Buying in a Buyer's Market
by Jean Knight Pace
Buyer's market. The phrase may strike fear into the hearts of some, but there are still plenty of folks who hear in those words a happy promise: falling prices, low interest rates, sellers who are ready to tango, and lenders requiring relatively low down payments (if you're still mourning the loss of the 100% house loan, ask your mother about the '80s).
So you're a buyer in a buyer's market. How do you make the most of a position you haven't had in many years?
First of all, know how you shop. If you have a reasonable amount of willpower, you can look in a bracket just above what you can afford and then offer low. Otherwise, stay in your own price range and find an agent who will respect that.
The agent you choose will have a lot to do with the house you buy. She'll be the one sifting through the hundreds of houses in your area and choosing what to show you. Avoid agents who continually push houses that don't fit the criteria you give, pressure you to offer higher than you want, or show mostly homes they have listed (which means a double commission for them if you buy). Also, never go with an agent who expects you to sign a contract. Generally, buyers can walk away whenever they're dissatisfied. An agent who tries to rope you in with a contract is waving a red flag in your face.
Seek out an agent who can give good advice and referrals, answer your questions clearly and accurately, and is available when you are. Remember that a real estate agent works for you.
A good agent should also be able to provide you with a history of recent sales for the house you're interested in and similar houses in the surrounding neighborhoods (comparables). I also look for agents who invest in real estate themselves because I've found that these agents often have the best eye for a deal.
If you're buying without an agent or just want to see what's out there, you'll want to find a good site for MLS listings. Two sites that I like are trulia.com and realtor.com. You can also look for bank-owned properties (foreclosures). I recommend hud.gov.
Once you've found an agent you trust, you'll want a good lender. Just as your agent has much to do with which house you end up buying, the lender has a lot to do with the monthly payment you end up making. You'll need to shop around for a lender who can offer low interest rates, low closing costs, and possibly a lower down payment. I would suggest you call at least five different lenders to get an idea. If you know your credit score, don't let them pull it. If you don't have time to call around, let a business like Lending Tree do the shopping for you. They'll run your credit once and then connect you with potential loan offers.
When you find a house you're interested in, you'll want to know if it's a good deal. Have your agent check the comparables and the assessed value (how much the city considers a house worth for purposes of property taxes) of the home. This information will show you whether the seller is asking high or not.
If you don't have an agent or want to see for yourself, check out your county's assessor site to find assessed values. Assessor sites are usually easily found by searching on the web, although some counties still require you to go to the courthouse to retrieve the information. This information should be free so beware of sites asking for money.
It's time to make an offer. First, ask for closing costs to be paid by the seller. (Be sure your lender has reasonable closing costs; otherwise, sellers paying closing costs might be forced to stick to a higher home price.) Second, make a low offer (generally I recommend that it be lower than average comparables, assessed value, and certainly the asking price). Most sellers will not get so offended they ignore you. They'll counter, and even if you don't get lucky and have your lowest offer accepted, you're likely to get the house at the cheapest possible price.
Buyer's market. Let the sweetness of the words wash over you. Dream a little dream, find a good agent and lender, and go shopping.
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