Seller’s Market vs. Buyer’s Market

Similar to other markets, the housing market follows a cyclical pattern that can be significantly impacted by various factors such as interest rates, economic situations, and consumer sentiments. These factors can lead to either a shortfall or excess of housing. A shortage of housing or a higher number of prospective buyers than available homes results in a seller’s market. Conversely, a buyer’s market arises when there is a surplus of housing or more properties on the market than potential buyers. A balanced market is characterized by an equal number of homes for sale and buyers.

Seller’s market at-a-glance

When there are more prospective buyers than available homes for sale, prices usually rise due to the heightened demand. In such a scenario, homes tend to sell rapidly, and there is a greater likelihood of multiple offers on a property, giving sellers an advantage in negotiations (and potentially rejecting conditional offers).

Buyer’s market at-a-glance

When there is an excess of homes on the market compared to the number of prospective buyers, prices tend to decrease due to the higher supply. In such a situation, homes may remain unsold for longer periods. A surplus of housing can hinder the rise in prices and even cause price reductions. Buyers have a wider range of options and are better equipped to negotiate deals in such a market.

It’s crucial to identify the type of market you’re entering when buying or selling a property. If you’re uncertain, seek advice from your real estate agent. While it’s ideal to sell a home in a seller’s market or purchase a property in a buyer’s market, people may not always have the opportunity to align their sale or purchase with the most advantageous market conditions. For instance, you may find yourself buying in a seller’s market or selling in a buyer’s market.

Tips on selling your home in different housing markets

Selling a property in a seller’s market is typically a swift and effortless process. However, in a buyer’s market, where numerous properties are sitting idle, you may need to take some steps to enhance your chances of making a sale. The following actions can help:

• Gain an understanding of the local market and your competition.
• Set the right price for your home (and be conservative).
• Ensure that your home is ready for viewing at all times (consider hiring a professional home stager to highlight the best features of every room).
• Be flexible with your real estate agent’s and prospective buyer’s schedules (treat every showing as an opportunity to make a sale).
• Be open-minded about your terms (such as offering an extended closing date or lowering your asking price).
• Remain patient and optimistic.
• If you receive an early offer, seriously consider it as a better one may not come along.

Multiple offers

In a seller’s market, where there are fewer homes available for purchase and more buyers looking, it’s probable that you’ll receive multiple offers for your property. Here are some actions you can take to increase your chances of receiving several offers:

• Ensure that your home is clean, uncluttered, presentable, and always ready for showings
• Consider pricing your home slightly below its fair market value.
• Collaborate with your real estate agent to guarantee that your home has adequate market exposure
• Be prepared to show your home at any time

Tips on buying a home in different housing markets

When buying a new home in a challenging seller’s market, there are several strategies you can use to increase your chances of success:

• Obtain pre-approval for a mortgage before beginning your search so you know how much you can afford.
• Make a strong offer with a significant deposit to demonstrate your commitment to the purchase.
• Move quickly on a property you like, but without being pushy or annoying.
• Make your offer as appealing and straightforward as possible by eliminating as many contingencies as possible, such as a contingency on the sale of your current property, and offering a larger down payment or shorter closing date.
• Be agreeable and responsive to the seller’s requests.
• Be flexible with your move-in date.
• Consider including a personal letter to the seller to explain why you love the property and why you would be the ideal buyer.

Bidding wars

If you happen to be in a bidding war with another prospective buyer, it’s advisable not to reveal your hand to either the seller or your competitor. Instead, try to discern the seller’s trigger, such as a specific closing date that would work for them, and include it in your offer. This could potentially give you an edge over other bidders. Additionally, remember that sellers favor offers with no conditions attached.

For more advice on selling your current home or buying a new one in any type of housing market, reach out to your mortgage specialist or real estate agent.