LIL' BUDDY'S BLOG - BUYING SMART IN A BUYER'S MARKET!
THE CHICAGO REAL ESTATE MARKET, AND OTHER THINGS CHICAGO, FROM THE POINT OF VIEW OF A LITTLE WHITE DOG!
Woof, woof, everyone! We at Dean's Team hope every tree you're barking up this Summer, is the RIGHT TREE!
This is the second in a series of three special blog reports on how to deal with the current Buyer's Market that now exists in Chicago and in other parts of the country. Last week, we covered SELLING Smart - advice for those selling their homes. Today, we shift gears to home BUYERS. You'll see I will write in an easy-to-understand manner, so any dog can understand my advice. However, feel free to share with your humans - but be patient as you explain. Sometimes, humans take a while to understand things!
First of all, thanks so much for your thoughts and comments on my last blog. I can't tell you how many positive emails, letters, and postcards I've received Not to mention, of course, those of you who left your opinions on the lawn if front of my house. I've been sniffing them all week. Well, everyone is entitled to their opinion - I guess!
As you can imagine, many homesellers are frustrated by the time it is taking to sell, as well as the final selling price on their homes. Indeed, according to the Chicago Association of Realtors, the inventory of homes and condos for sale is over 20% higher than it was a year ago! Many buyers, on the other hand, figure now is an opportunity to flat-out steal properties for sale, for an incredibly low price. Is that true? Well, it depends!
Many sellers, motivated to sell by financial distress or relocation, have already lowered their prices to reasonable levels. Others have staged their homes beautifully, and priced it properly, to sell quickly at the highest possible price. Some sellers, however, still don't understand how the market has changed today, and continue to price their properties at year-ago levels, despite the market shift. It is here where you might be able to negotiate to your advantage - but only if the seller is really motivated to sell.
Here are five thoughts and tips to consider while shopping for your new home or condo in today's Buyer's Market -
1. LET THE COMPARABLE PROPERTY DATA ALWAYS BE YOUR GUIDE! As in any market, let the SALES PRICES of SIMILAR PROPERTIES NEARBY be your guide to the correct purchase price. Depending on the property's condition, time on market, and the seller's motivation, you might be able to negotiate a bit downward from this level. However, simply "firing a lowball offer" as a matter of course may not be prudent, and might actually backfire, should you polarize the seller with a too-low offer. Before you say, "I really didn't want that property anyway," be honest with yourself and your interest in the house. If you're not sure about the property, perhaps you shouldn't bid for it to begin with.
2. SELL FIRST, THEN BUY! Here's a typical Sunday morning scenario. Beautiful, lazy day - you start to think your house is too small, and you look in the Sunday paper and on the web for new houses for sale. You might even visit an Open House or two. If you do that for a few weeks, you might actually find a new, dream house that will fit all of your needs. Problem, however - you need to sell your current house first. Especially in this shifting, buyer's market, it might take more time to sell your home than you anticipated, and your net sales price may be lower, perhaps FAR lower, than you expected. Sell FIRST, negotiate post-close possession, THEN BUY! This Little White Dog doesn't want to see your heart broken!
3. DON'T GO IT ALONE! I know, some may feel it's best to be "independent" - to proceed on gut instinct alone when you purchase your new home. However, affiliating with a Buyer's Representative representing your interests may actually be able to better seek out and advise you as to seller's motivation - and save you money. Here on our Team, Kathleen Weaver-Zech is our Director of Buyer's Agency Services - feel free to call her, me, or any of us, if you have any questions.
4. AVOID HIGH-LEVERAGE LOANS! Just about a year ago, virtually anybody with a pulse could get a home loan. Heck, I kept getting junk mail for credit cards and home loans, even though I'm not even two years old! Many took out 95%, 100%, even 103% loans, thinking appreciation was automatic, as was the building of home equity. Appreciation has backed off a bit, and many of these highly-leveraged buyers, now considering selling and moving to a larger home, don't have much money toward the new one. Many don't have much savings either - it's hard to save a lot with gas over $3.50/gallon here in Chicago. Equally as important, massive home equity lines of credit, for money toward home improvement and remodeling, are harder to come by. Putting more money down, if possible, provides a guaranteed base of equity to start, and can protect you in case you need to tap this equity, or desire to move into a larger place down the road.
5. INSPECT FOR CONDITION, NOT FOR RENEGOTIATION! Let's face it, everyone has a friend, a relative, or a co-worker that suggest you use the customary inspection period after the purchase contract is signed to attempt to exploit minor inspection items into a wider re-negotiation of the purchase price. The problem here, folks, is sellers that refuse silly repair requests, and nix the sale. Some might say, "I didn't really want that house anyway!" Well, why bid for it in the first place, then. Be true to yourself. If you get a strong price, don't jeopardize it by making subsequent unreasonable requests.
Hey, you dogs, I hope these thoughts and suggestions help you. Feel free to discuss with your humans, and let me know if they have any questions. (If you have any trouble working the computer keyboard using only your two front paws, please let me know. I've become quite good at it working on this blog!)
YOUR ACE REPORTER ON FOUR PAWS,
BUDDY HOLLY MOSS
