You've heard from your friends, your neighbors, relatives, and the media that it's a buyer's market and you can get homes for next to nothing. You are wondering how much of this is true, and what kind of deals you can actually expect to get when buying your next home. Well, I’m going to explain some of the truths, rumors, and myths you may have heard.
Rumor/Myth Number One: You can get homes for half or market value right now?
Truth: No matter if you are buying or selling, in Toledo or L.A., or buying a small or large home you always get the same deal. That is the Current Market Value. That's it, period. The market determines the value of a home based on a few parameters, and is constantly changing. The market, which you help comprise, values homes based on condition, location, supply & demand, seller's motivation, and comparable home sales. The market value of a home is constantly changing along with these parameters. The market value of a home five years ago, two years ago, or one year ago does not equal today's market value. If a home is under priced in any market the market will bid it back up to market value. If a home is overpriced the market will let it know by taking no action on it until price comes down to market value. With that said our current market values are lower than in the previous couple years so there is currently a great amount of value buys on the market.
Rumor/Myth Number Two: I can offer half of asking price and get a home?
Truth: Although this does happen, it is a rarity. The times you will most likely see this is with foreclosure homes that are in horrible condition (mold, foundation, structural issues, sometimes all of the above) and have been sitting on the market for a long time (a year or so). Most of the discount you will receive on the home has already been factored into the asking price. The average home in the Toledo area sells for 3 to 5% off of list price. Current buyers have been able to negotiate closing cost assistance more often than in previous years too. No matter what you will always end up with the same net price to the seller. An example is if you offer $100,000 on a home asking for 3% back to help with your closing costs, or if you offer $97,000 it is the same thing to the seller. They both net $97,000 and will be viewed as such. There are some great values, and it is still an awesome time to be a buyer. We just have to be realistic on our expectations.
Rumor/Myth Number Three: I can get a better deal if I pay cash?
Truth: This one holds up most of the time. A buyer who is in position to pay cash for a home will most likely get the home at a lower price than someone who is financing the home. The conditions of the seller must be taken into account every situation is different. A seller may need to get a certain price no matter how someone is paying for the home in order to close the deal, but if this is not the case you are in a much better negotiating position if you are a cash buyer. Why? With mortgage standards tightening daily there is a higher risk of financing falling through before closing can occur. Generally a cash deal has a higher likelihood of closing than one with financing as a contingency so sellers take that into account when negotiating.
Now that some common rumors, myths, and truths have been explained what can you expect in today’s market? Right now you can expect a large amount of quality choices when looking for a home. Right now we are seeing a larger discount on higher priced homes, and mostly steady priced on moderate/average to lower priced homes. This is due to basic supply and demand at different price levels. You can expect to be fully represented by a Buyers Agent. If you do not have one, get one. You will see more vacant homes than in the past which ups the odds of you being able to take possession of the home at closing. This is in contrast to the custom of possession 30 days after closing in the Toledo Market. This allows a seller time to move out of the home to where ever they are going. You can expect to get great value in accordance with today's supply and demand as compared with the past couple of years.
Bottom Line: With the current market supply, large amount of great values and historically low interest rates now is one of the greatest times to buy a home. Whether you are a first time buyer, looking to upsize, or looking to downsize now is a great time to buy.