Are you wondering when the best time to buy or sell a home is? Though it does seem like certain seasons are busier than others, the real estate market fluctuates due to buy and demand rather than by the time of year. That’s why if you’re considering buying or selling a home, it’s essential to pay attention to the housing market and know the difference between a seller’s market vs. a buyer’s market.
Not sure what those terms mean? Don’t worry! This article is here to give you a crash course on what buyer’s market and seller’s market means and how they can affect you. That way, you have the upper hand when you’re ready to buy or sell or just want to stay on top of the real estate market.
The Difference Between A Sellers Market Vs. Buyers Market
If you’re wondering if your local area is experiencing a seller’s market vs. buyer’s market, you’ve come to the right place. Whether you’re buying or selling, it’s crucial you understand what’s happening in your local housing market so that you can get the best price for your home.
Let’s start by defining a seller’s market.
What Is a Seller’s Market?
A seller’s market comes about when there are fewer homes for sale than buyers, giving sellers more negotiating power. When this happens, the median prices for homes increase significantly, putting buyers in difficult positions.
Read on for a few strategies that buyers can utilize when they find themselves trying to buy in a seller’s market.
Strategies for Buyers
You can do several things as a buyer to ensure you’re ready to go when the right house comes along.
First, prepare for bidding wars. The market is competitive, and other buyers likely see the same things you see in a house. Talk to your real estate and decide a firm price limit at the start based on what you can afford and what the home is worth. Being the winning bidder means nothing if the home appraises too low for your financing to get approved.
Next, you should get pre-approved for a mortgage before you even start looking. Getting pre-approved shows sellers that you are a serious buyer who is financially capable of making good on your home offer.
Lastly, act quickly and make your offer simple. Homes won’t stay on the market long, so you want to make a move quickly. It’s also tempting to waive contingencies when trying to get the upper hand. Don’t do this and risk buying a home that has significant problems down the road. Instead, make offers simple by including the financing contingency, the inspection contingency, appraisal contingency, and a standard closing period of 30 to 45 days.
3 Strategies for Sellers
Though it seems silly to list a strategy for sellers in a seller’s market, there are still a few things you should do to get the best price for your home.
The first thing you should do is list your home at marketing value. It might be tempting to list it extremely high, but overpriced homes will likely turn buyers off, and mortgage companies will likely get denied when an appraisal can’t support the increased offer price.
Next, consult with your real estate agent so that you know how to choose the best offer. The offer that sounds the best and the offer that actually closes isn’t necessarily the same. The right buyer will have all their finances in order and are ready to go quickly, even if it’s not the highest offer.
It’s also a good idea to have your next home lined up, as it’s likely your home will sell within days. If you happen to get a cash offer, your house could close within a week or two. That doesn’t give you much time to find a new place to live, especially when inventory is already low.
What Is a Buyer’s Market?
A buyer’s market exists when more homes are for sale than potential buyers, giving buyers the upper hand over sellers. Let’s discuss strategies for buyers and seller’s in a buyer’s market.
3 Strategies for Buyers
You can take advantage of your negotiating power to get a better deal in a buyer’s market. For example, you can offer less than the asking price, as a seller whose home has been on the market for a while might be willing to lower the price.
You might also be able to ask for seller concessions, which means asking the seller to pay some or all of your closing costs. Other possibilities include asking sellers to be flexible with the closing date or asking them to include appliances in the price.
Don’t be shy about asking for what you want – and that includes asking for repairs. The home inspection will let you know what needs to get fixed, and the sellers might be motivated to improve those for you.
3 Strategies for Sellers
In a buyer’s market, sellers shouldn’t let buyers walk all over them. So here are a few tips to help you handle a market that’s slightly working against you.
First, highlight your home’s competitive advantage. What does your home offer that other homes don’t have? Make sure your listing highlights those. Then, if you feel like your home doesn’t have some of those extra advantages, create them! Get the interior and exterior repainted, hire a handyman to finish all of those nagging projects, use a professional stager – anything you can to give your home a leg up.
Make room in your budget for buyer concessions. In a market where buyers will likely be asking for extras, plan for those in your listing price so that you still get a reasonable price without losing too much money.
Lastly, make sure you get a pre-inspection so that you can identify any potential issues before buyers do. This gives you a chance to fix the problems before you list or lower the price accordingly if you don’t want to fix them yourself.
A Final Word On Sellers Market Vs. Buyers Market
When you break it all down, it helps buyers and sellers know what’s going on in the market. As a buyer, you’ll want to purchase your home in a buyer’s market, as this indicates an influx of available homes, which means less competition. As a seller, you hope that you’ll be able to list during a seller’s market because it means there are fewer homes for sale, and your house will likely have several people interested.
Regardless of what’s happening in your area, the best thing you can do is hire a real estate agent to help you navigate the tricky waters that are real estate. Hiring a competent real estate agent can give you a leg up on the competition and ensure you get the best price for your home.