What will happen when the Real Estate Market hits bottom?
By Oliver Po - Real Estate Consultant
In this market where "doom and gloom" has flooded the news, plenty of buyers are afraid of buying real estate as they feel that the market has not hit bottom yet. No one wants to pay more than the last guy in this market. Everyone has their own opinion on when the bottom would be and by how much prices would go down. But lets be honest, no one can predict when the market will hit bottom and by how much.
The most common advice in investing is "buy low, sell high". Everybody knows it, yet not everyone follows it. During the real estate boom, people were buying high and selling higher. Funny thing is, a lot of people did this. And the people who procrastinated and bought real estate close to or at the height of the market boom are now the ones who have condos that has just recently completed or about to complete and have to absorb loses in the thousands or hundreds of thousands of dollars to prevent further bleeding. You might have heard in the news about buyers who failed to complete on their contracts. Not only are they losing their deposit, they are being sued by the project developers. This is what happens when you buy too late.
So when is the best time to buy? My answer is: in a buyer's market which is now. I say this because this is the time when you can get what you want and really negotiate on the price. All the negative news about market prices going down is working for you. The seller has that fear that if he doesn't sell now at a low price, he might get an even lower offer in the coming months.
I just sold a luxurious 3 bedroom condo with gorgeous water views from all rooms in the Beach Crescent neighbourhood. The original list price was $1,298,000. The very day I wrote the offer with my clients, the sellers dropped their price by $118,000. I presented my clients' offer personally and after 3 days of negotiation, we had an accepted offer at $1,080,000. This was very tough to swallow for the sellers as they accepted an offer $100,000 less even after dropping the price by $118,000. My clients saved $100,000 on top of the $118,000 price drop.
So what will happen when the market hits bottom? When prices stop slipping, when news of doom and gloom stop, when more positive news comes, and when sellers realise that the market has hit bottom, buyers will have lesser bargaining power which means smaller room for negotiation leading to lesser savings. Don't wait until it is too late.
As the great Warren Buffett said: "Be fearful when others are greedy, and be greedy when others are fearful."
In my humble opinion.
SOLD IN JANUARY