Is The Hot Real Estate Market Cooling Down?
By Raynor James, Fri Dec 9th
We've been living in the high flying world of a hot residentialreal estate market for the last three years. Is it slowing down?What does it mean for buyers and sellers if it is? Do buyers andsellers need to change their strategy?
Is the Market Slowing?
I live in Virginia in what is sometimes referred to as "thegreater Washington, D.C. area." Things have been changing in thelast few weeks. Houses which were selling in a few days to acouple of weeks are now taking a month or two to sell. There aremore houses which are expiring or being withdrawn from themarket without selling at the asking price. I'm also beginningto 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 indicatethat something similar maybe happening in other parts of thecountry. I believe it probably is and would welcome anecdotaland observational input from you if you're in a position to seechanges in your area.
What It Means for Sellers
You need to be more patient if you are a seller. When the marketslows, there is less "instant gratification" for sellers. Youneed to hone up your marketing and negotiating skills if you'rea FSBO (For Sale By Owner). You need to shop for a Realtor withmarketing and negotiating skills if you choose to use theservices of a broker.
Sellers in a cooler market need to realize that the sale oftheir home has become more sensitive to the price issue. Themarket really does "speak." If you have a good marketing programin place and are not getting several showings per week, yourprice is probably too high. You can lower it in $5,000increments until "traffic" picks up and you are getting severalshowings each week.
Sellers need to resign themselves to the fact that, in coolingmarkets, they are not likely to get multiple offers. Therefore,when a decent offer comes in, give it respect and realconsideration. It may not be "the only game in town," butcontract 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'tneed to make a quick offer on the first home which is adequatefor their family's needs. They can take a little more time, andcompare houses before making an offer. The home they ultimatelychoose to make an offer on will probably still be availabletwenty four or forty eight hours after the first viewing.
Buyers whose contract offer includes a provision for a homeinspection are not as apt to be displaced by an offer with nosuch provision as does happen when the market is sizzling hot.Another change is that buyers who offer less than full price arenot so apt to be laughed out of town. They are more likely toreceive a counter offer naming a price somewhere between theasking price and the offer originally made, or they may receivea counter offer at full price but with some other concessionoffered.
In Short
A cooler market can be healthy for both sellers and buyers.Homes can still sell at generous prices. Some of the franticpace 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 forsale by owner. Visit our home buying page athttp://www.fsboamerica.org/buyer.cfm to see homes for sale byowner.
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