As a home buyer or seller, the ability to negotiate favorable terms is always an important aspect of any real estate transaction. There are really two basic kinds of markets: a buyers’ market, and a sellers’ market. The rather unlikely scenario, a balanced market, only seems to happen in a transitionary time and is short-lived.
You might be wondering; what strategies work best in a real estate transaction in a buyer’s market versus a seller’s market?
Typically, during recessionary economic times real estate can turn towards a buyer’s market because there are more sellers in the market trying to sell their homes than there are buyers. This is often associated with job loss and other reasons to sell a home.
During such times, buyers usually have the upper hand in negotiating a sweeter deal for them, as sellers court buyers with lower prices and a variety of incentives to compete for the smaller pool of active buyers.
A buyer’s market seldom occurs in the Denver metro area. This is because there are many more buyers vying for the available inventory of homes.
Since the “Great Recession” of 2008-2009, the Denver Front Range market has been operating in a seller’s market. This is because there are many more qualified buyers in the market competing for the available homes on the market.
A variety of reasons can be pointed to as to why there are so many buyers wanting to buy a home. Along the Denver metro corridor, jobs are available across many diverse industries and often paying high salaries. The active lifestyle many Colorado residents enjoy is attractive to people wanting the same thing. The area enjoys all four seasons and usually without too many extremes in weather. And our largest population in the U.S. – 18-44 year olds – are seeking to own their first home and begin to build real estate wealth.
Competing in the strong seller’s market of the last ten years (and counting!) requires employing successful buyer strategies to improve the odds of getting the house they want. Here are a few of the most important factors buyers should consider:
It is unwise to begin the process of buying without knowing your financial situation and getting a full lender pre-approval.
Working with a real estate professional is critical in a seller’s market. An agent represents your best interests and can discover critical aspects to make your offer stand out above others. It is about writing a quality contract, being a good negotiator, and determining ways to modify the offer to satisfy the seller’s needs.
A seller’s timetable is an important questions your agent can ask about, for things such as a closing date or a post-closing occupancy period.
Consider a larger earnest money deposit to show you’re a serious buyer. If a post-closing occupancy period is requested by the seller, do it without charge.
Stick to standard contingencies of the contract (financing, appraisal and inspections), and do them as quickly in the process as possible.
Be part of a team.
You have allies and advocates (an agent, loan officer, inspector, title company, warranty company) to help you navigate the waters quickly and safely.
Be forewarned: in a seller’s market, the more contingencies you ask for and the more complicated you offer is, the less likely your offer will be accepted. As your agent I can help you be well prepared, and that will increase the odds of getting what you want.
Here is a document that lays out some strategy’s buyers can use to compete in an active seller’s market.
I also can bring to the table the reliable expertise of other industry specialists whose proficiency in loans, inspections, title, etc., who will also help make your real estate transaction a seamless and enjoyable experience.