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Buying or selling-- 7 Top Tips for
'07
Real
Estate Adviser by Steven
McLinden-Bankrate.com
In most parts of the
country, the New Year will dawn on a housing market
that's shockingly different from just a year ago.
Overzealous speculation, too-lenient lending and
aggressive overbuilding have combined to create the type
of home-inventory levels and price stagnations that
haven't been felt in the
U.S.
since the early to
mid-1990's.
In
short, the housing market, after a historic run-up in
prices,is correcting. While that's of little concession
to current and would-be sellers, it's not the end of the
world either,
especially
if you don't need to sell immediately. Economics
elsewhere are encouraging. Recession doesn't appear
imminent. Wall Street appears healthy. Unemployment is
low, and the general economy is good.
The
market, as it always does, will reach equilibrium again,
though probably not before mid-2008 or so, most
economists estimate. So reset that panic button and sit
back to raise a
glass
to 2007 as a transition year that will bring us one step
closer to healthier home sales. In the meantime, take
note of how home-buying and home-selling strategies
change in a
down
market.
Here
are seven selling tips and seven buying tips, for '07,
that could help save you a little grief in the short
term and a lot of money in the long
term.
7
selling tips for the down cycle:
1.
Price to sell.
2. Consider all credible offers.
3. Offer to proffer.
4. Catch the wave at the
source.
5. Preserve your equity.
6. Gain in a
sell-buy scenario.
7. Stay if possible.
1. Price to
sell. If you really must sell now, don't
mess around. List your house based on what the market
dictates today, not the prices that friends, relatives
and co-workers got last winter or last spring. And
consider that some -- certainly not all -- real estate
agents may suggest you hang on to a higher sale price in
hopes they'll earn higher
commissions.
At the same time, be wary of agents who will urge you to
set an excessively low price -- just so they can collect
fees.
2. Consider all credible
offers. Holding fast for a better offer
might put you in a situation where you're merely playing
catch-up with a moving market. Don't assume there'll
always
be another offer coming down the pike. You may need to
come off your price 5 percent in some areas and 10
percent or more in others.
3. Offer to
proffer. Buyers are requesting all kinds
of enticements to spice the pot. Club memberships,
prepaid lawn maintenance, moving-expense reimbursements,
all appliances included and liberal repair credits are
just a few possible throw-ins. Don't be shocked if you
hear, "Throw in that plasma TV and we've got a deal."
Consider in advance how far you'll be willing to go, but
draw the line, however, at "first-born child."
4.
Catch the wave at the
source.
Prepare your home for sale at the very earliest point
this "spring" (actually early March or even late
February), the time when seasonal buying interest is
just starting to build.
5.
Preserve your equity.
Until the market stabilizes, refrain from borrowing from
home equity (or raiding your 401(k), for that matter) to
pay your bills, or for vacations and other
purchases.
6. Gain in a sell-buy
scenario. If you'll be buying another
home at the same time you're selling your current one,
the price reduction on the new one can compensate for
the "loss"
you're
taking on the old one. If you plan a "move up" to a
better neighborhood and are paying 10 percent below list
after selling your old home for 10 percent below list,
your net
dollar
savings will actually be
more.
7. Stay if
possible. If you're happy in your home
and are meeting your expenses but want to sell due to
continuing "housing bubble" fears, sit a spell. A home
is a shelter first, and investment second. Except for a
handful of markets that are still hyperinflated, odds
are that it will pay to ride out the storm. Generally,
the early stages of a downturn are the
scariest
because that's when amateur investors are dumping "spec"
properties cheaply.
7
buying tips for the down cycle:
1.
Negotiate with builders.
2. Negotiate with home
sellers.
3. Educated timing.
4. Avoid hot spots.
5. Modesty is the best policy.
6. Flexibility.
7. Follow fundamentals.
1. Negotiate with
builders. Don't be afraid to ask
builders for concessions such as steep price discounts,
closing-cost waivers, luxury upgrades, free landscaping,
free trips and free club memberships. Many
builder-incentive packages are worth 10 grand and up! In
some markets such as
Boston,
new condos are selling for 20 percent less than they
were in mid-to-late 2005.
2.
Negotiate with home sellers.
Unlike the go-go market of recent years, offers of 5
percent to 10 percent or more under asking price will
not be inappropriate. (See "selling tips" for some of
the throw-ins that buyers are being offered.)
3.
Educated timing.
Read up on local -- not national -- market trends,
religiously read for-sale ads, and get a sense of what's
moving and where, then be prepared to jump on bargains,
especially as the last of the speculators are being
flushed out of the market and for-sale inventories are
at their zenith.
4. Avoid hot
spots. Stay away from buying homes in
neighborhoods that appreciated significantly above
average home prices in recent years -- especially if
you're moving for the short term. Once prices in these
hot spots are corrected, these often see slower upward
movement or remain flat after the overall market heads
north again.
5.
Modesty is the best policy.
Consider more modest homes in well-maintained,
established neighborhoods. By contrast, pricing and
re-pricing on expensive homes, new homes and new condos
make those products riskier during down
cycles.
6.
Flexibility. For maximum flexibility in
pouncing on the right deal, get preapproved for your
home loan.
7.
Follow fundamentals.
Just because a lender will advance you money to live or
build beyond your means doesn't mean you're standing on
sound fiscal footing. At year-end 2006, $330 billion of
adjustable-rate mortgages, or ARMs, were creeping
upward. Avoid risky interest-only loans and ARMs, opting
for fixed-rate mortgages instead. And learn from the
recent past: Don't assume housing will appreciate enough
in the near term to cover your home's rising interest
payments.
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