Strategies For A New Real Estate Reality
Yes, the real estate market is slow. That does not mean that you shouldn’t buy or that you shouldn’t sell. It simply means that an attitude adjustment may be necessary. If you are one of those unfortunate people who bought into the “Ships Start Here” hype and jumped into a bidding war to buy a home in late 2011 or in the first half of 2012, you may have a problem. In the first quarter of 2013 sales in the HRM were down about 30% and chances of getting your money back now, if you were to sell, will present a challenge. While the average home price has not yet gone down, we are actually seeing more price reductions than new listings on the daily MLS® Bulletin. If the trend continues, we could very well see average home prices decline for the first time in recent memory. So, if you bought high you may have to sell low or hold on and wait in order to protect your equity.
People who are selling to move up, down or sideways will not have a problem because the same market conditions that are affecting the sale of their home will apply when they go to purchase. You might get a bit less for your present home, but you will pay less when you purchase. If you are selling out of necessity – either to relocate to another province or country or for any other reason – don’t expect a quick and easy sale. It will take time and careful planning with the assistance of an experienced REALTOR®. Pricing becomes much more important, and prepping the house with a few inexpensive cosmetic updates may mean the difference between a sale and what we call a stale listing – a property that has been sitting long enough to make buyers suspicious that there is something wrong with it. You can sell in this market, but you will have to take the entire process much more seriously than you would in a more buoyant market.
Buying a home? Don’t get too excited and start throwing ridiculously low and insulting offers at already stressed home sellers. They may not have to sell and, if you are too aggressive, they may not want to sell to you – at any price. Showing respect and understanding will be a lot more productive in moving the negotiating process along. Don’t be a Low Ball Louie. So, let’s look at a few strategies to make your next real estate venture successful, even in this softer market.
Selling Your Home. First, find a good agent. This might sound self serving, but keep in mind that we do offer a for sale by owner service (A-La-Carte-RealEstate) for those who feel they can do it all themselves. A professional, experienced REALTOR® will do a proper market analysis and provide advice on pricing, which is crucial. They will also suggest small improvements that will make your home more saleable and they may identify major impediments that need to be addressed before going to market. When you meet with your agent review the market analysis and ask questions. The analysis should provide you with data on recent sales and properties in your area that are currently on the market. If the agent walks in without a proper analysis and simply gives you an asking price verbally or worse still, says, “how much do you want?”, show them the door and find a professional. Pricing can be relatively simple if you accept the notion that the first house to sell in your neighbourhood will probably be the the one that represents the best value. Of course, the unique needs of a specific buyer will also come into play. Listing at the right price is the first step in getting that all important offer, and negotiating to a successful conclusion is where your agent’s experience counts the most.
Buying a Home. Some home sellers may be more “motivated”, but don’t expect a fire sale. Many sellers may be in a position to wait for a better market if they can’t get the price or other terms they want now. One difference in this softer market is that a buyer may want to look a bit higher than their comfort level would suggest. For example, if your top dollar is $ 300,000 in a normal or strong market you shouldn’t really look at homes much over that price, while in today’s market it wouldn’t hurt to look at prices a little higher – say, up to $310- 315,000 – in the hope that either the owners will be more negotiable or the price will be reduced at a later date if the property sits on the market for awhile. The key for buyers, as always, is to be patient and weigh your options carefully, but act as soon as you have decided. You wouldn’t want to decide on a home you love and then lose it because you waited too long to submit your offer. And, as I said before, conduct your negotiations with respect, patience and understanding, even if you think the seller is selling under duress.
Other Options For Buyers and Sellers. If you are a young couple with a condo and you have decided that it is time to move to that cute family home with the white picket fence, but you can’t sell your condo, you might want to try a hold and buy strategy. That means renting your condo until the market picks up and buying your dream home now while prices – and interest rates – are attractive. You would need to know that the rent you get will pay the expenses of continuing to own the condo; things like mortgage payments, condo fees and taxes. And of course, you would need to have the bank’s approval for such a project. If it works, you would be taking the first step to becoming a successful real estate investor. In the same vein, you could keep your current house or condo and enter into a lease to purchase agreement with a tenant/buyer. The advantage to this option is that you have a chance of getting tenants who will take better care of your property because they are looking forward to owning it down the road. The biggest advantages to both of these options are that you can buy your new home at today’s very low interest rates and you can sell the other home when the market picks up and presumably, prices are higher.
Hopefully, I have helped the reader to get a better idea of the options available in this market and to understand that a slight correction in the real estate market does not mean that you should avoid the urge to jump in and go forward with your home buying and selling plans. By all means, if you are ready to make a move, then move, but do so with your eyes open and with clear plans for how you are going to accomplish your goals. And please feel free to get in touch if you have any questions.