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Buying a House in a Buyer’s Market – Part One

With falling housing prices, mortgage rates at all-time lows, millions of houses for sale and anxious sellers, many wonder if now is the best time to buy a house or not. In some cases, sellers aren’t just anxious, they’re down right desperate and with the number of sellers far outnumbering the number of buyers, things aren’t as clear-cut as they seem. In fact, this buyer’s market is complicated. Buy too soon and the figures could reduce by the time a buyer secures his mortgage, resulting in negative equity. Wait too long and someone could buy the house you’ve been eyeing for months out from under you. And you don’t want to get sidetracked by market forces that aren’t under your control either. Here are some strategies for buying a house in a buyer’s market.

For serious buyers, the first step and final goal should be the same – finding the right house at the right price. This is often easier said than done and only you can decide to actively shop and then negotiate a fair price or if hoping to stumble on a steal by passively browsing houses will work better for you. No one can predict when the local market will hit bottom which is why you’re more likely to find the right house at the right price by actively searching instead of waiting for prices to fall further. As mentioned before, there’s always the chance that someone could buy your ideal house out from under you if you wait too long. Buying a home in a buyer’s market is no different than buying that expensive dress or men’s business suit you’ve been eyeing at your favorite retailer. A frugal shopper, you wait until it’s reduced by 20%. Unfortunately, when you go to the store to buy it you discover they no longer carry it in your size. Sure you could have theoretically saved 20% but you still don’t own the dress or business suit.

On the flip side, there’s always the chance that you buy a house and then its value falls. This happened with housing in the 1990s in South Florida and Southern California and took years for the housing slumps in these two states to recover. This happened in many parts of the country in 2008 as well. This is why you should buy a home that can grow with you if necessary. In other words, buy a home where you plan to live for the long term so that when bad market conditions occur you can more easily ride out the storm. Fear is the last thing that should dictate whether or not you buy a house. Look for the best home and then negotiate the best price you can. Successful buyers don’t just look at homes solely for the best price. They look for the best home.

In this buyer’s market you should also keep in mind that you may have a sudden increase in buying power since mortgage rates have fallen. It’s best to get pre-approval before you begin actively shopping for homes so you know what you can afford. The last thing you want is to find the perfect house only to discover you don’t qualify for financing.

In “Buying a House in a Buyer’s Market – Part II,” we’ll take a look at putting technology to good use, negotiating effectively and avoiding gimmicks in a buyer’s market.