Is it a buyer’s or seller’s market? How can you tell? Which type of market is best? The answers to these questions can help you get the most out of your home buying or selling experience.
A seller marketplace favors homeowners looking to sell their homes for the highest profit. A buyer’s market, on the other hand, benefits prospective homeowners looking to purchase a house at a great value.
Comparing a buyer’s vs seller’s market requires you to analyze your local housing market. Home prices and housing trends vary across the country. Although the national housing market is something to consider, it is arguably more important to look at home trends in your local area.
Let’s break down and compare a buyer’s market vs seller’s market so you can develop a strategy to get the best value on a home, regardless of whether you are buying or selling.
What is a Seller’s Market?
A seller’s market, sometimes referred to as a seller marketplace, exists when there are fewer houses for sale than buyers looking to purchase homes. This type of market favors the seller instead of the buyer, which means the seller has more negotiating power for increasing the price or choosing the highest offer.
To determine if you’re in a buyer or seller market, consider this: the United States is currently undergoing one of the largest housing shortages in the history of the housing market. There are far more interested buyers than there are houses for sale. Because of the increased demand for housing and so few options, buyers are at the mercy of the seller, who has more power to pick the best offer.
However, when comparing a buyer’s vs seller’s market, keep in mind that local markets can differ from the national market. If you’re unsure, you can find information about the buyer’s or seller’s market by zip code by doing a quick online search.
Here are a few common characteristics of a seller’s market:
- Homes sell quickly
- Houses listed online disappear within a few days
- Homes are listed well above market value
- Fewer “for sale” signs in the area
- Buyers enter into bidding wars
What is a Buyer’s Market?
If you’re asking yourself, “is it a buyer’s or seller’s market right now?” you may be inclined to believe it’s a seller’s market due to the national housing shortage. However, it is possible to live in an area that has a local buyer’s market.
In a buyer’s market, there are more houses for sale than there are interested buyers. This means that buyers have more negotiating power when it comes to reducing the price of a home or asking for certain upgrades.
There are few other signs that you live in a buyer’s market. Here are some characteristics to look for:
- Increased number of “for sale” signs around the area
- Houses sell slowly or sit on the market for several months
- Homes are listed below market value
- Homes sell below the listing price
- Local economic turmoil
When comparing a buyer’s vs seller’s market, prospective homeowners may decide to wait until the market shifts so they can get a better deal. The longer a home sits on the market, the more inclined the seller may be to agree to the buyer’s terms.
Tips for Buying a Home in a Seller’s Market
Whether you’re in a buyer or seller market, you may be determined to purchase a home as soon as possible. A seller’s market does not make it impossible – it only adds a few roadblocks. There are a few strategies you can use to get the most value out of your homebuying experience.
If you live in a seller marketplace, the best thing you can do as a buyer is to get pre approved for financing. This is the first step in the homebuying process and shows the seller that you are financially capable of purchasing the home.
Getting preapproved takes time, which is something you don’t always have in a seller’s market. Come prepared with a preapproval letter from a mortgage lender so you can stand out among other prospective buyers.
While comparing a buyer’s market vs seller’s market, you may find that bidding wars are extremely common when sellers have the advantage. Just because you find a home within your budget does not mean you are the only buyer interested.
Also, the listing price is usually just a starting point. In a seller’s market, sellers have more power to continuously raise the price when there are multiple buyers interested.
Don’t get caught up in the bidding wars; determine your maximum budget and stick to it. Also, make sure you know the value of the home so you know how much you could be overpaying in your effort to outbid other buyers.
Tips for Selling a Home in a Buyer’s Market
Once you have done your homework and determined if you are in a buyer’s vs seller’s market, it’s time to put your house up for sale. Selling a home in a buyer’s market is not always recommended, but sometimes, you do not have a choice. Luckily, there are a few tips you can use to maximize your selling potential.
If you are not in a seller marketplace, you need to give yourself the competitive edge. In a buyer’s market, there are far more homes on the market than there are potential buyers. Set your home apart from others by making repairs, upgrades or other improvements that add value to the home.
Attracting buyers may be easier if you list your home slightly below market value. By listing the home at a lower price than competitors, buyers may be more willing to inquire about it. It may be a good idea to consult a real estate agent to discuss your selling tactics.The most important tip for selling a home in a buyer or seller market is to put yourself in the shoes of the buyer. Most prospective homeowners search for homes online. If you don’t list online, you could be missing out on thousands of potential buyers. Also, make sure to provide professional photos that allow the buyer to get the best virtual view of the home.