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How Market Conditions Affect Your Offer
Price
A hot market is a
"seller’s market." During a seller’s market, properties can
sell within a few days of being listed and there are often multiple
offers. Sometimes homes even sell above the asking price.
Though most buyer’s want to get a
"deal" on a home, reducing your offer by even a few thousand
dollars could mean that someone else will get the home you desire.
A slow market is a
"buyer’s market. During a buyer’s market properties may languish on
the market for some time and offers may be few and far between. Prices
may even decline temporarily. Such a market would allow you to be more
flexible in offering a lower price for the home. Even if your offered
price is too low, the seller is likely to make some sort of counter-offer
and you can begin negotiations in earnest.
More often than not,
the market is simply "steady," or in transition. When a market
is steady, no real rules apply on whether you should make an offer on the
high end of your range or the low end. You could find yourself in a
situation with multiple offers on your desired house, or where no one has
made an offer in weeks.
Transition markets
are more difficult to define. If the economy slows unexpectedly, as it
did in the early nineties, people who buy on the high end of a seller’s
market (like the late eighties) could find their home loses value for
several years. So far, no one has proven reliable in predicting when
markets change or how good or bad the real estate market will become.
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