A rising market, also known as a seller’s market, is a scenario in the real estate industry where the prices of properties are being subjected to steady or sudden appreciation. With rising property prices, sellers have a field day as they can pick-and-choose the asking prices and then negotiate on their own terms. The buyers usually have a tough task because not much is in their favor.
A rising market is eventually rewarding for buyers because they get to get into when there is an upswing and they would immediately witness some appreciation of the property they buy.
Since the market is tilted in favour of sellers, buyers need to be cautious. Here are some tips for buying in a rising or high demand market.
- First, you need to find a good property. Not one that appears to be good or one that seems to have a fair price but one that actually is a good buy on paper and in reality. Location, price comparison, the nitty-gritty of the property and the timing of the deal vis-à-vis the prospects in the area, everything that matters in a deal during a normal scenario would also apply in a rising market. Get professional valuations, weigh in the pros and cons of the property, do some math to anticipate the appreciation after you purchase and assess the property in regards to the purpose you have in mind.
- You should negotiate the price but for that you have to make an initial offer. Always take the initiative to make an offer. In a rising market, the seller will get multiple offers and if you are too late then you wouldn’t even get the chance to negotiate. Be the first mover and take the plunge. You can always back out. Entering the realm of a deal is not secured forever in a rising market.
- When you are in a deal alone, you wouldn’t have much leverage by your side. Many people, including independent investors and companies, will be able to make similar offers and may be willing to pay a bit more. Consider syndicate purchases. When plenty of property buyers or investors come together for a massive deal, then the seller has less room to ask for more. The sheer volume and financial aspect of the deal allows the syndicate to have the leverage.
- You can participate in auctions or private sales but always ensure that you avoid being emotional while taking the final call. Don’t get carried away, against the math to offer a pricier quote.
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