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The Difference Between a Buyer's Market and Seller's Market - Buying a home is one the biggest, most important financial decisions you will ever make. Depending on when you choose to start searching for a home, the market may or may not prove difficult. Sometimes finding a home can be quite challenging and other times it may seem like there are more housing options than you know what to do with. These are often referred to in the real estate industry as buyer’s and seller’s markets. What are they and what should you do to approach these markets? Let’s discuss.
Buyer’s Market
The first type of market you should be aware of is a buyer’s market. This type of market reflects the surplus in inventory over demand. In other words, more houses are available on the market than are interested buyers. This gives the buyer a sense of power in dealing with sellers because it incentivizes the seller to go the extra mile and meet the interests of the buyer in order to close on a deal.
The Approach
If you’re a home buyer, you’re in a great position in a buyer’s market. You don’t have to be as quick to close on a deal because there is a plethora of options. The probability of the home being sold quickly is low; therefore, make sure you negotiate well. Take a look at the asking price for each home you’re interested in and compare it to the market value in the neighborhood. If a seller is asking a higher amount than other comparable homes in the market, ask for a lower price. You may also want to consider things like a home inspection and selling your current home before moving in as contingencies to the seller.
If you’re selling a home in a buyer’s market, that means you will need to step up your game to stand out among a host of other sellers. Consider taking inventory of other homes on the market and see what their asking prices are. Making a lower offer may just sweeten the deal and catch the eyes of prospective buyers. "You will also want to look into whatever upgrades and repairs need to get done in the home so that you don’t turn away anyone who would otherwise put forth an offer." - Gregg Camp, Aptos Home Expert
Additional: The Difference Between a Real Estate Broker and a Licensed Agent
Seller’s Market
On the flipside, a seller’s market means that there are far more interested buyers than there are available homes for sale. This means a home seller tends to have the upper hand when coming to the table of home offers.
The Approach
You shouldn’t lose hope if you’re a home buyer in a seller’s market. That said, you will want to step up your game if you’re still serious about owning a home in this market. Once you’ve met with your real estate agent and have a game plan going, you will want to move quickly if you find the home for you. Taking too much time will almost guarantee the loss of the home because someone else jumped on the chance. On the other hand, you shouldn’t get caught up in bidding wars amongst other buyers or lose hope in buying a home. Stick within your budget and don’t offer more than you can afford. Patience is the key!
Related Information: How Much Money Should We Put Down on a House?
As a home seller, you have a lot of room to work with. Just as listing your home at or fairly below market value in a buyer’s market is wise, doing the same in a seller’s market is even more advantageous. In terms of home repairs and upgrades, you may not need to attend to as many items compared to a normal basis. Consult with your agent on where to go from here.
"Whether you’re a buyer or seller, knowing the type of market you’re in will help give you an edge in closing on a good deal for both parties involved." John K of Clearwater Beach Condos for Sale