What should be the right approach in a buyer’s market?
Understand the Market: If you find that all the listed homes are very expensive then it will be better to look for houses in another neighborhood. It will be a waste of time if you make an offer which is significantly lower than market value since seller will not pay any heed to it even if it is a buyer’s market. To get the best deal you need to look for homes which have been listed for sale for quite some time. Sellers of such houses will be more open to making a deal.
Lowball Offer: In a buyer’s market it is a good strategy to make lowball offer. But you should have realistic expectations. Do not expect that a 200k house will be available for 150k; a more realistic figure would be something close to 180k -190k. To get a better idea go through appraiser’s assessment as well as do your own analysis of value for which other homes are getting sold in the area.
Discounts and Upgrades: In this type of market condition you are in a better position to your demands, like for example, house repairs. You will have to decide between asking seller to do the repairs or deduct the cost of repairs from the price. Better option is to take the house as it is and deduct the cost of repairs from the price. The seller is only interested in getting the property sold and repairs made by seller might not be of right standard or to your expectations. However, to get some type of loans the pre-requisite is to get the repairs done before loan is approved. In such situation the above strategy will not work.
Closing Cost: Closing costs are normally around 1%-2% of sale price. In this type of market situation you will be able to get some of those expenses reduced. You can ask the sell to make payment for some of the house selling fees. As for example, in case there is some type of flip tax applicable for co-operatives then you should ask the seller to make payment for the same. The main thing is that you will have to negotiate and be prepared to drop the deal if things are not working out as you expected. If you get emotional and start feeling you must have that home then it will give seller more leverage.
To summarize we will say that you certainly have an advantage point in a buyer’s market but you still have to act thoughtfully and take the right steps to get the best deal.