HOW REAL ESTATE MARKET CONDITIONS AFFECT YOUR OFFER PRICE
A hot market is a "seller’s market". During a seller's market,
properties can sell within a few days of being listed and there are
often multiple offers. Sometimes homes even sell above the asking
price. Though most buyers want to get a "deal" on a home, reducing your
offer by even a few thousand dollars could mean that someone else will
get the home you desire.
A slow market is a "buyer’s market".
During a buyer’s market properties may languish on the market for some
time and offers may be few and far between. Prices may even decline
temporarily. Such a market would allow you to be more flexible in
offering a lower price for the home. Even if your offered price is too
low, the seller is likely to make some sort of counter-offer and you
can begin negotiations.
More often than not, the market is
simply "steady," or in transition. When a market is steady, no real
rules apply on whether you should make an offer on the high end of your
range or the low end. You could find yourself in a situation with
multiple offers on your desired house, or where no one has made an
offer in weeks.
Transition markets are more difficult to define.
If the economy slows unexpectedly, as it did in the early nineties,
people who buy on the high end of a seller’s market (like the late
eighties) could find their home loses value for several years. So far,
no one has proven reliable in predicting when markets change or how
good or bad the real estate market will become.