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Is It Really Buy-Buy to Those House Sales?

September 27, 2007 By:
Andrew Lasner
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Now is a great time to buy a house. Prices are falling, and so are mortgage rates. Millions of houses are for sale, and sellers are getting anxious.

Alternatively, you could say: This is a bad time to buy a house. Prices and rates might be lower in a few months. With more than 4 million houses on the market nationally, and more being added daily, sellers are bound to become desperate. Why not wait them out?

In many places, it's a buyer's market in real estate, with sellers outnumbering potential purchasers. The resulting downward pressure on prices makes buyers cheerful. But it complicates matters for buyers, too. In some markets, there are simply far too many choices. Even more bewildering, buyers wonder if they should wait a few months.

Buyers worry that if they buy too soon and the home prices reduce by the time they go to settlement, they will have negative equity in their new home. Regardless of these worries, in every market there are people who are serious about buying and don't get sidetracked by market forces that aren't under their control.

There is always a percentage of our population that gets divorced, gets relocated, dies, retires, downsizes.

"It's a seller's market transitioning to a buyer's market," says David Lereah, chief economist for the National Association of Realtors.

Sellers are reluctant to drop their asking prices, but a lot of them might have to "because the buyers now have a little more control, a little more power."

For home buyers, experts have some advice:

· Get pre-approved for a mortgage.

· If you find the right house at the right price, buy it.

· Put technology and a buyer's agent to good use.

· Negotiate effectively.

· Ask for incentives from the sellers -- such as buying points on a mortgage.

As for the first: Work with a lender who pulls your credit and verifies your assets before you start looking. This will give you a competitive advantage in the marketplace.

Imagine that you have found the perfect home, which has the features and amenities you want. The odds are likely another buyer is out there looking just as you are. If you have a mortgage pre-approval in place you can act faster than a buyer who does not.

That could be the difference between getting an offer agreed upon and losing that perfect home.

He Who Hesitates ...
Find the right house at the right price? Buy it! If you're serious about buying a house, this is both the first step and the final goal. You're more likely to succeed with the active approach instead of waiting for prices to fall further.

No one can predict when the local market will hit bottom. That's like predicting the bottom of the stock market. Even the experts can't do that. Remember, even if prices do fall, someone could buy your favorite house out from under you. Remember the adage: He who hesitates is lost.

Meanwhile, technological innovations are popping up on real estate Web sites practically every week. Among the most useful are valuation tools such as Zillow. com and Realtor.com.

Zillow has the best known of these called the "Zestimate," which is a computer-generated estimate of a house's market value. Be careful; the numbers Zillow uses in their calculations are not always the latest.

Using these tools will help you focus on excluding houses you're not interested in -- because they don't fit your criteria for asking price, size, neighborhood or amenities.

With so many houses on the market, it's useful to hire a buyer's agent to sort them out. You have your pick of agents now, and you should be asking about their experience, how long that they've been in the market and what price range they specialize in.

If you find a house you like, ask the agent to perform a comparative market analysis; also, do your own analysis online. Compare your research with your agent's. If they corroborate each other, fine. If something seems amiss, find out why.

Right now, there's more room for negotiation in most housing markets because the sales pace and prices have been falling. Buyers need to avoid the temptation to toss out lowball offers, because sellers won't negotiate if they feel insulted.

Also, don't forget to ask the seller to consider paying mortgage discount points; Uncle Sam can sweeten the deal.

Let's say the buyer makes an offer that is 3 percent lower than the asking price. The seller is firm on the price but is willing to be flexible by working with the buyer's interest rate and tax bill.

The seller pays three discount points and lowers the buyer's mortgage rate approximately three-quarters of a percentage point. By paying the discount points instead of selling for less, the seller gets the price, the real estate agents get a bigger commission, and the buyer makes lower monthly payments and gets to deduct the points from income taxes.

Andrew Lasner is a Realtor and a senior real estate specialist at Keller Williams Preferred in Newtown. He can be reached at 215-860-0800 or e-mailed at: Andrew1@ comcast.net.

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