Every now and then I feel the need to share information with the public at large and more specifically active or soon to be active real estate consumers. This message is directed at buyers and has been prompted by my first hand observations.
For the last couple of years everything that we have read or heard has indicated we are in a 'Buyer's Market' here in Berks County and surrounding areas. A 'Buyer's Market' is simply when there are more homes for sale than people looking to buy. This increased competition for each buyer leads to reduced sales prices, longer time on the market and more concessions by sellers in order to get a deal done. Not any more. While we are not quite in Seller's Market in most areas we are certainly no longer in a Buyer's Market. This is more of a very healthy equilibrium.
What does this mean for buyers? Two new and very important realities have taken over for buyers. Good homes do not stay on the market long and seller concessions are drying up.
As buyer you need to be decisive and realistic. Be decisive in that when you find a home, you are prepared to make an offer on it sooner than later. Waiting a few days to decide if you like a home can be the difference between getting your dream home or starting your search over. Once you have found the perfect home and are preparing to make an offer...be realistic.
Let me set a scenario: A home comes on the market, I get you in to see it the next day, you love it and want to make an offer. I tell you the home is priced well and won't last long. You tell me you want to offer 10% below asking price while also asking for a 6% seller's assist to help you cover closing costs. You are essentially offering 16% less than asking on a home's 2nd day on the market. In most cases this offer will not be considered and you may or may not get a counter offer. Assuming you get a counter offer, now we have started a lengthy negotiation process and by the way other buyers are still viewing the home and forming their own offers. Now you find yourself in a multiple offer situation where any significant discounts are going to be hard to come by. We could have streamlined the process a bit by submitting an offer that is more likely to motivate the seller to sell to YOU instead of somebody else coming late to this party.
As has been the case forever now, that pre-qualification or better yet pre-approval letter from your lender is gold in this current market. If you want to look at all the shiny new homes on the market, you better have proof of funds to make an offer. Take a look at the above scenario and replace the lenghty negotiation procees with the getting a lender pre-approval and the end result will look very similar.
The moral of this story is that the days of seeing a great home, going back a week later to see it again, sleeping on it for a week and then coming back to with an offer well below asking and numerous concessions are quickly disappearing. It's still a great time to buy but make sure you're truly ready to enter this market.