Welcome to Buyer's Market 2019!
Lots of options to choose from (supply). Few other bidders (demand). Like a kid in a candy store. Or a child opening presents on Christmas morning. But be warned: this dreamlike scenario won't last forever. Prepare, and strike while mortgage rates are low, before the winds shift and you've squandered your chance to win big.
When opportunities present themselves, be prepared to pounce.
Have your mortgage pre-approval in hand.
Make the cash down payment for the contract deposit liquid and available.
Are proof of funds and your personal financial statement ready for inspection?
Be sure your team of professionals (attorneys, inspectors, contractors, CPA’s, trusted advisors, etc.) are on call.
Shop for homes on-line and in person. Visit enough properties to know your options and recognize value when you see it. Set your priorities - must haves, nice-to-have, total deal killers, and communicate these with your agent. It's okay to be selective and take your time because -- you can in a buyer's market. Pay particular attention to those properties with warts and pimples (don't photograph well, in need of repairs, high carrying costs, overpriced, etc.) and track their time on the market. If they wallow without a sale - Bullseye! The seller may be anxious about carrying the home and therein lies your opportunity. The pendulum is swinging in your favor in a buyer's market. Sharpen your teeth and prepare to feast!
Ask questions to ascertain the seller's motivation:
A. What is the seller's time frame for moving?
B. Where is the seller going?
C. Why has the property not sold?
D. Are there currently any offers?
Don't be shy about making an offer. Low is okay. If it's not a little embarrassing, the offer isn't low enough. Very embarrassing or insulting? Perhaps such an offer is too low.
It's okay to make several offers at once and have them outstanding simultaneously. A buyer is not obligated to proceed with a purchase, even if an offer is accepted, unless and until the buyer signs a contract and tenders a down payment, and the seller returns the countersigned contract. Let each of the sellers know that you are seriously considering other options. After all, what seller doesn't let a buyer know that they have other offers on the property. (The Rule of Validation) The sellers' responses to your offers will reveal which are most highly motivated.
Never show your cards too quickly; it may reflect your motivation, and it is usually best to keep your true motivations hidden. It might be wise to hit the "pause" button in a negotiation, and even draw a line in the sand. It is okay to walk away from a deal that is not proceeding according to plan or is not to your liking. In a buyer's market, there is the real possibility that a seller's "appetite for a deal” might change if another offer does not materialize, and it is always sweet when a seller comes crawling back into a negotiation after withdrawing...
Nibble some more...
During the contract negotiation phase and the due diligence period, the negotiating fun may well continue. Examination of the building's documents, financials, and Board meetings minutes, as well as conversations with management and the superintendent, may reveal additional skeletons and dark secrets affecting a home's value. An inspection may show irregularities or surprises. Is it okay to renegotiate? Perhaps, but there may be strategic land mines which could blow up your deal. Will the seller be angry? Is there another buyer waiting in the wings for a hiccup in your deal that this renegotiation will trigger? Proceed with caution, especially if you've fallen in love.
Another rule for winning in a buyer's market: don't fall in love with a property until you've secured a contract for it. No one wants to have their heart broken. You'll have plenty of time to love your new home after you've secured and bought it.
Once you've identified "the one" and negotiated a killer deal, pull the trigger and don't look back. Well-priced properties sell quickly, even in buyer's markets. A "deal" that is shopped aggressively be a seller is likely to generate a second or third offer to compete with and jeopardize yours. Proceed quickly to contract or risk losing your deal.
A buyer's market is unusual and doesn't typically last very long. Take advantage while you can and enjoy the ride. While it lasts.