We’ve been living in the high flying world of a hot residential real estate market for the last three years. Is it slowing down? What does it mean for buyers and sellers if it is? Do buyers and sellers need to change their strategy?
Is the Market Slowing?
I live in Virginia in what is sometimes referred to as “the greater Washington, D.C. area.” Things have been changing in the last few weeks. Houses which were selling in a few days to a couple of weeks are now taking a month or two to sell. There are more houses which are expiring or being withdrawn from the market without selling at the asking price. I’m also beginning to see some modest price reductions. The market is still strong, but there are abundant signs that it is moderating.
There have been bits and pieces in the public media to indicate that something similar maybe happening in other parts of the country. I believe it probably is and would welcome anecdotal and observational input from you if you’re in a position to see changes in your area.
What It Means for Sellers
You need to be more patient if you are a seller. When the market slows, there is less “instant gratification” for sellers. You need to hone up your marketing and negotiating skills if you’re a FSBO (for sale by owner). You need to shop for a Realtor with marketing and negotiating skills if you choose to use the services of a broker.
Sellers in a cooler market need to realize that the sale of their home has become more sensitive to the price issue. The market really does “speak.” If you have a good marketing program in place and are not getting several showings per week, your price is probably too high. You can lower it in $5,000 increments until “traffic” picks up and you are getting several showings each week.
Sellers need to resign themselves to the fact that, in cooling markets, they are not likely to get multiple offers. Therefore, when a decent offer comes in, give it respect and real consideration. It may not be “the only game in town,” but contract offers aren’t “a dime a dozen” either.
What It Means for Buyers
It’s still a good idea to shop for a home with a really strong “lender letter” in hand, but, in a cooling market, buyers don’t need to make a quick offer on the first home which is adequate for their family’s needs. They can take a little more time, and compare houses before making an offer. The home they ultimately choose to make an offer on will probably still be available twenty four or forty eight hours after the first viewing.
Buyers whose contract offer includes a provision for a home inspection are not as apt to be displaced by an offer with no such provision as does happen when the market is sizzling hot. Another change is that buyers who offer less than full price are not so apt to be laughed out of town. They are more likely to receive a counter offer naming a price somewhere between the asking price and the offer originally made, or they may receive a counter offer at full price but with some other concession offered.
A cooler market can be healthy for both sellers and buyers. Homes can still sell at generous prices. Some of the frantic pace slows, but there’s still plenty of activity. With any luck, that’s the sort of market we’re entering now. Maybe the “Fed” will even be able to “pause” its interest rate increases.
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