• calendar_month October 25, 2022

What’s the Difference Between a Buyer’s Market and Seller’s Market?

 Current Real Estate, Industry, RE News October 18, 2022October 18, 2022  Seth Styles

Last week, we discussed our latest absorption rate statistics and how they are indicative of a seller’s market. Likely, some of you asked yourself, “What is a seller’s market?” And by comparison, you may have also wondered what defines a buyer’s market. 

Recognizing the difference can be key in planning your buying or selling strategy. But it can also help you predict when the scales tip and send one market sliding into the other. So, today we’re going to take a closer look at buyer’s and seller’s markets in real estate so you can plan your approach. 

The Differences Between a Seller’s Market and Buyer’s Market in Real Estate

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In a buyer’s market, you can expect sluggish home sales lending to a larger inventory of homes remaining on the market. Typically, this drives average home prices down as a result of supply exceeding demand. Therefore, in a seller’s market, you can expect buyers to snatch up homes from the market rather quickly, leaving minimal inventory that drives up home prices. 

This cause-and-effect relationship isn’t a rigid rule, however. We’ve seen many transactions buck the trends over the years. But paying attention to whether we’re in a buyer’s or seller’s market can still be useful when formulating your strategy. 

While it’s commonly agreed that a buyer’s market grants an extra advantage to buyers just as a seller’s market favors a seller, this isn’t an open-and-shut absolute. You can still take precautions as a buyer or seller in either market to increase your chances of a successful transaction. 

Common Strategies for a Seller in a Buyer’s Market

If you’re trying to sell your home in a buyer’s market, you may feel some greater-than-average adversity. But is it impossible to sell your home in these conditions? Not even in the most radical buyer’s market. 

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But you may need to get more creative with your approach. You’ll definitely want to emphasize your home’s most attractive features. But you should also give some extra attention to the areas of your home that need some extra care. 

For example, how is your property’s curb appeal? Even if you think you’re doing pretty well in this area, we recommend brushing up on some curb appeal ideas to further beautify your home. Many of these are low cost and low effort, but can give you a high reward with a solid sale, buyer’s market or not. 

We trust that you know what you have with your home. But here’s a friendly reminder to stay realistic about setting your selling price if a quick sale is important to you. There’s an art to knowing when to go for what you want instead of what you think you can get and when to curb your goals to the current market. When in doubt, a skilled real estate agent can help you determine the right figure. 

Common Strategies for a Buyer in a Buyer’s Market

Obviously, the buyer is going to have the wind at their back in a buyer’s market. But they can still be proactive in tightening their chances of victory. One way is by limiting demands. 

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As a buyer, you know exactly what you want. So don’t string a seller along with request after request because circumstances are in your favor. You could find yourself blindly dancing over a boundary and losing a purchase you really want. 

Buyers should also take advantage of the buyer’s market by taking their time in reviewing all of their options. In a buyer’s market, you have your pick of the inventory. So, honor this by taking the time to really see what’s out there! 

Common Strategies for a Seller in a Seller’s Market

Likewise, when the seller has a market advantage, they shouldn’t simply rest on their laurels and let fate do its thing. Instead, there are several proactive strategies a seller can use even with the odds in their favor. 

For example, your home should always be presented in the most positive light possible. Make any necessary repairs, scour our curb appeal ideas blog for easy improvements, and emphasize those selling features. 

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Sellers should also resist the temptation to state a deadline for offer reviews. You may think a deadline is helpful, but it could turn off the most determined buyers. Why? Because they’re more prone to submit an offer in the hopes of immediate acceptance. A deadline throws cold water on that kind of heat. 

It’s also important to recognize that bigger is not always better. Because if you use the market’s favor to drive up an exorbitant price, you could still get a buyer. But will they be able to get financing? 

Lenders won’t approve financing for more than a home’s appraised value. If you overshoot by blindly chasing a big payday, it could ultimately tank the sale. So, even when the odds are in your favor, you need to price strategically. 

Common Strategies for a Buyer in a Seller’s Market

When fighting the current, you have to swim extra hard to stand out from other offers. Fortunately, there are plenty of ways you can do this! 

One of the most successful strategies is to seek pre-approval for financing. This is an attractive prospect for sellers because it not only indicates financial backing but can speed up the closing process. 

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Historically, making an offer above the asking price opens up a quick path to success. It could also trigger a bidding war so make sure to only promise what you can deliver. 

Then, there’s the almighty all-cash offer. An all-cash offer often capsizes any surrounding offers. So, if this method is within your means, it’s well worth a try. 

But even if you can’t muster an all-cash offer, you can sweeten a deal in a host of other ways. This can require you to be flexible about certain terms or more open to a quick closing. But if you know exactly what the seller values, you can hone your buying strategy accordingly. 

Anyone’s Market

Ultimately, a seller’s or buyer’s market should only be seen as a guide. Viewing it as a rigid command shortchanges all of the work you and your agent could be doing to make your dreams come true. We see a lot of against-the-odds miracles in this business. To paraphrase a recent statement from our CEO and founder Harout Keuroghlian, this market really belongs to anyone who wants it badly enough.