Modern Negotiation Strategies: The 2022 More Balanced Market Edition
There's no denying that there's been a ton of buzz around the real estate market over the past few months. What has been an extreme sellers market has definitely cooled off as we've moved through the latter part of 2022 and generated tons of changes for buyers and sellers to take into consideration.
While headlines, social media and casual conversation with those not in the industry often cause buyers to fear the housing market in new ways, those of us in the real estate industry know it’s actually an amazing time to purchase a property. From interest rates still being historically low (keep in mind rates were in the double digits in the late 80’s and early 90’s), to price drops and listings staying on the market longer, the opportunities for buyers are at an all-time high compared to the last few years.
So, what does this mean when working with your agent? It means you'll want to work with someone in tune with this market shift. Someone who is keeping up with the weekly intricacies and knows how to leverage these changes to their client’s advantage.
I previously found the best strategy was to identify my buyer’s favorite home after completing our full tour and focusing all our energy on obtaining that one property. We’d complete our research on comps sold, discuss their maximum offer for the specific home, develop rapport with the listing agent and find out as much as possible about competing offers. My clients and I would then play our cards close to the chest until the very last minute before sellers were reviewing offers and submit the very best we could. This often meant well over asking, limited contingencies, like inspections, extremely fast deadlines and anything else we could add to sweeten the deal.
Sellers at the time held ALL the power and it was highly unlikely that buyers would get another chance on an alternate home because there simply weren’t enough homes available, a key driving factor that created the market in the first place. There was very little leverage, if any at all, for buyers and every listing agent and their seller knew this.
However, in our new market, it’s not uncommon for a buyer to identify several desirable homes lingering on the market which they would love to own. If a great offer is made and the seller does not accept, they risk losing the offer and potential buyer all together to an alternate home. This then causes their home to remain on the market for a longer portion of time and signals to other buyers that there is opportunity for negotiation.
With this information in mind, do I now suggest buyers casually take their time and begin submitting low-ball offers? I wish that were the case, but my professional recommendation would be to submit the lowest end of a fair market price (based on the most recent comps) once a client find a home they love. After all, the market is now more balanced, it has NOT become a buyer’s market and is unlikely do so because of our state’s high demand and low inventory.
As a quick (and very generic) example of the above… if a home is listed at 500K and you’re thinking you’d like to snag it for 20k below asking with comps in the area supporting this, I wouldn’t go in at 40k less than asking (just in case) and hope that the seller counters. This is still a great way to lose out on the home because there ARE still other buyers in the market and sellers do still have leverage.
Thinking of purchasing a home within the next year? Reach out today so we can discuss even deeper market specifics for your unique scenario and goals… CLICK HERE.
