Defensive Buying: 5 Ways to Buy Smart in a Down Economy

Depending on where you live, your local real estate market may be experiencing a downturn. Historically, these market adjustments have served as a natural hedge against runaway price inflation, and in the long run, they can be very positive, but as a buyer in one of these markets, you need to shop smart to protect your financial future.

Here are 5 ways you can take advantage of a falling market and protect your interests for the future at the same time…

1. Look at the local job market. Find out who the top employers are in the city and where their employees usually live. Read the newspapers and pay attention to the stability of these employers. If the company is in financial trouble or is laying off employees, be careful when shopping in areas densely populated by their employees. Yes, you can get a great deal, but home prices can drop drastically all around you and make you lose money. Plan for that in your negotiations.

2. Research new business developments in your area. If you find out that a new shopping or retail center is going to open near an area you want to live in, take the time to find out what stores are planned for development and look at what things like traffic flow and access will look like. managed. A poor plan can negatively affect area property values, but conversely, well-planned development can attract buyers like a magnet that drives up property values.

3. Learn about zoning. If you buy a home right next to a piece of land zoned for commercial development and don’t realize it, your property value could be negatively affected by increased traffic and the type of development. If you’re looking at a fully developed residential area, this may not be a big factor, but be aware of nearby open space and its zoning that could make your residential area difficult to access. Again, good developments can benefit you, but consider how changes could affect value in your trades.

4. Drive through the area where you want to live. Bring a camera and a notepad to record what you find. Look for things like for sale signs, blighted properties, new construction or residential development, open lots and land, road construction and access, and the availability of retail services. Lots of ‘for sale by owner’ or real estate signs could spell trouble as numerous homes for sale could cause a price-cutting war to sell. Once again, it can be beneficial for you, but you must take it into account in your negotiations.

Blighted properties will reduce the value of homes in the immediate area, and new construction, or anything that increases housing density, may ultimately reduce value in a slow market as inventory increases and inventory decreases. the number of buyers. Beware of new developments without any notable construction activity, as there may be financial problems that could affect the value of all homes in the area. Don’t be the fool who pays the highest price for a house that nobody wants.

Open lots and land availability can be a plus depending on the area you are looking for, but keep in mind that zoning can change and there are many commercial developers looking for any possible piece of land to develop in many markets.

5. Negotiate hard with the seller. I’m a firm believer that houses are exchanged for fair market value, which means the transaction should be a win-win, but that doesn’t mean you can’t or shouldn’t try to negotiate your best terms. Do your research and come to the table armed with extensive current market knowledge and a willingness to set your final terms and stick to them. Be reasonable, but firm. Be aware of the long-term implications of your purchase and make sure you have an exit strategy. Most importantly, don’t be afraid to stand your ground. If you’ve done your research, the numbers will speak for themselves.

I hope these ideas help you make a smart purchase in a falling market. You should be aware that even if you get a great deal on a home, the market may continue to slow down and nullify your gains. Know your market well enough to withstand fluctuations. Above all, get competent and knowledgeable assistance from professionals in the real estate industry to answer your questions and educate you so you can shop smart in our current market.

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