Advice to buyers

Advice to buyers
POSTED May 27, 1:01 PM
We all know that this is a buyer's market. Home prices are way down; foreclosure sales (which usually contain bargains) are way up. And mortgage rates are also down.

So if things are so good for buyers, why aren't there more deals getting done? Because sellers are still towing the line on price. A lot of sellers haven't adjusted their price expectations to the current market conditions. A recent Zillow survey on homeowner perceptions shows that only 28% of homeowners believe their home has declined in value, when in fact 75% of homes have declined. In particular, sellers who bought their home over the last few years still have their purchase price as a bogey in their minds.

So here is my advice to buyers:
1. Make an offer! Any offer! Don't be embarrassed to offer 5-15% less than the asking price -- you never know. There are so few offers coming in that you might find a seller who'll bite. Some people think it's insulting to make a low offer, but I don't think so. It seems much more insulting NOT to make an offer at all.

2. Consider renting. There are sellers out there who are amenable to a 2-3 year lease which just covers their mortgage payments. They figure that they'll ride out the market downturn with a good rental tenant, and they'll try to sell again in a few years. This is particularly true of sellers who have already bought their new home and are saddled with two mortgages. Again: make an offer! This is how I ended up in my current home, by the way. I offered to rent a home that had been sitting on the market for sale, and we rented it for a few years before eventually buying it.