For Buyers To Succeed Today

By MICHAEL EDLEN | Special to the Palisadian-Post

It has become a tremendously discouraging market for most buyers. Prices have been driven up at increasing percentages for five years by historically low interest rates that had made homes affordable for so many people.  Buyers are becoming more concerned, feeling that they have missed out on their opportunity to finally purchase a home of their own, or to move from a condo into a house.

Those who were able to succeed have been rewarded by the continuing increase in values, as well as having attained their desired housing result. Those who have tried and tried repeatedly, only to keep losing out to stronger buyers, are beginning to wonder if they will ever win out before being completely priced out of this highly competitive market.

Clearly the upward pressures on prices will likely continue until interest rates increase enough to reduce the number of people who can qualify for financing, or until there is a significant increase in the number of people putting their homes up for sale. Thus either a reduction in demand or an increase in supply, or combination of both, will need to occur.

Of course there will continue to be alternative properties that come on the market, albeit for an unknown time, selling at slightly higher prices each month. In the meanwhile, with half of the listings receiving multiple offers, what can a highly motivated and financially qualified buyer do to increase their probabilities of success?

As agents, we generally look at properties listed for as much as five to 10% above the price point a client is qualified for and therefore, able to purchase. In a normal market environment, when prices are relatively stable or perhaps increasing at the rate of ½% a month or less, this approach will usually result in a wider range of possible properties to be viewed and often one or two within striking range.

In a market where prices are increasing at a rate of 1% or more each month, that strategy usually will result in increasing frustration because the financial stretch may be too great.  Moreover, if interest rates are also increasing, the numbers of people who can possibly succeed become fewer and fewer.

When will this atmosphere change in favor of buyers? At the current rate of sales relative to inventory, it could be several months at the least. If interest rates do not increase more than ½ percent, it could be another year or more.

We have explored many of the stratagems in previous articles that buyers have found can help succeed in the purchasing process by increasing their odds of success. Aside from all of those actions, perhaps a different perspective may be what is required.

Some buyers have recently succeeded by changing their perspectives and considered weighing the pros and cons of alternatives.

One couple decided to reconsider a neighborhood which required an additional five minutes drive to get to home. That difference enabled them to find a home that checked off 80% of their main criteria and was well within their affordability range. Another family finally decided to consider buying a townhome to live in for the next several years if necessary, in order to be able to live in the Palisades. They were able to quickly succeed in outbidding other contenders because of their financial strength. Another family gave up trying to find a home that didn’t need any work, and was able to compete successfully against several other buyers whose purchasing power was not as great. And yet another family achieved their goal by deciding they could convert a garage in their new home for the combination of office and rec room, rather than holding out in the hope of finding a five-bedroom place that fit their budget.

Yes, it will continue to be a challenging market for some time. However, by being more flexible in the “must haves,” more buyers can increase their chances of succeeding and relatively sooner.

Michael Edlen has counseled thousands of buyers and sellers through four market cycles. He can be reached at 310-600-7422 or michael@edlenteam.com.