During the recession, when real estate sales are slow, and there is a glut of homes for sale, you may pick a house on the cheap. There are periods when you should show restraint and avoid an impulse key and times when you should pounce. Knowing the difference between whether or not you should buy houses for sale in Ottawa can save you thousands of dollars.
How to Get the Best Deal in a Recession
Buying a house is one of the most significant financial transactions you could ever make. There are some advantages of buying during a recession, such as lower prices and rates, as most homeowners will be willing to negotiate and lower their asking price or make short sales to get away from under their mortgages. Along with lower home prices, mortgage rates tend to fall during a recession, too.
Deciding to buy during a recession can come with its own risk, so there are some things you should consider.
Watch for Listings With High Days on the Market
When searching for a home, you’ll most likely gravitate toward listing photos and property stats as any house hunter would. If you’re looking for a bargain, you should pay extra attention to two overlooked details: the house’s days on the market and pricing history.
Days on the market is a real estate term referring to a property’s availability for sale. That gives you room to swoop in, place an offer, and negotiate without worrying about too much competition from other buyers. While most buyers shy away from properties that sit on the market for too long, you might find out it’s a great house that was overpriced.
You can ask the real estate agent to look for such houses, and you can both determine if you should make an offer or refrain.
Search for Foreclosure Homes
Another way to deal-hunt for a home during a recession is to search for properties headed for foreclosure or already bank-owned. You can find short sales by digging into public records or asking your real estate agent to search for pre-closures or subject-to-bank approval homes.
However, buying a foreclosure or short sale comes with several challenges. You will have to be ready to bid on a property on the courthouse steps, auction-style, and you’ll most likely have to pay cash. Please remember that in the foreclosure market, the competition is fierce, as all-cash investors are looking to flip or rent out such bargain-price properties.
On the other hand, short sales can be complex as they might require involvement from multiple parties. Because the lender agrees to sell the home for much less than what is owed, they will oversee the sale and must approve your offer
Look for the ‘Sold As Is’ Label
As you browse properties in your hunt for a great deal during a recession, you will probably come across some listings being ‘sold as is.’ The label can appear in the description section or property title, but whenever you see it, hit pause and take a closer look.
By definition, such a home has been priced based on its current condition, imperfections, and all. Because what you see is what you get, you have to decide how much money, effort, and time you will be willing to bring the house up to your preferences. Any updates and repairs are your responsibility as a buyer. You might get a discount upfront knowing the property will not be turnkey.
Should You Buy in Recession?
Buying a property in a recession is more complex than it may seem, so you must consider some fundamental principles during the search process. If you have the money to purchase a house, there is a great chance you’ll get a better rate on your mortgage than you would have had before the recession.
Before buying, you have to be honest about your finances. The question is not how low house prices can go during a recession but how much real estate you can afford to purchase before the prices go back up again. After all, paying your mortgage is just as crucial as finding a low-price property.
Finally, be kind. As recession force some homeowners to sell when they’re not ready, it can cause sadness and frustration for them. While for you, it might be an ideal timeline to get a deal, for homeowners, it’s not the best timeline.
Recessions usually depress prices in the real estate market. As demand decreases, property prices fall, and real estate income stagnates. However, this is just a general rule of thumb. During a real-world recession, housing prices could not necessarily go down, or they might experience volatility in all directions.