We've been living in the high flying world of a hot residential
real estate market for the last three years. Is it slowing down?
What does it mean for buyers and sellers if it is? Do buyers and
sellers need to change their strategy?
Is the Market Slowing?
I live in Virginia in what is sometimes referred to as "the
greater Washington, D.C. area." Things have been changing in the
last few weeks. Houses which were selling in a few days to a
couple of weeks are now taking a month or two to sell. There are
more houses which are expiring or being withdrawn from the
market without selling at the asking price. I'm also beginning
to see some modest price reductions. The market is still strong,
but there are abundant signs that it is moderating.
There have been bits and pieces in the public media to indicate
that something similar maybe happening in other parts of the
country. I believe it probably is and would welcome anecdotal
and observational input from you if you're in a position to see
changes in your area.
What It Means for Sellers
You need to be more patient if you are a seller. When the market
slows, there is less "instant gratification" for sellers. You
need to hone up your marketing and negotiating skills if you're
a FSBO (for sale by owner). You need to shop for a Realtor with
marketing and negotiating skills if you choose to use the
services of a broker.
Sellers in a cooler market need to realize that the sale of
their home has become more sensitive to the price issue. The
market really does "speak." If you have a good marketing program
in place and are not getting several showings per week, your
price is probably too high. You can lower it in $5,000
increments until "traffic" picks up and you are getting several
showings each week.
Sellers need to resign themselves to the fact that, in cooling
markets, they are not likely to get multiple offers. Therefore,
when a decent offer comes in, give it respect and real
consideration. It may not be "the only game in town," but
contract offers aren't "a dime a dozen" either.
What It Means for Buyers
It's still a good idea to shop for a home with a really strong
"lender letter" in hand, but, in a cooling market, buyers don't
need to make a quick offer on the first home which is adequate
for their family's needs. They can take a little more time, and
compare houses before making an offer. The home they ultimately
choose to make an offer on will probably still be available
twenty four or forty eight hours after the first viewing.
Buyers whose contract offer includes a provision for a home
inspection are not as apt to be displaced by an offer with no
such provision as does happen when the market is sizzling hot.
Another change is that buyers who offer less than full price are
not so apt to be laughed out of town. They are more likely to
receive a counter offer naming a price somewhere between the
asking price and the offer originally made, or they may receive
a counter offer at full price but with some other concession
offered.
In Short
A cooler market can be healthy for both sellers and buyers.
Homes can still sell at generous prices. Some of the frantic
pace slows, but there's still plenty of activity. With any luck,
that's the sort of market we're entering now. Maybe the "Fed"
will even be able to "pause" its interest rate increases.
About the author:
Raynor James is with
http://www.fsboamerica.org - FSBO homes for
sale by owner. Visit our home buying page at
http://www.fsboamerica.org/buyer.cfm to see homes for sale by
owner.
