Last Updated on May 22, 2023 by Bob Filipczak
Whether it is a buyers or sellers market – now and in the near future – will be the topic of conversation for anyone buying a new home or selling their current home. The real estate market is an ever-changing landscape that can shift between favoring buyers or sellers at different times. Understanding whether it’s currently a buyers’ market or sellers’ market is crucial for both home buyers and sellers. Let’s dive into the definitions of buyers and sellers markets. Then we will look at some helpful tips for sellers in a buyers market and buyers in a sellers market. Finally let’s discuss important questions to ask your agent in each scenario.
Definition of a Buyers Market
A buyer’s market happens when there are more homes for sale than there are potential buyers looking to purchase them. This typically leads to lower prices, more days on the market, less competition and greater negotiating power for buyers. That’s the simple, straightforward and concise definition. But there’s more to the story.
Definition of a Sellers Market
Conversely, a home sellers market arises when the demand for homes surpasses the available supply. Here, sellers have the advantage as they can command higher prices and receive multiple offers on their properties. In a sellers market, properties tend to sell quickly, sometimes above the asking list price. Buyers face stiff competition, limited inventory, and may need to act swiftly to secure a desired property.
In recent years, it’s been a hot market for sellers.
Which Market is it? Factors to Consider
Supply and demand is a simple equation, but the factors that control a market economy are a bit more complicated. Here are some factors to help you think about if you are considering buying or selling:
- Housing Inventory – Currently the number of homes in inventory is way down and has been for years. Earlier last year there were predictions that months of inventory would bounce back. They did not. Winners = Sellers
- Home Prices – If housing prices go down or are at least stable, that’s good for buyers. That hasn’t been the case for more than a decade. Ever since the housing crisis in 2008-2009, prices for homes have steadily increased – sometimes dramatically. This year they look like they will stabilize or even drop a bit, depending on your location. Winners = Buyers
- Demand for Homes – Buyers are currently a bit hesitant (see the next point) but there are still a lot more buyers than there are homes for sale. It looks like it will be that way for the foreseeable future. Winners = Sellers
- Interest Rates – This is the fly in the ointment for real estate if you are a buyer. Last year in 2022, the Federal Reserve increased mortgage rates at an unprecedented rate, cooling off the market and giving buyers second (and third) thoughts. Winners = No one
- Strong Economy and Job Market – Currently the job market is very strong, and wages are up, but the economy is being undermined by inflation. Winners = It’s a toss up.
- New Home Construction – Despite the fact that there are fewer homes out there, contractors are not building as many homes as we would expect. High interest rates and inflation, and even the stock market, have made builders take a step back on building single-family homes. Winners = Sellers (due to continuing low housing supply)
Tips for Sellers in a Buyers Market
If you are a seller in a sellers market, you don’t need any tips from us. However, if the market isn’t in your favor, a little advice could be helpful.
- Price Competitively – Set a reasonable and competitive price to attract potential buyers.
- Enhance Curb Appeal – Make a good first impression by improving the exterior appearance of your home.
- Stage Your Home – Showcase your property in its best light by decluttering, cleaning, and arranging furniture strategically.
- Offer Incentives – Consider offering incentives such as covering closing costs or providing allowances to entice buyers. You should also be flexible with contingencies.
- Listing – Your listing can make all the difference when you are selling your house. Having the right listing in the right database to get it in front of the right people is essential. Your agent will post your listing, but you can help them by providing great information about your home.
- Inspection – Provide a pre-listing home inspection report to potential buyers.
Tips for Buyers in a Sellers Market
Buyers have faced a strong sellers market for many years. Here are some of the things they’ve learned along the way that gave them the upper hand.
- Get Pre-Approved – Obtain a mortgage pre-approval to strengthen your position as a serious buyer.
- Act Quickly – With limited inventory, be prepared to make fast decisions when a desirable property becomes available.
- Be Flexible – Stay open to compromises on location or specific property features to increase your chances of finding a suitable home.
- Work with a Skilled Agent – Partner with an experienced real estate agent who can guide you through the competitive market and negotiate on your behalf.
Questions to Ask Your Agent in a Sellers Market
No matter the market trends, you are probably going to want to work with a real estate agent. You may want to hire a listing agent – professionals who have specialized in selling properties. Any agent interested in your business should also provide a comparative market analysis (CMA) to show you how to price your home versus other properties in the area.
Some other questions to ask your agent include:
- How do you plan to market my home to attract multiple offers?
- What is the average time it takes for homes to sell in this market?
- How do you handle multiple offers, and what strategies do you use to ensure the best outcome for sellers?
- How many offers are sellers receiving on their homes?
- Are buyers paying more than the asking price for homes?
Questions to Ask Your Agent in a Buyers Market
Agents who help you buy a new house have great negotiation skills, good searching skills and a network of connections that will make finding and affording a home easier (maybe not easy, but easier). Some agents who work specifically with buyers, and the real estate transactions involved in buying properties ,are called selling agents. We know, it’s counterintuitive.
Anyway, when you are looking for help in a buyers market, it’s a good idea to ask your agent:
- What strategies do you recommend for finding the best deals in a buyers market?
- Are there any properties that have been on the market for an extended period? If so, why?
- How can we negotiate effectively in a buyers market?
- Show me the comps (comparable homes in the area you are looking in).
Real Estate is Local
With the exception of interest rates, which are the same everywhere, local area markets may look very different. Even different cities in the same state can have very different local market conditions. All the factors we mentioned – real estate inventory, prices, high demand, new home construction – can be very favorable for either buyers or sellers depending on where you are. Keep that in mind when you see headlines about the housing market: they are usually only tracking national trends that may not play out where you live. That’s why it’s vital to work with a local real estate agent who can help you navigate the local real estate market conditions in your area.
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Then, after they have helped you close on your home, we send you Hero Rewards®–a check that averages about $3,000. It’s our way of saying thank you for your service.