of home price increases is slowing and the supply of available property is finally increasing, albeit ever so gradually.
Elizabeth Mendenhall, president of the National Association of Realtors (realtor.org), predicts more wannabe buyers will be entering or re-entering the housing market in the near future.
“The modest uptick in new listings last month is good news for would-be buyers. Listings are still scarce --especially for entry-level homes -- but patience may yield a positive result for those looking to buy in the months ahead,” Mendenhall says.
Ashley Richardson, a veteran real estate agent in suburban Baltimore, is also anticipating more robust sales as an increasing number of prospective buyers move off the sidelines in hopes of finally bagging a property they can afford.
“We’re not there yet, but we’re moving to a more normal playing field between sellers and buyers,” Richardson says.
Daren Blomquist, a senior vice president at Attom Data Solutions (attomdata.com), which tracks housing sales all over the country, cautions that neighborhood markets vary widely. That’s why it’s critical to hire an agent with in-depth experience in the area where you’re searching.
“All real estate is local, and a knowledgeable agent is the key to navigating the market and determining if a particular property is a good deal or not,” Blomquist says.
Here are a few pointers for buyers:
-- Realize that not all sellers are equally motivated.
Tom Early, a former president of the National Association of Exclusive Buyer Agents (naeba.org), says that although the overall economy is faring well, financial duress is still a common reason many homeowners decide to liquidate their property.
“Even today, I’d say the majority of sellers want or need the money they have tied up in home equity,” he says.
Mark Nash, a longtime real estate broker and author of “1001 Tips for Buying and Selling a Home,” advises buyers to determine as much as possible about the sellers’ situation before making an offer.
-- Ask for assistance from your agent on “due diligence.”
“Before making an offer on any property at any time, you’ll want to learn as much as possible about the sellers’ equity position,” Nash says.
He suggests that would-be purchasers ask their agent to research the public records to determine when the present owners bought their house, what they paid and how big a mortgage they took out.
If they bought long before the big housing crash -- around 2008 -- the odds are good they still have substantial equity, unless they gutted most of that with a big home equity loan or a cash-out refinance.
“Sellers with lots of equity have much more latitude for bargaining. They can cut you a reasonable deal and still move away with a check in their pocket,” Early says.
-- Ask your agent to quiz the seller’s listing agent.
Listing agents are sometimes surprisingly candid in responding to questions about their clients’ situation.
“If the owners are under extreme pressure to sell, the listing agent may even tell your agent their true bottom line price to let the house go,” Early says.
-- Don’t rule out “stale” listings.
Most sellers are advised by real estate professionals who help them hit the target when setting the initial list price for their property. But in all markets, there are a few owners who insist on premium pricing because of their emotional ties to their property.
“Some people are just simply bullheaded. They demand more than their homes are worth, even though they have to sell against their will. This is particularly likely among sellers who’ve invested large sums to customize their properties,” Early says.
Ironically, those who price too high at the beginning are ultimately the ones who must sacrifice the most to get their homes sold. That’s because properties that languish on the market soon lose their luster and raise suspicions among prospects.
But eventually some money-strapped sellers with financial problems must wake up and sell at a realistic price or see their properties taken away from them through foreclosure.
Have you fallen in love with a princely place that went on the market months ago at a bloated price? Are you confident the sellers must move soon and will eventually have to take a price cut to get their place sold?
If so, Early urges you to prepare yourself to submit an immediate bid on the property as soon as its owners face reality and take their reduction. Make sure you have a pre-approval letter from a reputable lender showing you have the income and good credit to go through with the deal.
“Sellers who’ve just sobered up and finally cut their price to a realistic level will sometimes succumb to a substantial reduction. It’s at that moment that you should pounce quickly with your fair offer,” Early says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)