What’s the difference between a buyer’s market and a seller’s market? The answer is fairly straightforward, but being involved in one or the other can greatly affect your ability to move...regardless of which side of the fence you’re on.
Naturally, in a post with a title asking the ‘what’s the difference’ question, we’ll explore what determines and differentiates buyer’s and seller’s markets, but we’ll also take a look at a few tips along the way, too. Oh, and there’s a third kind of market we’ll explore later on in the post as well!
First, though, let’s get the main question answered…
What’s the difference between a buyer’s market and a seller’s market?
Knowing where the property market currently stands when you decide to enter it is vital if you want to get the best deal possible, and that applies to both buyers and sellers. Naturally, one type of market will be more favourable than the other depending on your situation, but there are tips that can be applied in each...even if you’re the underdog.
Being aware of what kind of market you face is the first hurdle. With this in mind, here are our definitions:
What is a buyer’s market?
In short, a buyer’s market occurs when there are more homes on offer than there are buyers to buy them.
This puts the balance of power firmly in the buyer’s corner, hence the name, as they will be able to take their time and even potentially barter with sellers over price. Deals are there to be had for those looking to purchase property and sellers may have to pull out all the stops just to get noticed by the few buyers that are out there.
What is a seller’s market?
Unsurprisingly, a seller’s market is the opposite: more buyers than there are homes to go around.
Equally unsurprising is the shift in power. In this type of market, it is the seller who has the upper hand and buyer’s will often compete against each other for the choice cuts of property market meat! This competition can drive up prices, which means better deals for sellers and a faster turnaround time, too.
As mentioned above, however, there is a third kind of market that is rarely spoken about…
A balanced market
Again, there’s no prizes for guessing this one. A balanced market is precisely what it suggests: the amount of people looking to sell property is equal to those in the market who wish to buy.
The result of a balanced market is often stable prices offered and taken at a level that suits both parties. The time it takes to sell a property often finds an equilibrium, too.
So, it’s all about supply and demand?
Exactly right. When supply levels outstrip demand, the market favours the buyer, and vice versa when demand is higher than supply.
There are, however, a few things that both parties can do in order to improve their situation if they find themselves of the wrong side of either market.
Let’s take a look!
Tips for sellers in a buyer’s market
While some will hold off until the market swings back in their favour, many will find that they simply aren’t in the privileged position of being able to wait. So, what to do? Entering a buyer’s market as a seller can be a little daunting, but there are a few tips you can use in order to help your cause:
Knowing you’re entering into a difficult market is essential, but the information will be useless if you fail to act accordingly. Setting a competitive price for your home from the get-go will ensure that your property gets its fair share of attention from those all-important buyers. Going in too high could mean your perfectly sellable property is entirely overlooked.
Show your home at its best
Sellers can be more blasé about the condition of their property when the market is in their favour, but when it isn’t they’d better do all they can to make sure it stands out from the crowd. Home staging and completing any obvious repairs will help your property get noticed in a difficult market, so make sure you do them.
Be prepared to negotiate
No, this doesn’t mean ignoring point one and overpricing so you can knock the price down later (this strategy is flawed for a number of reasons, by the way. Not least because the majority of interest occurs when a home is new to market). Price is a factor, but negotiations can also apply to terms, too.
Maximise your exposure
It stands to reason that the more people who see your property, the more interest you’re likely to receive (providing you’ve followed our tips thus far!). Making sure your property is well marketed is vital at the best of times, but in trying conditions it is absolutely essential. Make sure your agent has all bases covered, which brings us nicely to…
Work closely with a reputable local agent
Yes, yes. We would say that, wouldn’t we? The thing is, there’s little denying the importance of doing so. Opting to instruct an agent who has superb knowledge of the local area will help you in so many ways.
Not only will they be able to advise you on a realistic starting price, they’ll also have a marketing team behind them who can put your property in front of the greatest number of eyeballs, too.
And, should your home need a little TLC, your local agent will usually be on good terms with the best contractors and cleaners in the area, as they’ll be using them regularly themselves for property management purposes. Further down the line, a good agent will also be on hand to offer priceless advice over negotiations as well.
In short, working closely with a highly accredited, reputable local agent like Petty’s means the top tips for selling in a buyer’s market will largely be taken care of for you.
Tips for buyers in a seller’s market
So, how about buyers buying in a seller’s market? What tips and advice should they heed? Let’s take a look!
Work out the essentials
Knowing exactly what you want is vital when entering a seller’s market. While the idea of buying your dream home without a hitch may make you warm and fuzzy, in reality it’s likely you’ll have to compromise on one or two things if the market is against you. If you know what you can be flexible on before you start viewing, you’ll be in a far greater position later on.
Getting a great deal is obviously high on everyone’s list, but in a seller’s market it’s vital that buyers don’t try their luck too much. Offering a fair price for the property is the way forward, as lowball offers are likely to be dismissed out of hand by sellers who may well have multiple interest from buyers.
While money most certainly does talk, people do deals with people, so being nice can go a very long way. If the sellers are present when you view a property, be friendly. As much as it’s important for the property to make a great first impression on you, the first impression you make upon the seller can have an impact to.
With multiple buyers for every property, dithering is not a good idea. If you like the look of a property, book a viewing. If you love it after you’ve viewed, make an offer. If you don’t, it’s highly likely someone else will. This is one instance where FOMO (Fear Of Missing Out) is warranted!
Although it may seem as though we’re contradicting the above point, patience is vital for buyers in a seller’s market. Yes, you need to act fast when you find a property that meets most of your requirements, but you certainly don’t need to panic. The right property for you and your family will come along soon enough...and it’s better to wait than act hastily and regret it.