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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
buyer’s 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
in earnest.
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.
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