Understanding the Market
We’ve all heard the terms “a buyer’s market”, or ” a seller’s market” to describe which party in a real estate transaction has the most influence and control over the negotiation process that occurs when you submit an offer to purchase your next home.
Using detailed market reports, you can see the median price trends, days on market and number of price reductions in a neighborhood.
If days on market have been decreasing, and median price trends are increasing, and if you see few price reductions, this is a surefire sign of a sellers market – Buyer demand is great, inventory is low.
In this scenario, sellers are able to put their home on the market, sell it fast, for what their asking, and there is usually multiple offers which will cause the sales price to increase as buyers compete, driving median prices upward in that community. These are 3 of the most important pieces of data you can use to build your offer strategy.
The buyer’s market scenario will show that median home prices have flattened out, or are dropping slightly, days on market are increasing (it takes longer for the home to sell), and you will see many price reductions in the area. Buyer demand is down, inventory is up.
Using Accurate Data
Your real estate agent is the absolute best source for these market reports, and the best way to decipher local market data to uncover the real story of which offer strategy has the highest likelihood of being appropriate, and competitive in your market.
An experienced and knowledgeable real estate agent has access to information that the public does not have. In addition to having access to the most current, and most accurate data available, a good agent will be able to help you decipher all of the data and look for opportunities for a more competitive approach.
Doing Your Own Research
Zillow & Trulia – Do not even think for a second about using websites like Zillow, or Trulia. These websites serve one purpose, and one purpose only, and that is to sell advertising to real estate agents and lenders.
The information found on Zillow, or Trulia is completely unreliable, usually updated, and not intended to represent a realistic representation of the current real estate market. That said, it’s not a bad place to look, just don’t give any weight to the information found on these sites.
Redfin.com – Websites like Redfin.com are much more accurate because they pull data directly from the Multiple Listing Service (MLS). However, even Redfin will hide data from the public that could be useful in analyzing local market data.
Altos Research – is a tool that real estate agents subscribe to, that provides a detailed, accurate analysis of local market data. Altos Research market reports are some of the best data analysis tools available in the market.
Want to see what an Altos Research Market Report looks like? I subscribe to this service in Orange and Los Angeles Counties. Using the form below, you can choose to see detailed market data by City, Zip Code, for Single Family or Condominiums.
Your report will be automatically emailed to you, and updated every month, and emailed to you. If you have questions about how to read these reports, or are looking for specific data, let me know by leaving a question in the comments section.
Click below to see a current Market Report for Long Beach California:
To subscribe to market reports in your area of interest, choose your area below:
Creative Ways to Use Market Data
The key to going above and beyond to make the most competitive offers really lies in your home buying team. Being fully armed with a loan approval (not a pre-qualification) and having both your lender and your buyer’s agent on the same page and communicating, you can structure a purposeful offer strategy that keeps the control in your court.
With the expert advice of your home buying team, you can determine how aggressive you want to be with your offer. Here are a few ideas that can make your offers more competitive in a highly competitive environment:
Competitive Strategies in a Seller’s Market
In a seller’s market, there is a great demand for homes and many buyers trying to buy the few homes on the market. This competition drives up home prices, and shortens the window you have to submit your offer to buy your dream home.
5 Ways to Make More Competitive Offers in a Seller’s Market:
- Be fully approved for your financing – speed to offer is key in a seller’s market.
- You may need to make an offer that meets or exceeds the asking price for the home.
- Be prepared to come in with cash to cover a short appraisal that does not support the asking price.
- If your lender advises you to do so, you may be able to offer a shortened contingency period.
- Submit a higher good faith deposit with your purchase offer.
Competitive Strategies in a Buyer’s Market
In a buyer’s market, there are more homes for sale than there are buyers in the market, demand is down. This drives home prices lower as seller’s look for ways to attract more buyers to their home.
5 Ways to Make More Competitive Offers in a Buyer’s Market:
- Be fully approved for your financing, while there are more options, speed to offer will still give you a competitive offer.
- When you find the home you absolutely LOVE, offer at or above asking price and the seller will likely jump on it quick!
- If the appraisal comes in lower, ask the seller to lower the selling price, the are unlikely to get a better offer.
- If your lender advises you to do so, a shortened contingency period is even more powerful.
- Submit a strong good faith deposit, again, other buyers might be trying to take advantage of desperate sellers.
What Kind of Market Are You In?
In many areas of California, we are still in a Seller’s Market. In many other areas, we are moving from a Seller’s Market into a Buyer’s Market. If you are looking for expert analysis in an area outside of Los Angeles or Orange County, leave me a comment below, or shoot me an email, and I will be happy to find a real estate agent that I trust to assist you.
If you are not already approved for your home loan, you can start the approval process below. Once you are fully approved, you are armed and ready to make competitive offers regardless of what market you’re trying to buy in.
Branch Manager at Broadview Mortgage Long Beach, California, I am passionate about educating and empowering consumers. Feel free to call, text or email me at (562) 999-1355 or ScottS@broadviewmortgage.com