Prices are coming down: I'm gonna wait-and-see....
"Prices are coming down: I'm gonna wait-and-see...."
These are the words many of us are hearing in the luxury real estate markets around the country. And while they may be right (they also may be wrong as all markets are hyper-local!), chances are they are making some serious mis-calculations especially if they plan to finance the purchase. So how do I respond to this statement, something we hear almost every day in the South Bay?
1. Asking prices have come down already. This property would have been priced ___% higher 18 months ago.
2. Sellers are more realistic about pricing AND they are more amenable to negotiation right now: you could negotiate off the price and create an insurance policy for yourself if indeed pricing does come down. If it does not come down, you may have added additional value.
3. Interest rates are super-low right now: Locking into a low rate is smart and may have longterm value. If rates come down further you can always refinance.
4. Credit is AVAILABLE: if a recession were to come - and pricing is down - you may not be able to get financing. Banks tighten the faucets in tough times and only lend to those with stellar credit and solid, guaranteed income....and a job. Job losses are a serious concern during recessionary periods.
5. Right now you have more choices and less competition. In a tough market you have to compete against cash bidders and I know few sellers who won't choose a cash deal over a financed one. In a super-strong sellers market, you usually have multiple bids and pricing that goes over the ask.
Source: Leonard Steinberg
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