We are currently experiencing what many in both media and industry circles refer to as a buyer’s market. Very simple, it is the first lesson of Marketing 101; when demand is high and supply is low, prices rise, but when demand is low and supply is high, prices fall. If you want to increase your price, you must either increase the demand or decrease the supply. The challenge we face today revolves around the large number of people being forced to sell for various reasons and the perceived consequences of lax lending practices.

As a potential buyer in this market, you have a number of advantages over a seller that are not normally available. Before I go any further, I want to address a common misconception that the buying public learns from the media and certain market gurus… A Buyer’s Market It is not It means you’ll take any concession from a seller on price, and you may still end up paying the higher retail price for your next home. Nice homes in great locations will always fetch the highest prices, and if you think otherwise, you may easily be outbid by another more aggressive buyer. We’ll get back to price in a moment.

In this buyer’s market there are other significant ways you can save money and increase your purchasing power, and that is the focus of this article. First, let’s look at some options from a seller’s perspective. The seller’s objective is to earn the maximum amount of money in the shortest possible time with the least investment in the property he intends to sell. In order to make any type of investment in the property, the seller will need access to capital resources to finance the upgrades or repairs. A seller can avoid spending the cash or use a line of credit for this business and offer the buyer a credit on the price or in the form of a decorating allowance, if desired.

What often happens, however, is that the seller won’t do the repairs or upgrades and will leave it up to the buyer to accept the house as-is or ask for some concessions in the purchase contract. My first piece of advice to you in this buyer’s market is therefore ask the seller to give you a credit for a decorating allowance or make any necessary repairs before closing. Now you may think I was just wasting your time and giving you useless advice, but you’d be surprised how many shoppers are too timid or afraid to be aggressive with these types of concessions. If you don’t ask, you will never receive. The worst that can happen is that the sellers say no.

Another way to save money in a buyer’s market is to include a provision in the purchase contract that requires the seller to pay all or part of the buyer’s closing costs and/or prepay. This can have a tremendous impact on your purchasing power because these costs associated with buying a home are what make the first few years of home ownership unprofitable. By saving this money, you will more quickly realize the benefits of appreciation and a reduction in your debt obligation to the lender. It is very important to coordinate with your lender, your real estate agent, and your financial advisor to determine exactly what to apply for to receive the maximum benefit. It is also critical that the contract is drafted accurately to ensure that the seller cannot avoid paying certain costs on a technicality.

Let’s review the price and see why the buyer’s market hype won’t affect an educated seller. Most sellers who choose to list their home with an agent will have access to very detailed market data. It will be obvious to even the most novice seller what the market indicates his home is worth. If sellers take the time and effort to properly prepare their home to sell, and pay attention to market data, they will most likely set a price that a competent buyer will pay fairly. This means that you probably won’t receive any price discounts from this type of seller.

But you are a smart buyer, fully informed about the market and fearless in your negotiations. You will find that the sale price is fair to the market and will try to save money in the other ways mentioned above. Sellers are fun… They’ll set a price, but turn around and make thousands of dollars worth of concessions when faced with a strong, motivated buyer and a signed purchase contract.

While my suggestions are general, you can easily adapt these ideas to your specific situation and confidently save money, request and receive repairs or upgrades, and increase the value of your purchase. Never forget that quality and location bring some value to sellers, so don’t make the mistake of putting your dream home down and then losing it because you offended the sellers. Be fair with the price, but get your concessions and savings in other, more creative ways. This is how I think you can best take advantage of this buyer’s market.