A buyer's market, or down market, occurs when there's more of a supply of something than the accompanying demand. For new homebuyers, a buyer's market can seem like a dream come true. However, there are a few things you need to look out for when seeking a home for sale in a buyer's market.
Spoiled for Choice
You'll know it's a buyer's market when you look into a particular area and see there's an overabundance of properties to choose from. You will have several options, which means you can be as picky as you want to be.
All of that choice gives you a lot of negotiating power. It's okay to become a little more nitpicky than usual. It's also okay to make an initial offer far lower than the asking price or the current market value of the property.
In a buyer's market, you have a lot more control over the process. This also means you need to show care. It's easy to purchase something that's a bit too much for you in ways that have nothing to do with the selling price.
For example, you may find the perfect home with expensive amenities for a price you can't refuse. What you may not take into account the cost of ongoing maintenance for such a property over time.
The Same Rules Apply
Stay grounded. All the home buying rules still apply, even in a buyer's market.
Research the market where you want to buy – You should still do research on the homes for sale in the area. Having knowledge of the average home prices can only help you. Equally, knowing how long homes have sat before selling, or the last time any sold, can help you negotiate.
Seek preapproval for a loan – Preapproval for a mortgage loan can also give you a lot of leverage in a buyer's market. Also, preapproval can ensure you can snatch up the place of your choice quickly. It can also help you to avoid a bidding war.
Order an independent inspection – A buyer's market makes it seem like it's okay to jump onto a well-priced property. But remember in a buyer's market, everyone is trying to get rid of their homes. Make sure you have the property you want to buy independently inspected.
Whether it's a buyer's market or a seller's market, it's important you do your due diligence. When you're looking for homes for sale in a buyer's market, the temptation to snatch something quickly is very strong. Keep in mind there's more supply than demand, so don't think there aren't other options just as nice in the area.