- What you should know about a buyers market

September 2008

More home buyers have a better chance now than at any other time in nearly a half decade to negotiate a home-buying deal that costs less and comes with some concessions thrown in.

In many locations, buyers will find a glut of new homes, more motivated sellers, foreclosures, auctions, short sales and other market conditions that can make it a really good time to buy.

That doesn't mean throw caution to the wind.

Here's how to begin to navigate today's housing market, step-by-step, and make a good deal without getting taken.

Begin with making a personal "right-time-to-buy" decision. If you stretch financially beyond your means to go after lower-priced homes, foreclosures or short sales, you could be setting yourself up for failure. Today's housing market is littered with home owners who borrowed more than they could afford.
On the other hand, if you wait for prices to fall further you could miss out on a good deal. No one knows when the market hits bottom until it begins a sustained upward turn and you can look back and actually see bottom.

Buy now because it's the right thing to do for you, because you need a roof over your head, because it's more affordable than renting and because you plan on sticking with the home long enough to make the deal pay off. Buy because homeownership is integral to your budget, your lifestyle and your goals.

Get to know the many facets of home buying.
You've got a lot to learn, but obtaining a broad base of knowledge about the home-buying process is a relatively easy task, requiring only your time and attention. You should sit down with your REALTOR® for the most effective guidance.

Next, get to know your local market or the market where you plan to buy, because that's where your action is.
Accept national news for what it is, a broad brush stroke of current events. You want housing news and information that really hits home. Get your housing market information from credible publications and broadcasts covering your local market.

Part of your homework should include learning the boundaries of your buyer's market. Your market can be designated by a ZIP code, a small neighborhood, a greater community or some larger region.

Whether it's a new home, resale property, foreclosure or short sale, learn the true value of any property you are considering. Uneducated buyers tend to low-ball sellers and ask for too many concessions. That can alienate the seller, especially those less motivated with top-value homes. Likewise, knowledge helps prevent you from spending too much.
Your Realtor is schooled in the history of local market trends and statistics. See comparables, track sale prices in your shopping area, use the local newspaper, online listing and for sale sites and other sources, to keep tabs on asking prices. Also visit open houses.

Check your credit. Your credit report is free from AnnualCreditReport.com, the only federally regulated source. You may have to pay a nominal fee for your credit score (a numerical scoring of your creditworthiness) depending upon your state law and other factors. But see both your score and your report. You may need to request corrections or adjust your credit habits to generate the best report and score -- before you start home loan shopping.

Get your cash in the pipeline. Get approved -- in writing -- for a mortgage. Use your newly gained knowledge to shop around -- a lot -- for a home loan. Shop online and off. Shop mortgage brokers, loan officers, credit unions and other lenders. Shop where you bank, shop where you don't. The key is exhaustive comparison shopping to get the most money at the cheapest rate

____________________________________________________________

- When most sellers list their home for sale

The first thing they think about is how much will I get and that is usually followed by how soon will I get the money. It's certainly understandable that those two concerns are, most often, top of mind. After all, you're likely selling your home to buy another one or invest the money in something else.

But, if as a seller, you can get into the buyer's mindset, the sale of your home can come faster and for more money.

Understanding the way buyers think involves seeing things not from your perspective but from your potential buyer's mindset. It can sound easy but actually it's often harder to do than most sellers think. The psychology of buying is driven by emotional experiences, money, and timing. With that in mind, sellers can help create optimal circumstances that literally help walk the buyer through the process and completion of the sale of your home.

It starts with a feeling. When you meet someone for the first time, you form a first impression based on a feeling. That's exactly what happens when buyers set foot into your home. Work with an experienced agent to learn exactly what kind of impression your home is giving off. If it's a small home, make sure it's not overfilled and cluttered.

Pick up all the loose clutter that's floating around. Throw out old magazines. People like to see things that are streamlined or clean or fresh looking. There's nothing worse than walking into a place and seeing a stack of magazines all over the place or an unmade bed.

Go the extra step and take care of items that might have been overlooked for quite some time. Steam clean the carpets, the upholstery, the furniture, if that's what's needed. Have the windows cleaned, light fixtures cleaned. Make it feel clean when you walk in.

Go back to basics. You may love your turquoise carpet but do you really think buyers will? Getting inside the buyers mind will help you answer these questions. You can also pick up home décor magazines and see what appeals to the masses. You don't have to change everything in your home, but going back to basics in a few areas will help buyers see how your home can become their home.

As soon as buyers see a really loud red, orange or lemon-green color they automatically think about re-doing. That, of course, means the buyers are already beginning to calculate the amount of money they need to take off of the sale price in order to get the home in the condition they would like it.

If instead you stick with neutral colors such as painting the walls off-white, light beige or Navajo white, you have a better chance in preserving the sale price.

Repair anything that looks torn, worn or broken If you walked into a retail store and saw a garment that you liked but it was torn or missing buttons, chances are you'd search for another one or ask for a discount if that were the only one of its kind.

That's what buyers will do with your home when they spot torn screens, garage doors that don't open, or broken light fixtures that are hanging out of the wall. Buyers, if at first they don't get completely turned off and walk away from the sale, will first begin to think that there is more damage to the home than what they're able to see and then they start to calculate the cost of repairing those damages. But buyers often exaggerate the amount of money needed to fix the repairs.

In today's market people are looking desperately to find out what's wrong with a home so that they can lower the price.

In the buyers' minds, they come up with some kind of incredible price to fix repairs. In their mind, they go way overboard and eventually it affects the bottom line price for the seller.

Don't miss an opportunity to get the word out about your home being listed for sale. It only makes sense to let your neighbors know. By doing this your neighbors can sometimes become great facilitators and supporters of the sale.

Most people are visual buyers. If the home doesn't look clean, spotless, and repaired then the buyer thinks what's behind the walls, how much more money do I have to put into this home.

Remember understanding the psychology of the buyer's mindset can help you sell faster and for the price you really want.