Depending on where you live, your local real estate market may be experiencing a downturn. Historically, these market adjustments have served as a natural hedge against runaway price inflation and can be very positive in the long run, but as a buyer in one of these markets, you need to shop smart to protect your financial future.
Here are 5 ways you can take advantage of a bear market and protect your interests for the future at the same time…
1. Look at the local job market. Learn who the top employers are in the city and where their employees usually live. Read the newspapers and pay attention to the stability of these employers. If the business is in financial trouble or is laying off employees, be careful when buying in areas heavily populated by your employees. Yes, you can get a great deal, but home prices can drop dramatically around you and you lose money. Plan for that in your negotiations.
2. Research new business developments in your area. If you find out that a new shopping or retail center is going to be built near an area you want to live in, take the time to find out what stores are planned for development and look at what things like traffic flow and access will look like. managed. A bad plan can negatively affect area property values, but conversely, a well-planned development can attract buyers like a magnet that raises property values.
3. Learn about zoning. If you buy a home right next to a lot zoned for commercial development and don’t realize it, your property value could be negatively affected by increased traffic and the type of development. If you are looking in a fully developed residential area, this may not be a major factor, but be aware of nearby open space and your zoning that could make access to your residential area difficult. Again, good developments can benefit you, but consider how the changes could affect value in your deals.
4. Drive through the area where you want to live. Bring a camera and a notepad to record what you find. Look for things like for-sale signs, blighted properties, new construction or residential developments, open lots and land, highway construction and access, and the availability of retail services. A bunch of ‘for sale by owner’ or real estate signs could spell trouble as numerous houses for sale could cause a price cut war to sell. Again, it can be beneficial for you, but you should take this into account in your negotiations.
Blighted properties will drive down the value of homes in the immediate area, and new construction, or anything that increases housing density, can ultimately drive down value in a sluggish market as inventory increases and numbers decline. of buyers. Beware of new developments without any noticeable construction activity, as there may be financial issues that could affect the value of all homes in the area. Don’t be the fool who pays the highest price for a house that nobody wants.
Open lots and land availability can be a plus depending on the area you are looking at, but keep in mind that zoning can change and there are many commercial developers looking for any piece of land possible to develop in many markets.
5. Negotiate strongly with the seller. I am a firm believer that homes are traded for fair market values, which means the transaction should be a win-win, but that doesn’t mean you can’t or shouldn’t try to negotiate your best terms. Do your research and come to the table armed with extensive current knowledge of the market and a willingness to set your final terms and stick to them. Be reasonable, but firm. Be aware of the long-term implications of your purchase, and make sure you have an exit strategy. Most importantly, don’t be afraid to stand your ground. If you’ve done your research, the numbers will speak for themselves.
I hope these insights help you make a smart buy in a down market. You should be aware that even if you get a great deal on a home, the market may continue to slow down and wipe out your gains. Know your market well enough to withstand fluctuations. Above all, get competent and knowledgeable assistance from professionals in the real estate industry to answer your questions and educate you so you can shop smart in today’s marketplace.