Real Estate Buyers: Beat The Market In 2023
Changes to the housing market are a top story of 2023, and national housing trends all agree that the peak of the Sellers market is behind us. So does this mean it's become easier to buy? I'm sorry to say it, but, not necessarily. That's not to say there isn't still an immense amount of opportunity today for Buyers who approach Real Estate as a long-term investment, and the shifting market will present some great deals. The key for Buyers will be understanding that: timing is everything.
Read on to learn our #1 tip for Real Estate Buyers hoping to come out on top in 2023!
After two and a half years of getting raked over the coals in the hottest Sellers market in modern history, Buyers are eager to take back control. They have made their new stance quite clear - no one is willing to overpay anymore.
As a result, property appreciation in 2023 has stalled out, and overall sales price is down in Q1. Properties are sitting on the market 62% longer on average than in 2022, and 29% of active Summit MLS listings today have reduced their sales price. On the surface, these statistics point to a slowing market.
So why then are we still running into bidding wars and hearing stories of Sellers receiving multiple offers?
This past month, we've encountered four different multiple-offer scenarios where our clients had to race against a deadline, submit offers with aggressive contingencies, and compete against other Buyers on price. Sounds a lot like the last two years, right?
You, like us, have surely heard a LOT about how interest rates are still hovering around 6%, purchasing power is down, and Buyers are wary of the economy. This is all true, but at the same time, you know Real Estate remains a reliable, stable investment, and demand remains high in second home and resort markets like ours. You're taking the time to inform yourself on today's market value, and other Buyers are too. If you're interested in mountain property, you're still keen to pay a price you can justify.
Everyone is talking about what Buyer habits are affecting the market, but does it not take two to tango? Instead of harping on about interest rates, lets consider what Sellers are doing right now and how it's affecting the market.
Generally speaking, Sellers are having a very difficult time adjusting to the end of the fever pitch pandemic market. As a result, Sellers are perpetually over-estimating their appreciation, and their property's value. (Are you a Seller concerned about missing the peak and losing value? Read more here about how to reframe your thinking!) As we established, no one is willing to overpay anymore. Yet every over-valued listing that hits the market begets a handful more. Every Seller wants the same price as they see their neighbor listing for.
So the more over-valued properties there are for sale, the higher the average days-on-market number skews. If a property has been sitting on the market for too long with no interest, the Seller is forced to reduce the price. So you can see now how Sellers' habits are affecting the market statistics as much as Buyers' habits. If the first price drop doesn't work, then you can expect another one and another one, until the property price is finally in line with today's market value. Because Buyers are more educated than ever, they're all waiting to pounce on a deal. So once a property's list price hits 'the sweet spot', all those Buyers who have been watching the falling price are ready and willing to make a move. This is when the bidding wars and offer deadlines and so on all come back into play, and it's also when Buyers begin to lose their bargaining power.
Of the four multiple-offer situations our team faced this month, three of them were on properties that had just dropped price after being on the market anywhere from 20 to 86 days.
So finally, lets get to the hook.
How can Real Estate Buyers come out on top and beat the market this year?
Our #1 tip for our Buyers right now is to go after properties before they hit 'the sweet spot'.
As the data and our anecdotes show us, there are still many Buyers in the Summit Area who are interested in attractively priced properties. If you can get ahead of the price drops, then you can likely get ahead of those other Buyers. Submit an offer that you think is reasonable, and see where it goes! You never know the Sellers' motivations and true bottom line until you begin the negotation. It's not true every time, but often, Sellers who are overpriced begin to realize it after two weeks. If they're mentally prepared for a price adjustment, then they could be prepared for a significally below-list offer. Many of our clients are wary of "lowballing", but the right Realtor can help you craft an offer that's realistic and considerate. If you can begin a conversation with a Seller before other Buyers, then you have a higher chance of avoiding competing offers. You might even be able to score some additional wins such as a lower purchase price, seller concessions to help cover your loan costs, or credits for home improvements.
Set yourself up for success as a Real Estate Buyer in 2023 by studying the market and its timing. Don't wait for prices to fall like everyone else in the crowd; make the price that's right for you a reality.
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