Q: If this is a “Sellers’ market”, does that mean it is a bad time to buy real estate?
A: This is an excellent question that all potential buyers should be considering. Here’s my answer- it is rarely a bad time to invest in real estate. Admittedly, I often say the same about the stock market. If you are in for the long term, you are generally going to make money. Studies have shown that sitting out of the stock market, waiting for it to drop, generally results in lost earnings over all. As with real estate, trying to time perfectly the ups and downs has the effect of keeping you out of the game- getting in is the most important part. That being said, when the market is high, you should be more careful and well informed. With a good Real Estate Broker, education about the market, and some patience, you can avoid overpaying for your new home.
I have been advocating for property owners who are thinking of selling to do it now. Why? Because the market is already “softening”, and is expected to continue slowing. Affirming this trend, the Wall Street Journal recently reported that the majority of economists surveyed predict a continued slowing, ending in recession by 2020. Does that mean you should wait for 2020? Don’t wait. That’s two years of building equity and enjoying the many financial and emotional benefits of owning your home. Tax deductions, no more rent payments, the pleasure of creating and improving your own space and building your nest egg, and so many more reasons that you rarely hear someone say that buying their home was a mistake. Even those who purchased homes at the height of the market prior to the unprecedented real estate crash of 2008, have long ago surpassed the values of those times. Remember, homeowners statistically have far greater net worth than non-homeowners, regardless of income.
The softening market is already creating some opportunities for buyers. Here are some tips on how to buy your dream home now and still get a good deal:
- Be patient, and educate yourself on the local market- Of course, a good real estate broker can help you with this. See as many properties as possible. When a good deal comes on the market, you will see the value, and be ready to act right away. You will also know the home that is perfect for you. Being prepared and lucky timing have gotten some of my clients their homes at amazing prices. As we enter fall, many buyers pull back their home shopping efforts, making it less competitive for you. This is no time to take a break! Step it up, savvy shoppers!
- If you make an offer but lose it to a higher bidder, MAKE A BACKUP OFFER!! Why do so many people shy away from this? Don’t let pride keep you from getting the home you want! So often, properties fall out of escrow, and you are back to competing in the next round of bids rather than having already secured your position. Often, Sellers will accept a backup offer for a lesser price than the accepted offer, with the mindset that it’s just a backup. However, when the existing buyers try to renegotiate price or ask for repairs, a Seller with a backup offer in place may be inclined to let the first buyer walk away- something they may be nervous to do if it meant starting over and putting the property back on the market.
- Make an offer- you won’t get what you don’t ask for. If you believe a property is overpriced, others might as well. Your offer, at a realistic price may be the only one they get. Sellers have various motivations for selling, and different levels of urgency. Some sellers may accept a lesser purchase price from a solidly qualified buyer, or a buyer they like. A letter to the Seller with your offer, describing why you love their property, can make the world of difference to an emotional Seller who loves their home.
Since 2009 the real estate market has gotten more and more expensive, and in our Silicon Beach areas, make that a double. Sellers have had their time, getting premiums for their homes. Some still are, but it’s finally just a little less. Buyers, now it’s your time! I’m not saying it’s going to be easy or that you are going to get steep discounts, but you might finally find a great financial opportunity, a critical investment in your future, and maybe even that ocean view, great backyard, or walk-in closet you have been dreaming of.
Disclaimer: This article is intended to be primarily for entertainment purposes, and is not to be considered legal advice.
ABOUT LISA PHILLIPS, ESQ./ CA Dept. of Real Estate, License #01189413
Lisa Phillips is an active Realtor® in the Los Angeles area, a licensed Broker and Attorney for more than 20 years. Lisa is also a member of the National Association of Realtors “Green Resource Council”, having achieved its “GREEN” Designation, and a Broker-Associate with Real Estate Collective. Her unparalleled knowledge of real estate, from local markets and pricing to legal issues and deal-making, has made her a trusted and valuable asset to her clients. In addition to her real estate and business savvy, Lisa is passionate about helping others, and works tirelessly for her clients, as well as several charitable causes. For more information or to have a question answered in a future Q&A column, please email [email protected] or visit www.LisaPhillipsRealEstate.com.