Real estate markets fluctuate. All the time. The market sometimes will be really hot, and people are flooding in to communities and having a hard time finding the perfect home. Other times, the market is stagnant, and it seems as though there are so many properties on the market, people can have their pick and decide their price too. In ANY market, there are opportunities. You just have to find them, and know what to look for.
Seller’s Market
During a seller’s market it can be daunting to look around the MLS and realize that people are asking 30% more for their house than what it’s worth. The sad reality is that people are actually paying those prices 😦
The real estate market where I currently live is definitely a seller’s market, meaning that the properties are overpriced and when they hit the MLS, (Multi listing service) they are usually under contract within a short period of time, and buying can get competitive.
A seller’s market is good for the property investor because it usually means 1) unemployment is low, 2) rental prices are up, and 3) it is easier to find good tenants to rent your property.
In a seller’s market, it’s probably better to look for properties that are off-market or that have been on the MLS for a long period of time. You’re searching for motivated sellers. Sellers in distress– either personal distress or financial distress. It’s important to be patient and to make sure you don’t go above your budget if you get caught up in a bidding war. Also, there are a few tactics that will make your offer stand above all others if you do find a property worth making an offer on.
Watch interest interest rates during this time because the FED is probably going to try and raise them in worry that the economy is growing too fast.
Buyer’s Market
During a buyer’s market, there are an abundant amount of houses on the market, and you can usually find motivated seller’s easily. This is usually the best time to buy because home prices are lower due to the low demand of real estate. Many investor’s strategy is to buy low, and sell high, therefore that idea will work a lot better in a buyer’s market.
Sometimes, the FED will lower interest rates to make home sales start to move. Typically, this will make your mortgage payment lower, and make buying more attractive.
Watch for finding good tenants during this time, and the unemployment rate in your market. Just because you can find a good deal, doesn’t mean you are going to find good renters. There many be many tenants that can’t afford the rents you are asking because jobs may be scarce. Plan conservatively for your rents during this time; always look at the worst case scenario and plan accordingly.
Recession
Recessions should be no big deal if you follow the 3 non-negotiables when buying and selling real estate. Make sure you plan to hunker down during the recession storm. As long as you planned conservatively when purchasing any and all real estate deals, you should be able to weather the storm with no problems.
Make sure you are able to adjust your rents a little and still easily make the mortgage payment. If you’ve done that, you should be able to just sit, and have your renters continue to pay off the mortgage.
Have any tips for buying real estate in a buyer’s or seller’s market? Leave your feedback!
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