The Real Estate License Professor

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When a HOT Market Cools Down
The last few years have been very good for the real estate industry but lately there have been signs of a slowdown. If this is true, what does it mean for your clients, the buyers and sellers? Do they need to change their strategy? Since you are the one with the real estate license you will have to help them decide.
Is the housing market cooling down?
Currently there are more houses that are expiring or being taken off the market without selling at the asking price. On top of that we are beginning to see some modest price reductions. The market is still strong, but there are signs that it is moderating.
What This Means for Sellers
Sellers need to be patient. In a cooler market they need to realize that the sale of their home has become more sensitive to the price issue. If the realtor has a good marketing program in place but the house is not getting several showings per week, the price is probably too high. It should be lowered it in $5,000 increments until the house gets several showings each week.
Sellers need to resign themselves to the fact that, in cooling markets, they are not likely to get multiple offers. Therefore, when a decent offer comes in, give it respect and real consideration. It may be the best offer they will get for a while. I don’t recommend selling the farm cheap but if it is a price the seller can live with advise them to take it.
What This Means for Buyers
In a cooling market the power is in the buyers hands as the necessity for expediency is no longer present. Buyers don’t need to make a quick offer on the first home they visit that is adequate for their family’s needs. They can take a little more time, and compare houses before making an offer. The home they choose to make an offer on will probably still be available 24 or 48 hours after the first viewing.
Buyers whose contract offer includes a provision for a home inspection are not as apt to be displaced by an offer with no such provision as does happen when the market is hot. Also, gone are the times when a potential buyer gets laughed at for offering less than full price. The seller is more likely to receive a counter offer naming a price somewhere between the asking price and the offer originally made, or the seller may receive a counter offer at full price but with some other concession offered.
In conclusion, a cooler market can be healthy for both sellers and buyers. Some homes are still selling at generous prices and some buyers are getting great deals.
Posted by Tom Chambers on January 5, 2007
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