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What are buyer and seller markets?

What are buyer and seller markets?

Let’s face it: We are all experts in real estate… Right? Most family gatherings are just “meeting of the minds”, where real estate advice and lingo are thrown around as loosely as a fantasy football. Really.

So when the conversation turns to the topic of Buyer and Seller Markets, what does it really mean?

A sellers market refers to the type of environment where there is less supply and more demand. Essentially, you might have the same 10 people fighting for the same property. Because of this, you tend to see more bidding wars, where prices get boosted up beyond the original list price. But, even beyond price alone, are the other terms and negotiating factors that become more evident. For example, you may come across seller demands for quick-closing escrows, shorter contingency periods, the removal of an appraisal contingency or all-cash requests. When a seller has the upper hand, a buyer should always expect that the terms are going to be tighter and more restrictive, as this will ultimately weed out the less serious competition.

Now, let’s talk about a buyer’s market. Basically, this is the opposite of the above.  In a buyer’s market you would be more likely to see a neighborhood flooded with homes for sale and less buyers that are seeking or able to purchase. In this type of market, a home might be sitting on the market for several months with only a trickle of prospective buyers walking through. In this case, the seller tends to become a little bit more desperate to sell. This typically leads to the seller accepting a lower purchase price and/or conceding to contractual terms that are slightly more favorable to the buyer. For example, you may see buyers requesting longer escrow periods, or asking for concessions or credits towards their closing costs. If a seller is desperate to sell, the buyer retains the upper hand and has more leverage to make demands or requests.

It’s important for those of us who are beginning our home-buying journey to have a basic understanding of what type of market were in. Part of this is to understand that there can be a gradual or slow progression from one type of market to another. It’s not just an overnight change that takes place. The buyer needs to recognize and study the current activity, which ultimately provides a realistic idea of the manner in which they’re going to have to pursue any specific property.

Our role as agents is to provide you with the most accurate market information at any given time. We see this as the best way to facilitate the acceptance of our clients’ offers and ultimately, the purchase of their desired home. This is also extremely valuable for our home sellers, as our goal is to always help you get top-dollar in the least amount of time possible.

 

Both buyers and sellers benefit greatly from understanding their neighborhood and local market sales activity.

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0 thoughts on “What are buyer and seller markets?”

  • Martin Moore

    March 22, 2016 at 7:10 pm

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