The real estate market is complex and often unpredictable for buyers and sellers who are new to the process. However, determining what type of market you’re looking to sell or buy in greatly influences how you proceed.
Real estate market trends have more to do with supply and demand than the time of year you’re looking to make moves. In short, you’ll be looking to buy or sell in a buyer’s market or seller’s market. Below, we’ve gone over what each market type means for you, and included some tips you can use to maximize your real estate ventures.
The Buyer’s Market
A buyer’s market occurs in real estate when the supply of homes exceeds buyers’ demands for homes. Characteristics of this market typically include the following:
- Real estate inventory is high and there are plenty of homes for sale.
- There’s a general shortage of interested buyers.
- Homes sit on the market for a longer amount of time.
- Real estate prices decrease.
- Buyers have more leverage over sellers.
- Sellers are more willing to negotiate or lower prices.
The buyer’s market is more advantageous for buyers than sellers. Since there’s a surplus in supply, buyers can really narrow down their choices and advocate for what they believe is their perfect fit.
Tips as a Buyer
If you’re looking to buy a home in a buyer’s market, you’ve got plenty of homes to choose from and more time to make your decision. When considering your options, make sure to compare the properties you’re looking at and communicate any wishes you have with the seller. With a surplus in supply, you’re able to negotiate with sellers more and really select your ideal home.
Also, pay attention to how long a home has been on the market. The longer it’s been listed, the more likely a seller is to work with you on pricing or upgrades.
Tips as a Seller
If you’ve listed a home for sale in a buyer’s market, just know that you should be open to considering buyer negotiations and waiting a bit longer to close on a sale. Making sure your home is move-in ready will be your ticket to attracting buyers. Here are some things to consider:
- Hire professional cleaners or thoroughly clean your space before showing.
- Declutter and depersonalize the space before photographing it. Make the home look inviting and ready for buyers to make it their own.
- Make sure you’re taking professional photos and working with your realtor or stager to deliver top-notch marketing for buyers.
- Pay attention to homes of the same size or location and price competitively. Pricing at or below market value ensures you’ll get interest.
The Seller’s Market
Opposite from a buyer’s market, a seller’s market occurs when demand for homes exceeds real estate inventory. There are a few key characteristics that let you know you’re in a seller’s market:
- There aren’t a ton of homes for sale, meaning inventory is low.
- Homes go quickly and buyers will drive up prices with bidding wars.
- Sellers prefer all-cash offers over preapproved financing and often won’t consider buyers without previous approval.
- Buyers don’t have much room to negotiate with sellers. Homes are more likely to go as-is.
- Sellers are at an advantage and will select one offer from multiples.
The seller’s market is one that’s more competitive among buyers. People looking to purchase a home should move quickly and be adaptable.
Tips as a Seller
If you’re selling in a seller’s market, you’re at the advantage. But even though you’re going to experience a lot of interest, it’s important to still consider the people who will buy your home. Make sure to price at or slightly below market value. In most cases, buyers will bid competitively on your listing anyway and drive the price up.
Be sure to carefully review the bids you receive and avoid unrealistic offers. Ensure buyers who require financing have already been preapproved for a mortgage loan. Also, be ready to sell your home and move quickly. Since the environment is so competitive, expect to sell your home in 30 days or less.
Tips as a Buyer
As a buyer in a seller’s market, you’re looking at a more competitive market with plenty of people in a similar boat as you. As such, time is of the essence. Follow these tips to make sure you’ll nab your dream home once you discover it:
- Act fast on a property you really like and make sure you’ve figured out your financing beforehand.
- Submit an all-cash offer if you can. Sellers also prefer buyers who can supply an all-cash down payment.
- Focus on what’s important to you and know when to drop a property. Bidding wars can drive prices up and some sellers may not price fairly. There will be more opportunities later, so know when to wait.
- Be patient and don’t get discouraged if your offers aren’t being accepted.
- Don’t settle for a property that requires more work than you’re willing to put in, or for a property that doesn’t fit what you want.
The Market Definitely Matters
When buying or selling real estate inventory, it’s vital that you know the market you’re in beforehand. Gaining insight into market trends assures you’re taking the right steps as a buyer or seller. The knowledge will help you develop a sophisticated real estate strategy, and you’ll find that selling or buying your home is at least somewhat easier.
