The real estate market is considered one of the safest investments out there and investors are jumping all in to reap the financial benefits in turn. Buying a home is considered a major investment for most people because it is not a cheap transaction to begin with. The buyer’s market is filled with opportunities that can either make or break an investor; you either become really rich or incur major losses. In a buyer’s market, there are many traps that can end up costing you more money for your investment and these traps are dominating the market.
A buyer’s market is filled with properties that can be labeled as a bad investment because people try and avoid investing in them. Spotting real estate investments that can make you rich has its own conditional circumstances depending on the type of strategy as well as the funds and longevity of the investment. However, there are traps in a buyer’s market that are easy to spot and in turn avoid regardless of the circumstances.
Many successful investors point out the disadvantages of a buyer’s market and affirm that a buyer’s market could be deceiving and result in financial losses if the buyer isn’t careful. In real estate, success in a buyer’s market is dependent on how prepared the investor is. Having some experience and knowledge in real estate for beginners through learning and reading up on real estate is crucial. There are tons of readily available information you can find on the web without paying a penny. Mashvisor blogs offer worthy data and advice for those real estate junkies or/and novice investors ready to take the first step.
What to Avoid in a Buyer’s Market?
Blind Bidding for Houses
Bidding without understanding the market is one of the most common mistakes in a buyer’s market. Investors who rush in to make an offer for a house are highly recommended to investigate if the price is fair or not. The seller will have a selling price for that property, which means that as a buyer it is your job to know if the price on the house is reasonable before making an offer. Some investors just get too enthusiastic if they see the selling price is within their reach and blind bid for the house. However, why overspend on that property before checking other comparable properties in the neighborhood of choice i.e. are there similar properties that are selling for less? It is important to be thorough and patient when looking at properties before making your final bid.
Related: 5 Real Estate Negotiation Tips for Investors
Buying the Wrong Home
Before entering the buyer’s market it is important to understand what type of house you need. This is called planning; having a set of specifications that will be deemed acceptable for you to buy the property. A common mistake buyer’s make is go house hunting on a whim, not knowing what they are looking for and not setting a plan for finding the right house for their investment. This ends up costing if they end up buying the wrong home. Another mistake when purchasing a property is to watch out for any hidden problems that are not easily detected from the get go. It is always recommended to conduct an inspection of the property before submitting an offer to make sure that repair costs won’t be massive or/and there isn’t any fundamental flaws in the property.
Hiring an Inexperienced Real Estate Agent
A buyer’s market is like a jungle if you think about it; it is a market place where as an investor you will have to deal with;
- competitors trying to outbid you when you make an offer
- sellers trying to get as much money off you as possible
- real estate agents hunting to make their own profit
Real estate agents can literally make or break your investment in real estate properties. Hiring an inexperienced real estate agent will result in mistakes that will end up costing you more than anyone else. Your real estate agent will need to fight for you, find you the best possible deal and also give you advise on what to do next. These qualities won’t be in abundance if the real estate agent lacks experience in the field. Hire an experienced real estate agent even if it means paying a little bit more. The more experienced and knowledgeable the real estate agent, the greater your chances at getting the best possible deal.
Related: Real Estate Investment Agent: Do You Need One and Why?
Ignoring Your Mistakes
The buyer’s market is filled with surprises, opportunities, and disappointments. As you go through the process of buying a property, mistakes will be inevitable because no one masters every aspect of real estate overnight. It is important to learn from your mistakes and not let them discourage you in your future investments. In a buyer’s market, many investors become extremely frustrated after having so many offers for properties rejected which leads to losing opportunities on properties they wanted. However, by learning from your last bidding mistakes you acquire experience i.e. getting to know what sellers expect and how to approach them. Mistakes are an integral part of real estate investing; making a mistake is a learning experience not a discouragement.
Not Having A Pre-Approved Mortgage
Before you even think about starting to make visits to properties, you should have sealed an agreement to get pre-approved for a mortgage. The buyer’s market doesn’t wait around for you when you find the property of your dreams. If you won’t make a serious offer then someone else will and the opportunity will be gone before you know it. Having pre-approval for a mortgage means you can be confident enough in grasping an opportunity when it arises. It makes it way easier for investors to expand and not feel restricted or worried about financial issues that may arise.
Related: House Hunting Lessons for Real Estate Investors
Conclusion
Being a part of the buyer’s market in real estate is very challenging for investors, especially those starting out in real estate. However, avoiding the traps of a buyers’ market is the first step to smart investing. Eliminate the risk of having to suffer financial and personal loses in the real estate by understanding what to avoid in the buyer’s market. Knowing what to avoid in the market will give you more time and resources to find a real estate opportunity with financial rewards.