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A hot market is a "seller's market." During a seller's market, properties can sell within a few days of being listed, and there are often multiple offers. Sometimes homes even sell above the asking price. Although most buyers want to get a deal on a home, reducing your offer by even a few thousand dollars could mean that someone else will get the home you desire.
A slow market is a "buyer's market. During a buyer's market, properties may languish on the market for some time and offers may be few and far between. Prices may even decline temporarily. Such a market would allow you to be more flexible in offering a lower price for the home. Even if your offered price is too low, the seller is likely to make some sort of counter offer, and you can begin negotiations in earnest.
More often than not, the market is steady or in transition. When a market is steady, no real rules apply on whether you should make an offer on the high end of your range or the low end. You could find yourself in a situation with multiple offers on your desired house, or where no one has made an offer in weeks. Transition markets are more difficult to define. If the economy slows unexpectedly, as it did in the early nineties, people who buy on the high end of a seller's market (like the late eighties) could find that their home loses value for several years. |
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