Understanding a Buyers vs Sellers Market

Usually the housing market will work itself back and forth between a Buyers and a Seller's market. It's important to note what type of market you are in so you can  best prepare to either buy or sell your home!

  • What Is a Buyer's Market?

    • A buyer's market is one in which the supply of homes is abundant, houses take longer to sell, and home prices are flat or declining. In this market, it tends to be more challenging for homeowners to sell their properties, and that gives buyers a better choice and opportunity to strike at cheaper prices. 

Real estate inventory is high, and these conditions give buyers leverage over sellers because when supply is high and demand is low, the market is forced to respond. 

Real estate prices will decrease, and homes will linger on the market longer, so sellers must compete with each other to attract potential buyers. Typically, sellers will drop asking prices to gain advantages.

  • Note: If you are a seller:

    • Price your home realistically

    • Spruce your home up

    • Stage for success

    • Be flexible about closing cost

    • Make necessary repairs

    • Market it like a pro

  • Note: If you are a buyer:

    • Take time to consider all options

    • Prioritize the concessions you want

    • Know what is all available

    • Analyze comparable properties

    • Pay attention to the days on the market

  • What Is a Seller's Market?

    • A seller's market arises when demand exceeds supply. There are many interested buyers, but the real estate inventory is low, so fewer homes are available. In this market, sellers are at an advantage. 

In a seller's market, homes will sell faster, and buyers must compete with each other to score the property. These market conditions often make buyers willing to spend more on a home than they usually would, so sellers tend to raise their asking prices. 

Homes in the sellers' market also tend to stay on the market for a shorter amount of time, making it easier for sellers to close and move on. A seller market exists when people who want to sell their homes have more negotiating power than prospective buyers. 

Much of the United States is experiencing a seller's market today because of a nationwide housing shortage, so the median price for a pre-owned home has been at an all-time high. 

  • If you are a seller:

    • Pretend it is not a seller's market

    • Avoid giving a deadline for reviewing offers

    • Be realistic about offers that exceed the asking price

    • Review all offers carefully

    • Be aware of contingencies

    • Ensure the buyer's mortgage approval early on

  • If you are a buyer:

    • Act fast

    • Know you're at a disadvantage 

    • Be patient

    • Do not settle

    • Get mortgage pre approval

    • Consider bidding more than the asking price

    • Consider boosting your earnest money deposit

    • Be prepared for rivals who pay in cash

If you are wondering what market you are in, your real estate agent can let you know. There are a few ways to determine the current market conditions: 

  • Real Estate Inventory

    • You can quickly determine whether you are in a buyer or seller's market by evaluating the real estate availability. If you find that your region has a high housing inventory, you are more likely to be in a buyer's market. Fewer homes available in the area will indicate a seller's market.

  • Pricing

    • One of the most straightforward indicators is the current asking prices. Sellers are likely to reduce their asking price in a buyer's market and raise them in a seller's market. When you are looking at these housing prices, make sure you look at the trends rather than one home to get the most accurate idea of the market. 

  • Interest Rates

    • Lower mortgage interest rates enable more buyers to enter the marketplace, creating an influx in demand, which leads to a seller market. Higher interest rates make people back out of the market, benefiting buyers. 

  • Recent Sales

    • Looking at how much money other properties have sold in recent weeks and comparing it to your home value is a great way to determine the housing market. Make sure the houses are comparable to your home. Look at bedrooms, size, location, and age. If comparable homes have been sold for or above the asking price, then you are in a seller's market, while if houses that sold for less than the asking price, then you are in a buyer's market

Consulting a local real estate agent who knows that specific area can be helpful because markets are constantly changing, so if you are interested in buying or selling anytime soon, contact an agent to start looking at the trends to get a better understanding of what you need to do in order to be successful!

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