What To Know About Taking Advantage of the Housing Market

The current housing market slump in some areas is raising concerns for many home buyers and property investors. Yet despite the seemingly unfavorable conditions that surround the real estate industry, it’s important to recognize the opportunities bestowed by such slow times. Purchasing a property during a slow housing market is strategically sound for many reasons, one of the obvious ones being that ask prices are generally lower compared to market averages. 

Identifying a Slow Market

One must be able to spot a slow housing market before he/she can capitalize on any opportunities for investment or housing upgrade. There are several key signs to look for, one of which is literally a sign. Drive around the location you are interested in buying and look for "Lower Price" signs on the properties. Another sign can be found in your local newspaper, which will do dedicated articles and posts whenever there is noteworthy news including decline or surge in housing demand and supply.

Avoid Debt

Conventional wisdom states that you should borrow money to purchase an investment property if expected value increase outpaces the interest rate. This same conventional wisdom is what led to the 2008 financial crisis. Your primary residence should be purchased with a large down payment on a 15-year fixed rate mortgage, where the payment is less than 25% of your take-home pay. Second properties should be purchased debt-free, or not at all. The risk incurred by financing investments is understated by the metrics used in the industry. Protect your investments by saving up and paying cash. See this article on How Much House Can You Afford?

Inspect Meticulously

You don’t want to encounter nasty surprises only after the property gets signed off to you. Inspect the property thoroughly, looking for signs of damage and deterioration, such as chipped walls, cracked foundations, and mite-infested flooring. If you encounter problems, it’s best to settle it before signing any contracts. Require the seller to pay for bed bug or termite inspections or lower the ask price to compensate for these needed repairs and replacements. Rochester Pest Control has an article on 3 Pests to Check for When Purchasing a New Home.”

Negotiate and Walk Away

You’ve probably heard "the buyer is king" or a similar phrase before, and it definitely holds true, especially in the real estate market. The profit is made on the purchase – in other words, if you can’t get a deal on the purchase you won’t make money on the sale. Don’t be afraid to negotiate the ask price. This is where a good realtor will certainly pay off. Countless studies have shown that you will make more money by using a good real estate agent. See this HGTV article on 7 Negotiating Tips for Homebuyers.

The housing market has always been one of the more stable investment vehicles people choose from. Unfortunately, few people are equipped with the prowess to take advantage of these opportunities. With the four tips listed above, anyone with the drive to succeed in the housing market can learn and master how to do it.