Selling an Investment Property in a Buyer’s Real Estate Market

  If you’re reading this article, then you undoubtedly know enough about real estate to have at least heard the terms “buyer’s market” and “seller’s market”.  There are many factors governing the swinging trends of the real estate market, but it basically boils down to a cycle that every few years sees a major shift between who holds the leverage in real estate transactions: buyer or seller.  In a buyer’s market, the seller may have a good hand, but the buyer holds all the chips, because the demand for housing is so low.  We are currently in a buyer’s market.  So how does a seller motivate a potential buyer enough to avoid getting low-balled by a single buyer who understands he has the power?

      The answer is not a simple one.  It is called a buyer’s market for a reason—it is not nearly as kind to the seller.  It may be a bit counterintuitive, but the more money and disposable income a buyer has (in other words, the greater the demand for houses), the worse it is for that buyer.  That’s because he runs the risk of competition with other equally qualified buyers, and in that kind of market the buyer is often forced to make very quick, often rash decisions simply to secure the home.  This is called a seller’s market, where the seller stands to gain the most.

      Currently, however, buyers are not trampling one another to sign off on their dream homes, and the result is a slow and studious process in which the buyer can (and should) take pause to carefully consider the offers and counteroffers before proceeding with a transaction.  Sometimes the trick in a buyer’s market is to “trick” the buyers into thinking it’s more of a seller’s market than it really is.  I say “trick” because it doesn’t really involve any lying, just careful presentation.

      Try this: when you show the home, make sure you are scheduling three or four parties to view the home at the same time.  Even if you are having trouble getting appointments, it is worth your while to spread them out far enough that you can double-and-triple-book, creating the illusion of a more competitive market.  Secondly, be sure to establish your need for selling.  Personally, I think it can be excellent motivation for a buyer when there is a strict time deadline (a date by which you absolutely have to have the house sold, no matter what)—as opposed to providing a reason for leaving, which could go any of a number of ways.  Sometimes having a deadline backfires; if there is only one interested buyer, he may make a very low offer, knowing you have to sell.  However, you can always reject the offer and hold out for new leads.

      Selling a home in a buyer’s market may take a bit of work and coaxing, but it can be done.  Do not give the buyers the notion that they have the leverage.  Make them aware that you have a valuable asset and will be paid accordingly, if not by this buyer then by the next one lined up at the door.   

      Tell us what you think. J