The real estate housing market can be confusing, especially if you are a first-time home buyer or seller. When is a good time to buy? When is a good time to sell? Should you wait for the market to change? What does a buyer’s market mean? What about a seller’s market? How can you tell the difference? If all these questions are flying through your head, you are not alone. Understanding the terminology associated with the real estate industry alone can be a challenge, but we are here to help.
The real estate industry is a delicate balance of supply and demand. When one is higher than the other, someone could be at a disadvantage in the home-selling process, but how do you know who has the upper hand?
What is a Buyer’s Market?
A buyer’s market is a real estate market where demand is lower than supply or there are fewer people looking to buy a home versus the number of homes available for sale on the market. This type of market tends to favor buyers as sellers are forced to compete for interested buyers. As a result, sellers may need to make more compromises in order to get their houses sold.
Some key characteristics of a buyer’s market can include:
- More homes on the market
- Lower sale prices
- Longer time on the market
What is a Seller’s Market?
A seller’s market is a real estate market where demand is higher than supply or there are more people looking to buy homes than there are homes up for sale. In a seller’s market, sellers tend to have an advantage as multiple buyers compete for a limited number of properties. Buyers may end up in a bidding war and often do not have as much negotiating power.
Some key characteristics of a seller’s market can include:
- Low housing inventory
- Higher sale prices
- Less time on the market
How to Determine A Buyer’s Market vs. Seller’s Market
The real estate market depends on a variety of factors such as the economy, season, location, and more. Because of all these factors, there are natural fluctuations. There can be drastic changes from year to year as well as sometimes even day to day. Different cities can also have vastly different trends, so trying to keep up can be overwhelming.
While a lot is going on, there are some key differences between buyer’s and seller’s markets and ways to recognize which market you are currently in. Some important factors are:
- Days on the Market – When homes are flying off the market in a few days, it is typically an indicator of a seller’s market. If homes sit on the market for several weeks or even months, it is often a sign of a buyer’s market. You can typically find the number of days on the market online.
- Prices – If homes in your area are being sold for more than the asking price or the house price seems high, it is likely a seller’s market. In contrast, if homes are sold for less than their asking price or the house price was reduced, it is likely a buyer’s market. Look at the sale price of properties in your area as well as the price history to get a better understanding of how these numbers compare.
- Number of Homes on the Market – Fewer homes on the market typically mean more competition among buyers and a seller’s market. On the other hand, if there is a surplus of homes available, it is usually a buyer’s market. Check to see how many listings there are in your area for a better idea of the number of homes on the market.
Navigating a Buyer’s Market vs. Seller’s Market
Regardless of if it is a seller’s market or a buyer’s market, it doesn’t mean you need to shy away from selling or buying your dream home. While these different markets can favor different parties, there are some tips and tricks that can help either party win out whether dealing with a buyer’s or a seller’s market.
Tips for Buyers in a Buyer’s Market
If you are a buyer in a buyer’s market, you are already in luck, but these tips could help you take full advantage of the market.
- Do your research. Spend some time looking at comparable properties to what you are looking for, so you know what they are selling for and can ensure you get the best price.
- Negotiate. As a buyer in a buyer’s market, you have the upper hand. Especially if a home has been sitting on the market for an extended amount of time, you have more power at the negotiating table. Use it wisely and talk to your real estate agent about your options.
- Take your time. In a buyer’s market, homes are not flying off the market as quickly, so you typically have more time to make a decision and ensure you put an offer on a house you love.
Tips for Sellers in a Buyer’s Market
Just because you are trying to sell in a buyer’s market doesn’t mean you have to struggle to get noticed. These tips could help you get your home off the market fast and for a good price.
- Make necessary repairs. A house in need of repairs is a big turnoff for buyers. Take the time to make home repairs before selling to keep buyers interested.
- Price your home competitively. With so many homes available on the market, an asking price that is too high will immediately turn buyers away. Make sure your asking price is in line with comparable houses in the market and understand that you may need to make concessions at the closing table.
- Update your home. Most homeowners want move-in ready homes so if your house is not up to this standard in a buyer’s market, it will likely sit on the market. Instead, a refresh or even home remodel before selling could help your house get off the market sooner and at a higher price.
Tips for Buyers in a Seller’s Market
Buying in a seller’s market may come with its challenges, but it doesn’t mean you can’t find your dream home.
- Act quickly. In a seller’s market, homes do not often stay on the market for long. If you find your dream home, make an offer right away to avoid missing the opportunity. Also, get preapproved for a loan if you can to speed up the process.
- Manage your expectations. In a seller’s market, you are at a disadvantage. Be prepared to have less power at the negotiating table.
- Be patient. Because of the nature of the market, you may lose out on some homes you are interested in. Do not give up hope, but also do not just buy any home because you are frustrated.
Tips for Sellers in a Seller’s Market
Selling a house in a seller’s market can give you a good starting point to work off of, but you want to make sure you are still getting the most out of the market.
- Price your home fairly. Just because it is a seller’s market, doesn’t mean you should ask for an outrageous amount of money. Price your home fairly to get it off the market sooner and attract more offers.
- Weight the offers. Because there is a high demand, you can be a bit more particular about what offer you accept. Be aware of any contingencies or stipulations that could cause the deal to fall through, and weigh your options carefully.
- Present your home in the best light. Although it is a seller’s market, you can attract more offers and higher ones if you take the time to refresh your home before selling or at least stage it. Otherwise, you may miss out on easy money.
Whether a seller’s market versus a buyer’s market, the real estate industry can be a bit tricky to navigate. If you thinking of selling, make sure you take full advantage of the opportunity.
Originally post on Curbio on April 27, 2023