When is a better time to buy or sell a home? Should it be in a buyer’s or seller’s market?
It’s a common question and one that has many answers.
Buyer’s and seller’s markets have many differences, and buyers and sellers should act differently in each market.
What is a Buyer’s Market?
A buyer’s market occurs when there are more homes for sale than buyers.
In other words, fewer buyers are in the market than sellers wishing to sell their homes.
When supply is higher than demand, buyers have the upper hand.
In a buyer’s market, prices drop, and homes take longer to sell. This is because buyers have many options; if they don’t like what one seller offers, they’ll go to another.
Sellers are in a bind because they must meet what buyers want or sit with their homes unsold for longer.
Strategies for Buyers in a Buyers Market
Buyers have the upper hand in a buyer’s market, but there are still strategies buyers can use to make the most of their money.
- Don’t rush – During a buyer’s market, buyers have many options and don’t have the stress of other buyers beating them to the offer. Take your time, evaluate your options, and choose the right home for you.
- Consider your offer carefully – You don’t have to offer the highest price to beat other buyers in a buyer’s market. While you should pay a fair price for the home, you shouldn’t rob yourself. Work with your real estate agent to figure out the perfect amount to bid, and consider bidding low (within reason) so you have room to go up and still be within your budget.
- Consider contingencies or seller concessions – With less competition beating down the door, you can protect yourself during a buyer’s market. Ask the seller for the contingencies you need, or ask for seller concessions. This could be as simple as asking for a flexible closing date or asking the seller to contribute to your buyers closing costs.
- Know the market – Work closely with your real estate agent to determine what other homes have sold for recently. Of course, the market won’t immediately reflect those prices, but if you know homes in the area sold for a great deal, you can also try to get the same deal.
Strategies for Sellers in a Buyers Market
A buyers market is tougher for sellers. Here are a few strategies to ensure you get what you need in a buyer’s market.
- Make your home as attractive as possible – Fix any issues with your home, declutter it, and pay for home staging. Buyers have many more options in a buyer’s market, so make your home stand out as something they ‘must have’ versus just another home in a sea of homes.
- Price your home competitively – Do your research and work closely with your real estate agent to determine what homes are selling for in the area. Buyers know they have room to negotiate in a buyer’s market, so be realistic about how much you can get.
- Use great marketing – A buyer’s market isn’t the time to cut back on marketing efforts. Instead, work with a reputable real estate agent who can make your home stand out among the many others for sale, getting the buyers’ attention and, hopefully, the bids.
What is a Seller’s Market?
A seller’s market is the opposite of a buyer’s market. Instead of more homes than buyers, there are more buyers than homes.
Sellers have the upper hand because there are typically more offers and interest in their homes.
In a seller’s market, homes sell much faster, and buyers often get into bidding wars to win the bid.
Check out this article we wrote on how to get your offer accepted in a sellers market.
The bidding wars often increase home prices, giving sellers a higher price for their homes.
Sellers don’t have to be as forgiving with contingencies and seller concessions in a seller’s market either
Strategies for Buyers in a Sellers Market
Buyers have the disadvantage in a seller’s market, but here are some strategies to get through it:
- Get pre-approved – Don’t look at homes unless you have an official pre-approval letter from a lender. Most sellers won’t show their homes without a pre-approval letter because they know there are lots of buyers who are interested in their homes in a seller’s market.
- Be ready to act fast – When you find a home you like, be ready to make an offer. If you don’t, another buyer will. If you get your offer in first, you might avoid a bidding war.
- Be flexible – Sellers can choose any offer they want in a seller’s market, so make your offer stand out. Try to match what the seller wants without too many contingencies or changes.
- Know how to handle a bidding war – A bidding war doesn’t mean you won’t get the house. Work closely with your real estate agent, alerting him/her of your budget and how high you’re willing to go in a bidding war.
In a sellers market, conventional loans are more popular. Here’s why : Why Should I Pursue a Conventional Loan Over a Government Loan?
Strategies for Sellers in a Sellers Market
Sellers much prefer a seller’s market versus a buyer’s market, but there are still some factors sellers should consider:
- Keep your price at market value – Don’t overprice or underprice your home. It turns buyers off. Instead, stay in line with the market, and you might even get a higher price if buyers get into a bidding war. Have a conversation with your real estate agent to find out what the best course of action is for your situation.
- Look at more than the financial offer – Pay close attention to the big picture, not just the dollar amount. What closing date, contingencies, and concessions is the buyer asking for? Choose the offer that matches what you need.
- Don’t assume the sale – Even in a seller’s market, you should declutter, repair, and stage your home. Buyers can be picky even in a seller’s market, so market your home as if it’s a buyer’s market to ensure you get top dollar.
It’s important to know what kind of market you’re dealing with, whether you’re buying or selling a home.
It will affect your strategies and how much you pay for or make on a home.
Talk with your real estate agent to learn what the market is like, and adjust accordingly.
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