Recession. Natural Disaster. Pandemic. These are experiences that put people to the test, and we all handle them in different ways. Some of us squirrel away every penny. And some of us… buy property! If you’re eyeballing the historically low interest rates and have enormous faith in your real estate agent, here are eight tips for buying a house during times of crisis. Spoiler — these insider secrets come from our very own Leonard Steinberg at Compass, who has put them to good use no fewer than five times.
Properties tend to hit the market out of fear or necessity during times of crisis. That’s an advantage to you as the buyer. You’ll have more properties to shop and a slower market means you don’t have to panic buy.
You’ll have competition, but a lot of bidders come in far too aggressively. If you’re prepared to pay fair market value instead of trying to low ball, you’ll be in a better position. And that brings us to tip three.
During a crisis, too many bidders prioritize getting the biggest price break — even if it means overlooking quality. This is an opportunity for you to focus on the quality of your investment and to win the bid with a more enticing and realistic offer.
Consider Immediate Potential
Focus on immediate potential instead of long-term market escalation. I recently put some amazing first-time homebuyers into contract on this beautiful Victorian in the Mission District of San Francisco. This has an undeveloped attic with what will end up having amazing sunset views and several currently-illegal rooms downstairs that can be turned into legal extra bedrooms with a foundation upgrade.
Keep Offers Simple and Desirable
Keeping things realistic, simple and fair is reassuring to the seller. You’ll still likely enjoy a discount, but you won’t spook the seller with a cutthroat offer or complicated terms.
Once you’ve decided on a property, be direct and move with purpose. Don’t dither on this or that — it just gives the seller time to start second guessing, or worse, another bidder to step in with a better offer. That was exactly the case with the offer I mentioned above. Shortly after going into contract, a much better back-up offer was received from a buyer who regretted missing out.
Capitalize on Low Interest Rates
Low interest rates are another bonus of times of crisis — one of the few! — so take advantage of them. In our case, our clients were able to leverage an under 3%, 30-year fixed loan on a jumbo mortgage!
Set Aside Savings
Get in the habit of putting money away for a rainy day. You never know what’s just around the corner, and having money set aside for opportunities like these means you can move quickly.
Following these eight steps is infinitely easier when you have an experienced guide. In this market everyone is looking for a bargain, but knowing one when you see it is half the challenge. If you’re considering real estate in San Francisco, I’d be honored to help you make that happen.