Understanding a Buyer's vs Seller's Market Before You Buy
Have you ever wondered when the best time is to buy or sell a home? While certain seasons may be busier than others, the fluctuations within the real estate market have far more to do with the concept of supply and demand than they do with the time of year. That’s why it’s important to pay attention to the housing market and whether your local area is experiencing a buyer’s market or a seller’s market. In this article we'll discuss what it means to be in a buyers market vs a sellers market, and how to make the best financial decision when buying a home.
Key Takeaway
A buyers market is a great time for potential buyers to purchase a new home as prices are typically lower and sellers are often willing to negotiate. Buyers should take their time when searching for their desired property, be aware of the different resources available, and analyze comparables in order to make sure they get the best deal possible. By taking these steps, buyers can ensure that they will find a home at a price that suits their budget.
What Is A Buyers Market?
A buyers market is a type of economic environment in which the prices for goods and services are relatively low, giving buyers increased negotiating power. This creates an ideal situation for those looking to make large purchases as they usually have access to better deals than sellers want to offer.
In a buyer’s market, real estate prices decrease, and homes linger on the market longer. So, sellers must compete with each other in order to attract potential buyers. Typically, sellers will drop their asking prices to gain an advantage in the market. Furthermore, they are much more willing to negotiate offers to prevent buyers from walking away. A buyers market is the most ideal time to purchase a new home because prices are lower and there are fewer buyers to compete with.
Tips For Buyers-
Take Your Time- In a buyers market, buyers have the upper hand in negotiations and can often score better deals. Buyers should take their time when searching for their desired property as they will likely be able to find the best price possible. It is important to do research on the current market conditions and get an idea of what other similar homes are selling for in the area.
Know What's Available- In a buyers market, potential buyers should be aware of the different options and resources available to them. They should take the time to research what types of properties are on the market in their desired area and how much they are going for. Doing research in advance can help buyers make informed decisions when it comes time to purchase.
Analyze Comparable Properties- In a buyers market, analyzing comparable properties is an important way to make sure you are getting the best possible deal. Comparing similar homes that have recently sold in the area can give you an idea of what the fair selling price for your desired property should be. Additionally, you can use this data to negotiate with sellers and get the best possible deal.
Pay Attention To Days On The Market-In a buyers market, one of the key things to pay attention to is the number of days a property has been on the market. This can tell potential buyers a lot about how motivated the seller is and how much room there is for negotiation. Generally speaking, the longer a property has been sitting on the market, the more likely it is that the seller will be willing to negotiate a lower price.
Tips For Sellers-
Make Some Needed Repairs- Sellers in a buyers market should make any necessary repairs or improvements to their home before listing it for sale. This can help the home stand out among other properties on the market and make it more attractive to potential buyers. Carrying out small renovations such as replacing fixtures, repainting walls, and updating appliances can improve a property's overall aesthetic and make it easier to sell.
Clean And Depersonalize Your Home- When selling a home in a buyers market, it is important to clean and depersonalize the property. This means removing all personal items such as family photos and mementos, as well as any excess clutter. Doing this will create an atmosphere of neutrality that potential buyers can envision themselves living in. Additionally, sellers should be sure to deep clean their home to make sure it is in top condition when potential buyers come to view the property.
Market It Like A Pro- In a buyers market, sellers should make sure that they are utilizing all available marketing tools to ensure their home stands out from the competition. This could include taking high quality photos of the interior and exterior of the property, creating virtual tours to show off each room and feature, and using social media platforms to spread awareness about the property. Additionally, sellers can use third party real estate websites to list their home and make it more visible to potential buyers.
Price It Competitively- In a buyers market, one of the most important things for sellers to remember is to price their home competitively. This means pricing it fair based on comparable properties in the area, but also at a level that will attract potential buyers. By doing this, sellers can ensure that their property stands out against other similar homes and gets more attention from potential buyers.
Be Flexible On Price- In a buyers market, sellers should be prepared to negotiate on price as they may not get their desired asking price. Being flexible and willing to come down on your listing price can help attract more buyers and increase the chances of selling your home. Additionally, sellers should be open to working with buyers who are seeking financing as this can help speed up the sale process.
What Is A Sellers Market?
A sellers market is when the market favors the seller and there are more buyers than sellers. In this type of market, demand for properties is higher than the supply. This means that there are fewer houses for sale and more buyers vying for them, resulting in an increase in property prices. Sellers tend to have more negotiating power as they can often get a higher price for their home than it is worth. Additionally, properties tend to sell faster in a sellers market because there are more buyers available and less competition from other houses on the market.
Tips For Buyers-
Act Fast- If you find your dream home during a seller’s market, you will want to act fast. If you hem and haw over a house you know you want to buy, you may find that it’s no longer available by the time you wish to make an offer. Understand how to get preapproved for a loan ahead of time, so your financing is in order when you need it.
Know You're At A Disadvantage- As a buyer, you’re at a disadvantage in a seller’s market. This means that you may end up paying more than the list price for the home of your dreams and have to make due with fewer concessions from the seller. Be prepared to act fast and be willing to compromise on certain things, such as closing date or repairs, in order to secure the home.
Be Patient- If you find that you keep losing out on the homes you’re interested in, it’s crucial to be patient and not get discouraged. Many buyers end up suffering during a seller’s market because they get frustrated. Inexperienced buyers caught up in bidding wars will often offer more money than a home is actually worth – or they feel comfortable spending – in order to get the home they want. That’s always a mistake.
Don't Settle- On the flip side, some buyers will end up making offers on homes they otherwise wouldn’t be interested in because they’re tired of losing out. Remember, buying any property is a huge investment and often a 30-year commitment to a mortgage payment. Don’t settle on a home just because it’s available. Unless you have to move immediately, it’s a much better idea to wait it out and resume your home search after the market cools down.
Be Ready To Make Your Best Offer- When it comes time to make an offer, put your best foot forward and make a competitive one. Don’t be afraid to offer slightly more than the list price if you really want the house, as this may help tip the scales in your favor as a buyer. Also, be prepared to answer any questions the seller may have and provide evidence that you’re a serious buyer.
Be Ready For Closing Costs- Lastly, buyers should be aware of closing costs when purchasing in a seller’s market. Many sellers will include some of their own closing costs as part of the sale, but buyers should be prepared to pay their own costs as well. Overall, a seller’s market can be challenging for buyers, but with the right strategy and preparation you can still come out on top.
Tips For Sellers-
Clean And Organize Your Home- When preparing your home for sale in a seller’s market, it is important to take the time to clean and organize it. This will help the home show better, which can increase its value and make it more appealing to buyers. Start by decluttering and removing any personal items from the home. It is important to create an environment that is neutral and inviting so potential buyers can imagine themselves living there.
Research Comparable Homes- Researching comparable homes in your area is a great way to get a sense of what your home may be worth. Look at photos, square footage, age, and condition of the homes in order to determine an approximate value for yours. This information can help you set a realistic and competitive asking price for your home.
Price It Fairly- When pricing a home in a seller's market, it is important to set a fair asking price. If the home is priced too high, it can turn away potential buyers who may think they are getting a bad deal. On the other hand, pricing the home too low could mean that you would leave money on the table. As such,
Carefully Consider Offers- When it comes to offers in a seller's market, it is important for sellers to carefully consider each one. Due to the high demand, buyers may make offers that are higher than the asking price. However, this doesn't necessarily mean they are the best offer.
Ensure Preapproval- For any buyers who require financing, you should ensure that they have been preapproved for a loan. Preapproval requires that buyers’ finances and credit history are verified, making it far more likely they’ll ultimately be able to obtain a loan for a specific amount of money. Prequalification, on the other hand, is just an estimate of buyers’ finances.
Be Aware Of Contingencies- When it comes to offers in a seller's market, it is important to be aware of contingencies. A contingency is a condition that must be met before an agreement can be enforced or completed. Contingencies can take many forms, including home inspections, appraisals, and financing. For example, buyers may require that their offer is contingent upon a satisfactory home inspection or appraisal. Overall, a seller’s market can be an advantageous time to buy and sell real estate - as long as you are prepared!
Is It A Buyers Or Sellers Market?
Before you buy or sell, there are ways to determine if your local area is experiencing a buyer’s market or seller’s market. Here are some indicators that will help you:
Real Estate Inventory- When it comes to determining whether your local area is a buyer’s or seller’s market, one of the most important factors to consider is real estate inventory. If there are more homes for sale on the market than there are buyers, then it is likely a buyer’s market. Conversely, if there are fewer homes for sale than there are buyers, then it is likely a seller’s market.
Days On Market- Another key indicator to look at is the average number of days that properties remain on the market before selling. In a buyer’s market, houses typically stay on the market for longer periods because there is less competition among buyers. In a seller’s market, houses tend to sell more quickly because there are more buyers trying to get the same properties.
Price- The average sale price of homes can also be an indicator of whether it is a buyer’s or seller’s market. In a buyer’s market, prices tend to be lower because there is more competition among buyers. Conversely, in a seller’s market, prices tend to be higher due to the increased demand for homes.
Recent Sales- Check the recent sales of properties comparable to your own or the one you’re interested in. If you find that homes generally have been selling above ask, it’s a good indication that you’re in a seller’s market. If they’ve been selling below ask, signs point to a buyer’s market.
Conclusion
A buyers market is an ideal time for potential buyers to purchase a new home as prices are typically lower and sellers are often more open to negotiation. Take your time when searching, be aware of the different resources available, and analyze similar properties in the area, to ensure that you get the best deal possible.
