We recently highlighted seller’s markets, and what such an environment may look like for both sellers and buyers. Now, we’re taking a closer look at the opposite scenario: a buyer’s market.
When buyers have the upper hand in negotiations, the environment is labeled a buyer's market. In such a market, inventory exceeds the number of potential buyers in the market, meaning there is less demand than there is supply.
Tips for Buyers
Try your luck at offering below-asking. In certain cases, sellers may be prepared to accept a lower price in order to close the transaction when they are aware that a buyer has plenty of other homes to choose from. Think about how much you desire the home and allow your negotiating strategy to be guided by your answer. If the property checks all your boxes for your dream home and you’d prefer to pay more than the asking price than risk losing out on it, you may want to err on the side of caution and make an offer at, or only slightly below the asking price. Alternatively, if you’d only purchase the home at a significant discount, then making an offer significantly below-asking is a risk you may want to try.
Request concessions from the seller. Asking the seller to cover some or all of your closing costs can prove to be an alternative to submitting an offer below-asking. Or perhaps, you’d like to try your hand at both. Other items you may wish to negotiate with the seller may be closing date or including furnishings in the sale, for example.
Request repairs, post-inspection. In a buyer’s market, a buyer may likely make their offer contingent upon an inspection, and a seller may be more inclined to agree to make necessary repairs to the home prior to closing. If a home requires a considerable amount of repairs, a seller may quickly realize that, if they fail to perform those repairs, they may end up putting their home back on the market – and, at a lower price, knowing the next buyer will likely discover those same issues within the home.
Tips for Sellers
Emphasize your home’s advantages. Evaluate comparable properties in your price range before putting your house on the market. Consider the features within those homes, versus what yours may offer. Things to consider may be: location, floorplan, finishes and upgrades. If you can’t easily identify advantages within your home, get creative. With the help of your real estate advisor and professional stager, showcase your home with a "less is more" approach so buyers visualize themselves, their belongings and their lives within your walls. Finish any ongoing projects, paint the interior and exterior in a fresh, modern hue, and spruce up your exterior including landscaping to enhance your home's curb appeal.
Budget for buyer requests. In a market where buyers are more likely to request concessions, consider how you, as a seller, can afford to provide that "extra" while still considering how you’ll pay off your own mortgage, put a down payment on your new home and cover your closing and moving costs.
Consider a pre-inspection. Hiring your own inspector prior to going on the market will allow you to locate issues that should be remedied, in order to increase the value of your home and therefore, increase buyer interest. In theory, performing a pre-inspection and correcting major issues should also make for a smoother inspection once under contract. Once you’ve got an idea of what the issues may be, if any, you can choose to remedy the issues prior to listing, price accordingly or give the buyer a repair credit (if the buyer asks for it.)
Determining If You’re In a Buyer’s or Seller’s Market
It's usually relatively simple to determine the state of the market by keeping a close watch on currently active and recently closed properties.
Signs of a buyer's market:
- Homes are on the market for longer
- Homes may sell below the asking price
- Home values decline
- Inventory is at an all-time high
Signs of a seller’s market:
- Days on market decreased/shorter days to offer
- Home may sell above asking price
- Home values increase
- Inventory is low
Regardless of the current market conditions in your area, having a trusted real estate advisor on your side is the best tool you can have to ensure you a competitive advantage. For guidance with buying or selling in any market, connect with me via email [email protected] or on social media.