How to Spot an Opportunity in Today’s Market
In anticipation of writing about the housing market in September, I fully expected to discuss a continued slowdown in buyer activity due to the upcoming election. However, I was pleasantly surprised to see that wasn’t the case. While there were pockets of Central Oregon, like Redmond, where buyer activity was slower than expected, most of the area saw activity come in as expected or even a bit stronger.
This raises the question: why is that, especially considering all those buyers talking about waiting until after the election? While I could list a few potential reasons, I’ll stick to the one I believe is the primary driver—buyer negotiation power.
At this point in the year, days on market continue to grow longer, and price reductions become more common, all in an effort to get homes sold before the holidays. The motivation—or let’s call it what it really is, neediness—of sellers increases during this period, and their willingness to negotiate loosens up. When I talk to other agents and loan officers lately, here are some examples of the kinds of outcomes buyers are getting right now:
$14,000 below asking price, plus $10,000 in credit to the buyer to cover closing costs. Sellers also agreed to put on a new roof as part of the home inspection.
$15,000 below asking price, 4.99% mortgage rate (15-year fixed).
$15,000 below asking price, plus $10,000 in credit to the buyer to help cover closing costs and rate buy-down.
$5,000 below asking price, plus a $12,000 credit to the buyer to help cover closing costs and rate buy-down.
And for buyers I just helped close on their first purchase: $19,000 below asking price, plus $13,000 in credit to the buyer to cover closing costs. Mortgage rate in the first year: 4.125%.
Now, let’s put some caveats on this. Deals like these, which favor the buyer, aren’t available with every home on the market. Some sellers are simply testing the market or don’t have a pressing need to sell. Other homes have been well-prepared and priced appropriately for the season, so they still sell quickly. Finding these types of purchases comes down to the usual suspects: longer days on market, high motivation from the sellers, and at least one or two price reductions. Sale fails (where a home was under contract and the deal fell through) and some deferred maintenance can also help in negotiating better terms. While those qualifiers to find a good deal shouldn’t come as a surprise, the ability to negotiate to the extent highlighted above is at a level we haven’t seen in a while.
How long this level of opportunity lasts is the million-dollar question. I believe this will continue until at least the election is over, and potentially into early spring (March-ish). However, this market has also had some out-of-the-norm moments, so only time will tell.
If you’re considering buying and waiting for the right window of opportunity, this might be it. Or, if you’re thinking about selling and need to understand how to avoid the kind of negotiations I’ve mentioned above, let’s connect and make a plan.
