How will I know we have reached the bottom of the market?

Many experts agree that we will see the bottom of the real estate market within the next twelve months. But the real question you should be asking yourself now is "how will you know it has been reached"? This is a very important question since we have already seen some significant price reductions. Much of the "low hanging fruit" of price reductions have been taken and with time fewer people with be willing or able to take a lower price. Many people have seen banks willing to negotiate on price or accept short sales on properties. Short sales occur when the bank agrees to accept less than what the seller owes on a property. Once the market stabilizes banks will be less likely to accept lower offers. In other words waiting, through time, will assume more down side risk resulting in a missed opportunity. Once lenders perceive that the downward turn has stopped, their willingness to negotiate with delinquent borrowers will stop as well.

The question is: Are you willing to take the risk that you may end up paying more for your dream home while attempting to wait for a lower price? I advise my clients to offer what they feel is reasonable now rather than waiting to see what the seller may take down the road. Too many would be buyers loose the "perfect" home waiting while others are acting. Real estate is not only local, it's micro! What I mean is, once you choose a neighborhood, the kind of home you are looking for and your price range you have a very narrow focus. How many homes will come up for sale that meet your needs? Many of the best values are already gone or being offered now. Many people with miss this opportunity just as others have missed similar real estate opportunities in the past.

So, what is the best way to proceed? You need to look at what the current owner paid, what they owe their lender and what their motivation for selling is. Motivation comes in many forms such as being transferred, loss of employment or simply being overextended in debt. You will also need to understand what is occurring in the immediate neighborhood and what the recent sales in that neighborhood have been. Recent sales are those that have occurred in the last few months - preferably less than six. Once you have this information, you will be ready to make an educated offer on a property and feel secure that your appraisal will reinforce your proposal. Keep in mind, the listing price may be a start or already their best offer. Any of our Realtors can help you with this process - call us to find out how.