What is a Buyer's Market Anyway?

By
Real Estate Broker Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

Now is a great time to buy real estate. I was quoted 3.75% on a 7/1 ARM today (great if you are putting a lot down and plan to move in 5 years or less), and 30 year fixed are getting deliciously close to 5%. The high inventory and low prices are all in the buyer's favor. I see homes off 25-30% from their peak in some very nice areas, and even more in some parts. Sellers want to make a deal too, and I am seeing them do things they never would have done even 2 years ago: include furniture, help with closing costs, eating the difference in low appraisals, and even agree to significant repairs. All this points to a strong buyer's market. 

Yet some buyers are frustrated. Why? Because all this talk in the media has them thinking that if they offer $400,000 on a gorgeous $500,000 home in a prime location that the seller will fall down and kiss their feet! Worse, when someone outbids them for that gorgeous, well appointed home in a prime location they are perplexed! Prices are down 50% in Shamokin! I should be able to get something in White Plains or Scarsdale for 25% off! Isn't a buyer's market a license to steal?

 

Of course it isn't. A buyer's market isn't a flea market. That $500,000 house was selling for $650,000 4 years ago. That's your discount. If I am your buyer agent, you might get it for $460,000 or $475,000. And the seller may throw in the deck furniture, the snow blower and the breakfront you liked. But a market, by its very definition, is not where theft occurs. It is only a good deal if the seller goes for it. And until we are able to hypnotize the seller, their agent, their lawyer and Uncle Vinny, you aren't gonna raid the neighborhood like an invading Visigoth. 

Moreover, in those perplexing cases where you are outbid, you have to understand that if you adore a fantastic place that is aggressively priced, then someone else will probably love it too! Hot properties still have a larger audience. So happy househunting for you brave, smart people out there actually looking in earnest, and do remember that a buyer's market is distinct from a hold up.  

 

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Re-Bloggged 5 times:

Re-Blogged By Re-Blogged At
  1. Gene perez 11/20/2009 01:57 PM
  2. Sandy McAlpine 11/21/2009 09:12 AM
  3. Vanessa Stalets 11/21/2009 09:57 PM
  4. John Occhi 11/22/2009 07:52 PM
  5. Sharon Sapp 11/23/2009 10:32 AM
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Topic:
Home Buying
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buying a westchester home
buyers market
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Rainer
122,675
Marian Pierre-Louis
Metrowest Boston
Fieldstone Historic Research

There's a buyers market and then there's a fire sale.  Buyers often have a fire sale mentality.  They aren't aware that the prices they are seeing are great prices.  Ironically, the only ones who are seeing that are the sellers who are selling at a loss.  But there is nothing like a buyer losing a house in a multiple bid situation in a so-called "Buyer's Market" to cure them of their misperceptions.

November 22, 2009 07:13 AM
Rainmaker
572,402
DeeDee Riley
Realtor - El Dorado Hills & the Surrounding Areas
Lyon Real Estate - El Dorado Hills CA

Thanks Phil,

I have to repeatedly talk to my buyers about the particular market and price range they are looking at as it is not cut and dry.  Each house almost has to be evaluated for it's potential buyer competition.  But in general none of the sellers, including banks are accepting offers 25% lower than the listing price.  Before I let my sellers accept a really low offer, I would encourage them to lower their listing price significantly and see if that generated multiple offers.  If one person were willing to pay that low a price, there could possibly be many others and that would help drive the price up. We see it with foreclosures all the time.  Buyers need to understand these kinds of things. 

November 22, 2009 12:11 PM
Rainmaker
792,500
Lyn Sims
Schaumburg Homes
RE/MAX Suburban - Schaumburg IL Real Estate - Northwest Suburbs of Chicago

Good example of a buyer market. As I always tell my buyers, yes the market is flexible at this time but the sellers have not gone insane!  After a couple of hard knocks, loosing out with dual offers, they get a different perspective.

November 23, 2009 01:03 PM
Rainer
41,053
Dominick Gaccino
Dominick gaccino

It is a buyers market but most 1st time home buyers think they are buying a used car from Kurt Rusell in "used cars"

 

meaning they can make REDICULOUS offers(like you said 400k on a 500k asking price)

 

All I can say to these buyers is rates are VERY low(and stick with a fixed so you dont screw yourself---high 4's on 30 year), and so are the prices of homes so take advantage...........sounds like in next 6-12 months rates will go up .5% and stay there

 

anything i can do to help please keep me in mind....i'm right in Peekskill/ctld manor area

 

DOMINICK GACCINO
ABC123 Mortgage Corp

914-391-2388

www.abc123mortgage.com/dg

November 24, 2009 06:55 AM
Rainer
31,555
Linda Landry
HomeSmart Realty

Unfortunately Mr. and Mrs. Buyer have the notion they are the ONLY buyers out there.  I just lost a couple who took their sweet time in responding to listings I sent for their review via email.  Six of the seven they chose to see had contracts on them.  I don't think they believed me.  They no showed for the appointment I set with them to meet in my office for the purpose of selecting other properties to view in person.  Perhaps they found another agent; perhaps they will see that the 'deals' (decent shape and price) are gone in the blink of an eye.  Perhaps they will then realize I was telling the truth.  Perhaps none of the above.  Oh well, NEXT!

November 25, 2009 09:56 PM
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Rainmaker
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J. Philip Faranda

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Additional Information

Phil Faranda is broker and owner of J. Philip Real Estate LLC in Briarcliff Manor, NY. Since founding the firm as a sole practitioner in late 2005, the team has grown to over 30 agents & closed 350+ transactions valued at $140 million. He is in his 4th term as Vice President of the HGMLS. This blog commentary is geared toward consumers and industry colleagues alike. You can reach him at (914) 723-8900.
Warning: *Sarcasm and irony advisory at all times.*



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