Is the Hot Real Estate Market Cooling Down?

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                Is the Hot Real Estate Market Cooling Down?

We’ve been living in the high flying world of a hot residential real estate market for the last
three years. Is it slowing down? What does it mean for buyers and sellers if it is? Do buyers
and sellers need to change their strategy?

Is the Market Slowing?

I live in Virginia in what is sometimes referred to as “the greater Washington, D.C. area.”
Things have been changing in the last few weeks. Houses which were selling in a few days to
a couple of weeks are now taking a month or two to sell. There are more houses which are
expiring or being withdrawn from the market without selling at the asking price. I’m also
beginning to see some modest price reductions. The market is still strong, but there are
abundant signs that it is moderating.

There have been bits and pieces in the public media to indicate that something similar maybe
happening in other parts of the country. I believe it probably is and would welcome anecdotal
and observational input from you if you’re in a position to see changes in your area.

What It Means for Sellers

You need to be more patient if you are a seller. When the market slows, there is less “instant
gratification” for sellers. You need to hone up your marketing and negotiating skills if you’re a
FSBO (for sale by owner). You need to shop for a Realtor with marketing and negotiating skills
if you choose to use the services of a broker.

Sellers in a cooler market need to realize that the sale of their home has become more
sensitive to the price issue. The market really does “speak.” If you have a good marketing
program in place and are not getting several showings per week, your price is probably too
high. You can lower it in $5,000 increments until “traffic” picks up and you are getting several
showings each week.

Sellers need to resign themselves to the fact that, in cooling markets, they are not likely to get
multiple offers. Therefore, when a decent offer comes in, give it respect and real consideration.
It may not be “the only game in town,” but contract offers aren’t “a dime a dozen” either.

What It Means for Buyers

It’s still a good idea to shop for a home with a really strong “lender letter” in hand, but, in a
cooling market, buyers don’t need to make a quick offer on the first home which is adequate
for their family’s needs. They can take a little more time, and compare houses before making
an offer. The home they ultimately choose to make an offer on will probably still be available
twenty four or forty eight hours after the first viewing.

Buyers whose contract offer includes a provision for a home inspection are not as apt to be
displaced by an offer with no such provision as does happen when the market is sizzling hot.
Another change is that buyers who offer less than full price are not so apt to be laughed out of

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town. They are more likely to receive a counter offer naming a price somewhere between the
asking price and the offer originally made, or they may receive a counter offer at full price but
with some other concession offered.

In Short

A cooler market can be healthy for both sellers and buyers. Homes can still sell at generous
prices. Some of the frantic pace slows, but there’s still plenty of activity. With any luck, that’s
the sort of market we’re entering now. Maybe the “Fed” will even be able to “pause” its interest
rate increases.

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