Seller’s Market vs Buyer’s Market – What’s The Difference?
Is it a buyers market or a sellers market? Understanding your local housing market can help get the best price for your home, whether you are the seller or the buyer. While these trends change over time, interpreting the difference of each will help you navigate your next real estate venture to get the optimal outcome.
What is a Buyers Market? Plus Tips
A buyer’s market exists when people who want to buy homes have more negotiating power than those selling homes. In a buyer’s market, there are more homes for sale than potential buyers. An economic downturn, a major employer leaving the area, high crime rates and overbuilding are all potential causes of a buyer’s market.
In a buyer’s market, as a buyer, you can take advantage of your power to negotiate a better deal. Some strategies to discuss with your realtor are:
Offer Less than the Asking Price – When the seller knows you have many options for homes to buy, they may be more willing to lower the price they’ll accept to close the deal. Think about what you would pay for the home if you had no idea what its list price was. If you would only be happy with the home at a steep discount, it doesn’t hurt to make a lowball offer. If it’s your dream home and you would gladly pay above the listed price, you may want to play it safe and submit an offer at or only slightly below what the seller is asking.
Request the Seller Make Necessary Repairs – You don’t always need a home inspection to know that a home needs a new roof or other major fix. Sellers are more likely to make needed repairs in a buyer’s market unless they’re willing to sell the property as a fixer-upper, knowing that this will limit their pool of potential buyers and probably lower the potential price.
Selling your home in a buyers market may not be ideal but it may be necessary. Here’s some tips to try when selling your home in a buyers market.
Highlight Your Home’s Competitive Advantage – Before you list your home, see what else is on the market in your listed price range. What does your home offer that buyers will find more attractive? Even in a condominium or suburban tract, some locations and models will be more appealing to certain buyers than others. Maybe you have a convenient first floor unit or a quiet top floor unit, a house near shops and restaurants or a perfect backyard for dog owners.
Conduct a Pre-inspection – One way to make your home more attractive to potential buyers is to hire an inspector yourself to identify problems that you should fix before listing. Taking this step will theoretically allow your home to sail through the appraisal and inspection processes once you have an interested buyer. If the inspection unveils issues that you don’t want to deal with fixing or can’t afford to fix, you can either lower the asking price or offer the seller a repair credit at closing to handle the outstanding issues.
What is a Sellers Market? Plus, More Tips
A seller’s market exists when people who want to sell their homes have more negotiating power than buyers. In a seller’s market, there are fewer homes for sale than buyers. Much of the United States is currently experiencing a seller’s market because there’s a nationwide housing shortage.
Being a home buyer in a sellers market can be very stressful. You’ll need to know well in advance exactly what you want in a home and how much you’re able and willing to spend so when the time comes to place your bid, you can without hesitation.
Be Prepared for Bidding Wars – Start by assuming you won’t be the only buyer bidding on a property you’re interested in. Decide on a firm upper price limit with your realtor at the start based on what the home is worth and what you can afford. Being the winning bidder is useless if the home appraised too low for your financing to get approved.
Try to Get Pre Approved for a Mortgage – When you’re battling for the same house with multiple buyers, you can stand out by demonstrating that you’re financially able to make good on your offer. A mortgage pre-approval from a lender who has reviewed your finances goes a long way. Some lenders may even offer pre-underwriting, which can strengthen your offer further with a promise to close quickly.
Act Quickly – Homes will not stay on the market long in a seller’s market. Oftentimes, homes get offers the day they are listed. Sometimes real estate agents show homes that are coming on the market before they’re actually listed. You have to stay on top of new listings and be prepared to make fast decisions.
Selling your home in a sellers market may seem like a no-brainer. Often you can sell any property in any condition when there isn’t enough inventory and buyers are lining up to make offers. You’ll still want to ensure you are taking the necessary steps to get the best price for your home.
List Your Home at Market Value – It may be tempting to list your home higher because the market is right or lower to initiate bidding. But Buyers can be turned off by overpriced homes, and mortgage applications get denied when an appraisal can’t support an ambitious offer price. Listing your home at its value is the best way to get what you want for your home.
Know How to Choose the Best Offer – The offer that sounds the best and the offer that will actually close on time with minimal hassle are not necessarily the same offer. The best offer is often the one with the strongest finances, meaning it is either all cash with proof of funds or a pre-approved buyer with documented financing, even if it’s not the highest offer.
And of course, make sure to have your next home lined up after the sale is complete. In a seller’s market, there is a good chance your home will sell in less than 6 weeks.
No matter buyer’s or seller’s market, our real estate agents at Coldwell Banker Carroll Realty will make sure you get the optimal outcome when purchasing or selling your property. We have local realtors throughout Panama City, Panama City Beach, and 30a ready to help you on your way. Contact our locally owned, nationally recognized realty team today.