Real estate prices are affected by a country’s economy and likewise, a country’s economy is affected by the price of real estate. When an economy is bad, it is harder for people to secure loans in order to buy a home but if the economy is good, those loans are far easier to come by.
When people have difficulty in securing loans, obviously the number of property sales goes down and as the demand is therefore less, the property prices also o down. If however the country’s economy is strong, it is easier for people to find loans and so more people buy houses. As with anything else, when the demand is high for something, the prices go up and that is the same with real estate.
How this affects the overall economy is because it is loans and spending that help to keep an economy flourishing and so when there is a drop in real estate sales, the economy can see a further decline and even perhaps trigger a recession.
The state of a country’s economy is a factor that therefore has to be considered by any house buyer. If the economy is bad but they are still able to secure a loan, they will probably be able to buy the house they want at a far lower price than if the economy was good. On the other hand though, although a loan may be easier to obtain when the economy is good, the price you pay for a house will probably be higher.
Other factors that an estate agent must take into consideration when recommending an asking price to a house seller, is the location of the house, the condition of the house and of course the size of the house.
Although a real estate agent may recommend an asking price for a property, it is of course up to the owner themselves to determine how much they will ask. A usual practice is to ask for a price perhaps 5 % to 10% above what the agent recommends as by doing that, when you get a lower offer, it may be the actual recommended price that you receive.
There are some people that like to gamble by placing a price lower than that recommended and the reason why they do that, is that they hope they will get a lot of people who want to buy it and as they try to outbid each other, you may even end up getting more than recommended asking price.
This certainly is a amble though and so not really suitable for the faint of heart. If a potential buyer makes a bid which is lower than the asking price, the estate agent will probably suggest that the seller and buyer negotiate a price which is acceptable to both and the agent will usual offer to mediate between the two in order to try and get them to meet an agreement.
If an economy is at a low, many home owners will try and hold back on selling until it picks up and they can place a higher asking price on the property.