Home buyers optimize their advantage
Favorable market has buyers fine tuning a strategy
By Lisa Scontras
Custom Publishing Group
Warmer weather and graduations are two signs that summer is almost here. While many local families get ready for summer travel, barbecues and other rites of the season, those looking to buy a home are fine tuning their strategies.
For the first time since the housing boom started, it's a buyer's market, and the biggest opportunity to optimize their advantage and finally get a home this summer.
Chris Kitaoka, Realtor and partner at Prudential Locations says the slower pace of the market is music to buyer's ears and they should be getting serious now before interest rates ultimately rise.
"Interest rates are a very big reason why it's a good time to buy now," says Kitaoka. "Currently, rates are as low as they've been in 35 or 40 years giving buyers more leverage — the lower the rate, the more a buyer can borrow. When interest rates go higher, the opposite is true and buying power decreases — the same income will enable you to borrow less."
In addition to having more buying power, buyers can optimize their advantage by taking advantage of peak selling periods. Not only are there more homes to pick from, but prices have stabilized and sellers are motivated to sell in the summer to be settled in their new home before school starts.
"The summer months have always been the most active season," says Kitaoka. "There is more inventory to choose from so sellers become more competitive with their prices and incentives."
Softer market conditions are also favorable for buyers. Though prices fluctuate, over time they always end up higher. That's why as a long-term investment, Kitaoka says that homeownership is always a wise investment.
"Buyers now have an opportunity to get into the market and to participate in the next upward movement in prices," he says. "Getting involved now will allow a homeowner to take advantage of immediate tax benefits and the next cycle of appreciation."
How can a buyer exploit the low rates, summer selling season and stabilized prices? How can you turn adversity into advantage and get what you want at the price you want to pay? Here are some strategies to consider:
1. Find out how much the seller paid. A seller who is going to walk away with a bag full of money might be more willing to negotiate than one who is barely going to pay off what they owe. It takes a Realtor a few minutes to find out, but it might give you — the buyer — a negotiating edge.
2. How many days has the property been on the market? Sellers who have been on the market for months might be more willing to negotiate than one who is just listed. But be careful. Excessive days on the market may indicate the property is defective, or that the seller isn't serious about selling.
"If it has been on the market for a long period of time, it could possibly indicate a 'red flag,'" warns Kitaoka.
3. What is the list-price-to-sales-price ratio in the neighborhood? Again, your Realtor can search the sold listings on the MLS to see roughly what percentage of the asking price is a fair offer. In some neighborhoods, sellers might be getting 100 percent, but if they are only typically getting 85 percent, it would be good to know that. In fact, the seller may have priced the property knowing that ratio.
4. Ask your Realtor for a competitive market analysis for the home you're considering. Past sales in the neighborhood are just as valuable to a buyer as a seller.
"The CMA allows the buyer to establish a 'market price' rather than be misled by a 'list price,'" Kitaoka adds.
5. Know your financial limits. Get prequalified. This should be the first step, before you even start to shop. Shopping without knowing what you're qualified to borrow is a waste of everyone's time, says Kitaoka.
6. Remember, it's a buyer's market and everything is negotiable. Get as much information as possible. Knowledge is power.
NOTE TO MEDIA: Prudential Locations executives are available to comment on the report and on real estate market trends in general. Please call Monica Salter, at 808.531.6087 x 102, to set up an interview.