I know you've all heard the term "seller's market" before (or, on the opposite end, "buyer's market"), and while it's pretty easy to Google what those terms mean on a high level, I think it's super important to understand how these terms affect us on the ground level.
But first, what is a seller's market?
Columbus, Ohio is a great example of a "seller's market." Essentially, this is where sellers have the upper hand in negotiation, or where there is not enough supply to meet demand. Many houses on the market will have multiple offers, and offers will need to be competitive to win the acceptance. This can cause house prices to increase, and can lead to houses selling for more than the appraised value.
A "buyer's market" is the opposite; with more supply than demand, the buyers typically have the upper hand in negotiations, which can cause houses to sell for less than value.
In these two types of markets, the negotiation process is very different; I know everyone likes to think they can get a great house on a lowball offer, but in a seller's market it's just not a realistic expectation (I'm not saying it can't happen! It's just not realistic). If you are putting in an offer under value, typically there are other offers coming in either at or above value, and yours can be pushed to the side.
To improve your negotiation position in a seller's market, here are some tips to consider:
How much are you offering?
Consider: If you are offering lower than asking price, there is a good chance that someone will have a higher offer (keep in mind, higher is not always better! And does not guarantee acceptance, either).
HOWEVER: Don't offer asking or above asking if you don't feel the house is worth what is being asked for it. Don't put yourself in a position where you are offering or paying more for a house than what you're comfortable with, or than what you feel it is worth.
What concessions are you asking for?
Consider: The seller probably didn’t do much work to get their house sold, since they know the market is to their advantage, and if you ask them to fix a lot of issues or put a lot of money into the house that they don’t want to, or if you ask them to bring a lot of money to the closing table, they may decline your offer and wait for an offer where they’d have to put less into the house or the transaction.
HOWEVER: That doesn’t mean to not get an inspection, and that doesn’t mean that you shouldn’t ask for anything to be fixed at all. ALWAYS get a home inspection, even if the seller makes it clear that they are not remediating any of the issues found in it. If you’re uncomfortable taking the house without certain issues fixed, or if you don’t think you should have to pay for the fixes you’re requesting, stand your ground! But understand you may have to find another house.
How high are your expectations?
Consider: In a seller’s market, houses typically sell quickly. Ask yourself: “if I see a great house today, am I willing to make an offer?” If the answer to this is no, then you’re probably not serious about buying a home. In some cases you’ve only got a couple of days to see the property before the seller accepts an offer, and if you see something you like, you’ve got to make an offer on it quickly to be considered. Also understand that you’re probably not going to find your dream house! One word I personally love and that I think is underrated: potential.
HOWEVER: Don’t make offers on houses if you wouldn’t buy the house if your offer got accepted. If you don’t like the house, if there are too many things to fix, if it simply doesn’t meet your needs or isn’t your style, don’t just make an offer for the sake of making an offer.
The real estate professional you are working with will know the best negotiation techniques and will help do their best to get you the house you want at terms that work for you. However, the process is much easier when you communicate clearly and openly and when you're realistic about the process. It is possible to get an offer accepted in a seller's market! It may just take a few tries and some tough negotiation.
If you're in Central Ohio and considering the purchase of a home, I'd love to work with you! For homebuyers, agent representation is free and is a great resource for you to help navigate the purchase process. I am always available for a consultation via text or phone: 614-795-6148.
Comments