5 TIPS FOR HOME BUYERS DURING ECONOMIC RECESSION!
When the economy is doing badly as we currently have it in Nigeria and real estate sales are slow and there is a glut of homes for sale, buyers always have an opportunity to buy houses at reduced prices as property owners are likely to get desperate because of reduced demand. However, there are times when a buyer should pounce and there also times when a buyer should show restraint and avoid an impulse buy. Knowing the difference could save the buyer millions of Naira.
Do Your Homework
Buyers generally have the advantage in a down market, but this doesn’t mean you should walk into a transaction blindly. Prospective buyers should search the internet, magazine and publications for listings, inquire with a real estate agent to gain insight on a particular area. The objective of this research is to get to know the price range for the area. You want to learn what is considered excessive and what is considered low. This research will help you make a reasonable bid and also provide the first inkling that there is bargaining room on a particular home.
Remember, you are probably not the only one looking for a bargain home to buy. You may have an edge on the sellers, but another buyer could snap up your great deal if you delay the buying process. To make sure that you’re able to pounce on a deal at a moment’s notice, it makes sense to get yourself organized and ready financially. When looking for bargain homes or deals in real estate, there is no wasting time as you may eventually lose out to a better prepared buyer.
Watch for Motivated Sellers
Some homeowners may want to sell their homes in a hurry. This gives you additional bargaining power. In a situation like this, it makes sense to ask if the seller will also sell furniture or other fixtures in the house that you like. Here are a couple of signs that the seller is motivated: (The home may have been on the market for several months and has undergone several price reductions. At the showing the home is empty, which suggests the seller has moved out.). It’s very difficult to determine exactly how much leverage you have in any given situation – after all, there are many reasons why someone could be selling. However, your agent can give you a general idea of the seller’s motivation.
Negotiate With the Estate Agent for Price Reduction
When houses are selling at a slow pace, many real estate agents are also struggling. In such an environment, both agents and firms may be more inclined to knock a percentage point or two off of their commission schedule to get a deal done. Commission is important to the buyer because the seller probably listed the home at a high price so he or she could pay the commission to the agent and still walk away with a nice profit. Buyers can get their real estate agents to ask the listing agent to lower his or her commission so that the deal gets done, and both the seller and his or her agent both walk away with a decent profit.
Make Sure You Have Clear Title
During trying economic times, sellers may be looking to unload their homes because they are in over their heads. In some cases the property itself may be encumbered by a lien from a contractor, service provider, bank or other lending institution. For this reason, it always makes sense to use a lawyer to do a title search to make sure that there are no liens and the property can be transferred without the risk. The last thing you want is to have to absorb any of those liabilities.
Avoid a Bidding War
When you are shopping in a down market the last thing you want to do is let your emotions get the best of you. A bidding war is almost always an unnecessary waste of time and, in the end, money. Down markets are all about getting a really good deal, so to fritter away that possibility because of ego, or the desire to simply win a bidding war, is foolish. The best advice for avoiding a bidding war is to set a price limit and stick to it. Remember, there are plenty of homes out there and other deals to be had.
Prospective buyers have an edge in a down market, but this doesn’t mean they are guaranteed to make money on the properties they buy. Ask yourself some hard questions about why you are buying the home. A quick flip may not be possible in a prolonged down market, and so you should be prepared to live in the new home, or at least to hold on to it for an extended period of time. Being prepared and organized and relying on trained professionals for guidance can help you get a great deal in a struggling real estate market.