Whether you’re buying or selling property, the primary goal for everyone involved is usually a quick and profitable sale. But the length of time a home sits on the market depends on quite a few factors, one of which is whether it is currently a buyer’s market or a seller’s market. These are terms that get thrown around a lot in the property investing world but play a significant role in how quickly a home sells. Understanding the difference between a seller’s market and a buyer’s market will help you identify current market trends and devise a strategy that results in a quick and profitable sale.
A Seller’s Market
A seller’s market occurs when more buyers are looking for homes than there are homes for sale. This puts sellers at the advantage, because in terms of supply and demand, they have what is in demand. A seller’s market means higher competition between buyers and puts more power in the seller’s hands. During a seller’s market, sellers often see multiple offers come in within a short amount of time, and have the freedom to accept only the most appealing offers. When the market is leaning more towards sellers, home prices increase, and buyers are willing to pay it. The fierce competition between buyers means sellers have their pick from qualified and motivated buyers and are far less likely to agree to buyer contingencies and concessions.
Buying In A Seller’s Market
Not everyone has the luxury of waiting around until market conditions lean more towards the buyer to buy a home. Buyers who hope to buy a new home in a seller’s market must act fast. In a seller’s market, hesitating even just a few hours to submit an offer can cause you to lose out on a property you are interested in. High competition means other buyers are ready and eager to send their offers within hours of a listing going live.
The best thing a buyer can do when purchasing a home in a seller’s market is to be prepared. Having all the paperwork and proper documentation on hand will reduce wait times and give you the best shot at submitting a thorough and complete offer.
Part of being proactive in a seller’s market is getting pre-approved. Doing so allows you to know exactly what you will qualify for and will speed up the buying process once you submit your offer. Anything you can do to avoid delays will help you be successful in buying a home in a seller’s market.
One way to stand out amongst the other buyers in a seller’s market is to get personal. Sellers often see multiple offers come in within hours and days of them listing their property for sale, so the key to getting noticed in the shuffle is to stand out. Consider including a personal letter with your offer, appealing to the seller’s more personal side. Is the yard a perfect place for your kids to play? Is the home in the same neighborhood as your in-laws? Connecting with the seller on a personal level may be just the thing that inspires them to choose your offer over someone else’s.
A Buyer’s Market
A buyer’s market occurs when there are more homes that need to be sold than people looking to buy homes. This turns the tables and puts the power in the hands of the buyers. Sellers are desperate to sell their homes and will resort to lowering the asking price or agreeing to buyer contingencies to close the sale. Buyers have a much better chance of getting the home they want for below-asking price and can even get sellers to throw in extras such as completing a list of cosmetic repairs. During a buyer’s market, a seller can decide to heed to the request of the buyer, or take their homes off of the market and wait for a shift in their favor.
Selling In A Buyer’s Market
While not ideal, homeowners can sell their homes for asking price (or close to it) during a buyer’s market, but it requires patience. While the goal is usually a quick AND profitable sale, sellers may have to pick between quick OR profitable when navigating a buyer’s market. There are few areas seller’s can focus on when selling their home during a time when the power is in the hands of the buyer:
If you do not have the time to wait around for market trends to shift, you’ll have to adjust your expectations when it comes to the price of your home. A buyer’s market is not the time to be stubborn about what you feel the home is worth. Being flexible and willing to adapt is key in selling during a buyer’s market. It is not recommended to underprice the home, as it sends up red flags for buyers and may make them think there is something wrong with the property.
In a buyer’s market, buyers have the luxury of picking the home that best suits their lifestyle right now. Not six months from now, not a long list of repairs from now, but right now. Make the repairs, freshen up the paint, spend the money on staging, and hire the professional gardener. Now is the time to pull out all the stops to make a lasting first impression.
Because buyers have a lot of options, they will not spend a lot of time considering a property that does not appeal to them right away. This means all of your marketing materials need to be accurate, easy to read, and aesthetically pleasing. A well-written listing description, high-quality photos, and exposure on a variety of different sites and marketing platforms will help up your marketing game and impress motivated buyers.
Sometimes in order to generate more interest during a buyer’s market, a seller must be flexible and adaptable. When it comes to showings, make your home available during peak times like evenings and weekends. This may be a bit of an inconvenience for a while, but giving buyers access to the house when it is convenient for them may help sway them into choosing your home over the others on the market.
The most significant difference between a buyers market and a seller’s market is the competition. It boils down to who has the power and who may have to do some compromising. Like the weather, property market trends shift and change. If it’s a buyers market now, it is only a matter of time before sellers are back in control. Understanding the different market conditions can help you adapt your home buying and selling strategies to help you achieve the ultimate goal: a quick and profitable sale.