If you have spent any time observing the real estate market, you have heard the terms seller’s market vs buyers market. Even though these are familiar terms, it is vital to understand the difference, especially if you are considering selling your house, buying one, or both. Here is a breakdown of the market types and tips on making the best of either.
What is a Buyer’s Market?
As the name suggests, a buyer’s market is an excellent time to be looking for a new home. The number of houses available in a buyer’s market exceeds the number of interested potential buyers.
There are a few different forces that bring about a buyer’s market. These include,
- A significant employer leaving the area
- An economic downturn
- A substantial increase in crime
- Overbuilding an area
As a buyer, you will have the best choice of homes, limited competition from other buyers and the most leverage to ask for concessions from the sellers. Buyers are in an excellent position to carefully examine numerous properties and stand a low probability that another buyer will purchase the property before you have a chance.
What is a Seller’s Market?
A seller’s market means the number of homes for sale is much lower than the number of people looking to buy a home. This is a great time to put your home on the market because there will be competition between buyers, and in some cases, bidding wars occur.
There are several reasons seller’s markets occur, including,
- An economic boom in an area
- Inventory shortages
- A large population of potential homebuyers (millennials) entering the housing market
During seller’s markets, homeowners will see houses selling quickly, many at the asking price and some above the asking price. Potential buyers are willing to accept some imperfections, and many more homes are sold ‘as is’ with buyers asking nothing extraordinary from the sellers.
Sellers Market vs Buyers Market – How to Tell
It is in your best interest to determine if your area is in a buyer’s or seller’s market when you begin your plan to sell, buy, or both. There are a few key indicators you can look at to determine a seller’s market vs a buyers’ market.
- Statistics About Recent Sales – A quick way to gauge the local housing market is to check the selling price of homes comparable to yours that sold recently. If you see that the homes have been selling for over the asking price, you are in a seller’s market. If the trend is that houses are selling below the asking price, you are in a buyer’s market.
- Check the Real Estate Inventory – Find out how many homes are for sale. Divide that number by the number of homes sold during the last month. If the number you get is above seven, you are in a buyer’s market. If the number is five or lower, you are in a seller’s market. In between means, the market is neutral.
- Time Spent on the Market – If houses spend an extended time on the market, you are likely looking at a buyer’s market. The converse is true, so quick selling homes point to a seller’s market.
- Check the Market Trends – Analysts produce regular data regarding market trends. You can see if you are in a seller’s market vs a buyer’s market based on the pricing of homes. If prices climb steadily, you are in a seller’s market, and if the home prices are falling, it is a buyer’s market.
Tips for Selling in a Buyer’s Market
Even though you may be at a disadvantage if you must sell in a buyer’s market, you can still come to a reasonable deal with your buyer.
- Create Your Competitive Advantage – You do not need a remodel worthy of the Taj Mahal, but make sure your home is immaculately clean with fresh paint. Remove your possessions and declutter. If you have several unfinished handyman projects, hire a handyman to complete them. If possible, hire a professional designer to stage your home to show it at its best.
- Accentuate the Outdoors – Whether you have a large yard and a pool, a fenced area for small children or dogs, or a delightful garden in an alfresco area, shine it up and show it off to your prospective buyers. Trim, mow, and clean up every space. Add simple and inexpensive touches like solar garden lights or hanging little lights in garden bushes.
- Arrange a Pre-Inspection – Hiring an inspector to highlight any problems and then fixing the issues is a great way to show potential buyers that you will go the extra mile to sell your home. Additionally, a pre-inspection will make the appraisal process faster.
Tips for Buying in a Seller’s Market
When you are a buyer in a seller’s market, you may sense some competition for every property you see. While it is easy to feel anxious, do your best to stay calm under pressure.
- Know Exactly What You Want – You will not have time to wander through homes that do not tick off all of your boxes. If you are sure you need a house with four bedrooms, there is no need to go through two-bedroom homes. Write down your non-negotiables and review the list as often as necessary. It will be easier to make a move if you are already sure of what you want.
- Plan Ahead for a Bidding War – It is easy to become swept up in the excitement of a bidding war. So, make sure you are aware of your limits. Make sure you set your maximum amount firmly so you will not be tempted to bid more than you can afford.
- Get Pre-approval on Your Loan – Approaching a seller with a preapproved loan makes you a more attractive buyer than everyone who views the property without preapproval.
- Make Your Offer Simple – This is not the time to try creative methods or to remove valuable contingencies. Try making everything as standard as possible, so your offer is easy to understand and accept.
When making real estate moves, you want to be on the right side in a seller’s market vs a buyer’s market. However, the demands of life do not always line up with market conditions. That is why working with an experienced real estate agent is crucial to your success in purchasing or selling a home.
At Nest Realty, our team knows to walk you through your real estate journey regardless of the variations in the market. No matter where you are in your buying or selling process, we can help you reach your real estate goals. If you would like more information about how Nest Realty can help you, contact us to set up a consultation.