Differences Between a Buyer’s Market vs. a Seller’s Market
Whether you own a home or not, you’ve probably heard of the term: a hot market. But what does that mean? Does a hot housing market indicate it’s a buyer’s market or a seller’s market? Is it still a hot market today? If so, is it possible to buy a home in a seller’s market, or should you wait until it’s a buyer’s market? There are a lot of questions surrounding the state of the real estate market, and trying to keep up with dynamic changes can be tiring. So, first things first. It’s essential to understand how to tell the difference between whether it’s a buyer’s or seller’s market. We’ve compiled a comprehensive guide to help walk you through the differences and what to do during each.
How Can You Tell the Difference Between a Buyer’s Market or a Seller’s Market?
There are a few ways to understand the current market conditions in your area. You can usually figure out market shifts by looking at the following factors:
Days on the Market — In a buyer’s market, properties tend to stay on the market for longer periods of time. It’s likely a seller’s market if homes sell quickly, sometimes within mere days of posting a listing.
Inventory — When more properties are listed than interested buyers, you’re in a buyer’s market. Supply is higher than demand. You’re in a seller’s market when demand is higher than supply, and there are limited available properties.
Price — Price stabilization or decline usually tells if it’s a buyer’s market. Prices tend to rise in a seller’s market due to higher demand and reduced inventory.
Market Trends
If you’re unsure about the current housing market, working with a local real estate agent will provide invaluable information to help you on your home-buying or home-selling journey.
What is a Buyer’s Housing Market?
A buyer’s market occurs when the conditions of the market are in favor of homebuyers. In a buyer’s market, the supply of homes for sale exceeds the demand from potential buyers. This situation often leads to a more competitive environment among sellers, who may need to adjust their pricing or offer additional incentives to attract buyers.
Factors That Put the Market in Favor of the Buyer
There are several reasons why homes linger on the market, some of which include the following:
A decline in the job market
Increased construction
Shifts in demographics
Economic recessions
Tips for Buying in a Buyer’s Real Estate Market
A buyer’s market is the ideal time to purchase a new home. To help, consider some of the following tips for buyers in a seller’s market.
Consider All of Your Options — Take the time to explore your options. Widen your search and consider properties in different neighborhoods or with varying features. A buyer’s market allows for a leisurely exploration of the real estate landscape, so don’t limit yourself to a narrow selection.
Don’t Rush Through Things — Be patient, and don’t rush through the decision-making process. There may be a low number of buyers and plenty of houses to choose from, so you have time to make the right choice.
Negotiate Asking Prices — Buyers have the negotiating power, as sellers who don’t compromise may find their houses stay on the market longer. Use it to your advantage, within reason.
Ask for Flexibility with Concessions — Consider negotiating about closing costs or warranty coverage. Be transparent about your needs and explore your options with the seller.
Discuss Options for Repairs or Other Requests — If a home needs repairs, see if the seller is willing to make them before closing. If it means closing the sale, sellers are often accommodating to these types of requests.
How to Sell Your Home in a Buyer’s Market
There are a few tips for sellers in a buyer’s market to avoid having your home on the market for months. They include the following:
Prioritize Marketing — The stronger your marketing is, the more likely you will get buyers interested. Take the time to highlight the best parts of your home to appeal to prospective home buyers.
Make Repairs in Advance — When there’s a high real estate inventory, homes that need repairs will remain on the market. Get things fixed before listing your property to help expedite the sale.
Consider Paying for Closing Costs or Other Concessions — Offering to pay for closing costs or other concessions can give you an advantage in the market. It’s a good way to stand out if you can afford it.
Offer a Competitive Market Value — You won’t get much interest if you list your home above fair market value, so be competitive but realistic.
Be Open to Negotiation from Potential Buyers — Consider the requests from an interested buyer and whether you’d be willing to make negotiations. Being flexible can help you stand out in the local market.
What is a Seller’s Housing Market?
A seller’s market occurs when the conditions of the market are in favor of home sellers. In a seller’s market, the demand for homes exceeds the number of available properties on the market. This situation leads to a more competitive environment among buyers, who will likely need to increase their offer, forgo certain contingencies, and secure pre-approval.
Factors That Put the Market in Favor of the Seller
When properties currently available on the market decrease, it can be caused by a combination of one or more factors. Some of these include the following:
Population growth
Booming job markets
Low interest rates
Less construction
Developmental limits
Tips for Selling in a Seller’s Real Estate Market
When a seller’s market occurs, things get a bit easier. However, you should still take a few steps to help you close your home faster in a seller’s market. These include:
Get Your Home Ready to Sell — Even though you’ll have the upper hand, it’s still important to ensure your home looks presentable. Go through and remove any pictures, clean each room, and get ready for the open house.
Set a Fair Price at Market Value — Although some buyers may seem desperate, they likely won’t appreciate overly high prices. Avoid setting asking prices above fair market value.
Confirm Any Pre-Approval — Pre-approved buyers are a great way to expedite the home-selling process, but always confirm these before moving forward with a close.
Avoid Contingencies — You may have the power to limit any contingencies during the selling process. If this interests you, talk to your real estate agent to ensure adequate communication with interested parties.
How to Buy a Home in a Seller’s Market
There are a few tips for buyers in a seller’s market to maximize their efforts. They include the following:
Be Patient — Trying to buy in a seller’s market doesn’t mean you’ll never find a home, but it may require some time. Try to be patient and diligent about your search.
Mentally Prepare for Bidding Wars — If multiple parties are trying to close on a property, interested buyers may start increasing their bids. Being mentally prepared to go higher (within budget) can increase your chances of success.
Be Ready to Act Fast — Know what you want and be ready to close if the seller accepts your offer. The faster you act, the less likely the seller will choose another offer.
Don’t Ask for Too Much — While it can be difficult, avoid asking for too much. Keep your offer simple and to the point to appeal to sellers.
Know What You Want — At the same time, don’t settle for a home you don’t love or one that’s outside your budget. It can be frustrating, but buying a home is a big deal, and you don’t want to end up in a situation you regret.
Get Pre-Approved for a Mortgage — Getting pre-approved for a mortgage can help expedite the home-buying process and show sellers that you’re serious. It will also give you a better understanding of your budget throughout the process.
Work with a Real Estate Agent — A real estate agent can help you find local listings that match your preferences and increase the likelihood that your offer is considered.
Whether you’re looking to buy a home or sell, First Star Realty can help. Our team of real estate professionals have years of practice and knowledge and always work to ensure you have an amazing experience. We truly believe we haven’t done our job if you don’t have an amazing experience with our realty services. If you’re ready to buy or sell a home in Northwest Arkansas, contact First Star Realty. Our highly-seasoned real estate professionals are dedicated to providing exceptional, personalized service to our clients. Call us at 479-267-1600 to get started, or local real estate agent today.
