Buyer Market Vs a Sellers Housing Market: Understanding The Difference
Is now the right time to buy or sell a home? Supply and demand in the real estate markets are constantly changing, and sometimes the situation will help, but at other times it could hurt you.
Different times of the year can affect how easy it is to buy or sell a home, but the availability of homes and the number of buyers are larger factors.
Whether you are dealing with a buyer or a seller market, you can still enter the market successfully, though you will need to do some things differently to succeed.
We look at the buyer market vs home seller market to show you how to find out what the local situation is, and the things you should do to get the best deal.
What is a Buyer Market?
If there are a lot of homes for sale in the market, but not many buyers, it’s a buyer’s market. In this situation, the buyer has more power and can ask the seller for more.
When home prices are falling, homes linger on the market longer and there are more buyers interested than there are number of homes for sale, it is an indicator that you are dealing with a buyer market. These conditions mean that sellers need to work harder to compete for the attention of the smaller pool of buyers. When this happens, sellers are likely to drop their list price and be more open to negotiations to sell their homes.
How to Sell Your Home in a Buyer Market?
If you have to sell your home in a buyer’s market, there are some things you should do to improve your chances of finding prospective buyers.
- What makes your home stand out? Does your home have some sort of competitive advantage that will appeal to buyers? Even if it doesn’t have something that will appeal to a certain type of buyer, you should be able to find an angle that will create an advantage.
- Take care of repairs. You will be competing with other sellers, so if your home has some minor problem, they are more likely to put off a potential buyer. Fix these issues before the home is listed, and consider making small improvements as well.
- Deep clean. Your home needs to be looking its absolute best to attract a buyer. Deep clean your home so there is nothing that could put off a buyer. Tidy up the yard as well, as it will be the first thing the buyers see when they visit.
- Declutter. Tidy away everything you can so there isn’t any clutter lying around. Put away any toys belonging to children or pets both inside and outside the home.
- Depersonalize your home. It’s natural to have family photos, souvenirs, and sports memorabilia from your favorite teams but these could make it more difficult for a buyer to imagine themselves living in your home.
- Staging. Staging your home will make it look better in the professional photographs you need to have. It will also make the home easier to sell when buyers are shown around. If you hire a professional stager, they will know what to do to make your home look its best.
- Competitive pricing. Your home needs to be competitively priced but not so low that buyers might think there is something wrong with the property. Your real estate agent can help advise you on the best price, and a comparative market analysis can help show what similar homes have sold for locally.
- Offering concessions. Even if you get the pricing right, you should be prepared to offer concessions to the buyer. Buyers need a lot of money to cover the down payment, closing costs, and moving expenses, and anything you can do to make things easier will make your home more attractive. Concessions sweeten the deal for the buyer and could be the difference between them buying your house or not. Paying concessions could mean covering part or all of the closing costs.
- Have your home inspected. If you hire a home inspector before your home is listed, it will show you the problems in your home. This gives you the chance to fix these issues and being able to read the inspection report should give buyers more confidence. If more serious problems are found, you could lower the asking price or offer a repair credit. Since these things will be found through the buyers home inspection later on anyway, you’re better off knowing this in advance.
How to Buy a Home in a Buyer Market?
When there are plenty of homes for you to choose from it’s a great time to buy a property. Since there will be less competition from other buyers when you find a home you like you can afford to do a few things differently.
- Don’t rush. Since the home will stay on the market longer and there is less of a chance of another buyer making an offer, you can take more time to decide.
- Visit more properties. If you have been shown more homes before you make any kind of offer, you will have a better understanding of the market. Knowledge of the market will help you make sure you have found your ideal home and leave you in a better position to negotiate the price.
- Days on the market. If a property has more than average days on the market, the seller might be more open to lower offers. While it might be tempting to make a lowball offer, a very low offer might not receive the positive result you expect. It can be better to bid nearer the asking price and negotiate concessions, repairs, and contingencies.
- Comparable homes. Another way to have a better understanding of the market is through comparable properties. This can show you if the house is overpriced compared to similar properties and prevent you from spending more than you need to. Your real estate agent can help analyze comparable homes for you.
What is a Seller Market?
When the demand and supply of homes exceeds what is available, it is a seller market. When prices are rising and homes are still selling quickly, it’s likely a seller’s market.
There is more likely to be competition between multiple buyers for the smaller number of available properties. This competition is beneficial to sellers, allowing them to raise prices and call the shots.
With more competition for homes, there’s a greater chance of buyers finding themselves in bidding wars. This will push up the price of the home but could increase the chances of purchases falling through because of financing.
How to Buy a Home in a Seller Market?
While it is more difficult to buy property in a seller market, if you take the following steps you can still buy the home of your dreams.
- Move quickly. If you find your ideal home, you’re going to need to act quickly. If you take your time, another buyer might complete an offer while you’re still deciding.
- Be realistic about the situation. When you are making an offer, you can’t expect to be able to get everything you want in a seller market. You might want the protection of contingencies when writing up an offer, but it might be better to reduce the number of contingencies or remove them altogether.
- Cash buyers. If you are buying the home using cash, you will be in a better position than someone who has to rely on a lender. When the buyer needs to use a mortgage, there is always a risk that the financing will fall through. Perhaps the home will not appraise, or the lender won’t approve the loan application
- Have some patience. It is very easy to become disheartened if you continually lose out on homes you want to buy. If you find yourself in this situation, it can be tempting to enter into a bidding war out of desperation. While you might end up winning the war, it could mean you have spent a lot more than the home is worth. If you are using a mortgage, the home will still have to appraise or you won’t have the money you need to close.
- Don’t offer on just any home. Continually missing out on properties you want to buy might lead you to make offers on homes that aren’t exactly what you’re looking for. Purchasing a home is a serious commitment, and you don’t want to regret buying somewhere that isn’t right for you. Unless you need to move and you don’t have time to wait, it might be better to stop your search until the market cools.
Selling Your Home in a Seller Market
While it should be easier to find a buyer for your home, there are still some things you need to do to help the process along.
- Clean and declutter. Your home needs to be ready for showings, so clean it and remove the clutter. Even though you will probably have fewer problems selling your home because the market conditions are in your favor, you shouldn’t ignore making your home look its best.
- Fair prices. While there will be the temptation to increase the price above what is fair, you still need to attract buyers. Pricing the home higher than it should be could leave it sitting on the current market for longer than would be expected in a seller market. It is better to price it at or even slightly lower than the fair market value to attract interest that could lead to a bidding war.
- Qualified buyers. In a seller market, you should ensure that all buyers have preapproval for the mortgage when they need help from a lender. Preapproval means that the finances and credit history have been checked by the lender. This makes it more likely that they will get approved for the loan they need to purchase your home.
- The highest offer isn’t necessarily the best one. It is easy to be attracted by the highest offer you receive, but there are other things to consider. Look at the financial strength of each buyer, and cash buyers are better because there is less risk. Even if you have a higher offer from someone who has been approved for a loan, there is a possibility that the home will not appraise for the offer amount, and this is more of a danger when house prices are rising.
- Offers with contingencies. Offers that have more contingencies are unlikely to be as attractive as offers without them. Some contingencies could hold up the sale for potentially a long time, like a home sale contingency.
- Setting a deadline for offers. If you decide to set a date for considering the offers you have received, it could put off some potential buyers. Some buyers want to move as quickly as possible, but you don’t need to speed things up to suit them.
Summing Up Buyer vs Seller Housing Market
If market conditions aren’t ideal, whether you are purchasing or putting your home on the market, you can still succeed. If you are prepared to do a little more work and be flexible, you can still buy the home you want or sell for a fair price. Though if you aren’t in a hurry to move, it might be better to wait until the conditions turn in your favor. The housing market is continually moving, and if you can wait a year or two, the current buyer’s or seller’s market could be completely different.
About the author: This article on “Is It a Buyers Market or Sellers Type of Market? What’s The Difference?” was written by Luke Skar of MadisonMortgageGuys.com. As the Social Media Strategist, his role is to provide original content for all of their social media profiles as well as generate new leads from his website.
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