Some markets are very sequential and ordered; but the market that we’ve been in for the last nearly 3 years is anything but normal. As a matter of fact, normal isn’t even used when discussing a property.
In a recent article in Money magazine, approximately 1/3 of all people who purchased a home in the last 2 years now feel that they have overpaid for that property. Even if they are right, the price they paid with the mortgage they were able to secure may make the price reasonable according to today’s standards.
Even though 50% of all homes that were sold was involved in a bidding war, the number of such fierce competitive markets is no longer the case.
So how do you know when the price is right?
Not All Markets Are Created Equal:
Each market has its own demand trajectory. Many markets that were once highly competitive are now seeing a bit of a turnaround. Many listings are seeing price reductions. In some cases, some homes are seeing two or three price reductions within a month. Sellers who were overly ambitious when they first put their property on the market are now realizing that the buyers and their wallets are being squeezed because of inventory shortages, inflation, high interest rates and smaller down payments.
The Seller’s Market Is Now Settling into a Market
More inventory is coming into the market, which makes sellers more motivated to price their houses in the right range. Since active listings have increased by 17% year-over-year, according to realtor.com, buyers are getting to see more homes without the pressure to take the first one they come across.
Because of the rise in the number of new listings, asking prices are coming down. Even in the red-hot month of June, 1/5 of all homes that came on the market reduced their home list prices within 4 weeks.
Buyers Have Tools
One of the lessons that real estate agents have used when representing their buyers is the escalation clause. This provides the seller the information that the buyer is willing to increase his offer based upon other offers that come in.
Contingencies Can Cancel a Purchase
There are many different kinds of contingencies that an offer may contain: one is the appraisal contingency, which permits the buyer to waive the appraisal of the property. Waiving the inspection can also be a factor when buyers are making an offer, which indicates that the buyer is purchasing the house as is and is responsible for any of the potential repairs that have to go into the home after the purchase.
