What is a Buyer’s Market?
What is a buyer’s market? A buyer’s market is a term used in real estate to describe a market condition in which buyers typically have the upper hand. In general, there are more properties for sale than available buyers. In this kind of market, buyers usually have the advantage because:
- They have more options.
- They have more negotiating power.
- Prices are typically lower.
Conversely, a seller’s market favors the home seller. There are usually fewer homes available, which makes a good listing a hot commodity. When conditions favor the seller, real estate agents advise homeowners not to give too many seller concessions like closing cost coverage because buyers are more motivated to make compromises. There are typically shorter listing times and many bidding wars in this environment.
Characteristics of a buyer’s market can happen even when there aren’t many available homes, though. In this kind of housing market, qualified homebuyers are rarer due to decreasing affordability or stricter lending standards. Therefore, despite a low inventory, they can still call more shots with the asking price, repair negotiations, and more.
What does a buyer’s market look like?
A buyer’s market offers more incentives for buyers to purchase a home than a flat or seller’s market. Since listings are abundant, sellers often need to lower prices and offer incentives to attract the best buyers. Interest rates may also be low, decreasing the cost of borrowing, which allows buyers to get more amenities and better quality houses for their dollar.
A greater variety of properties is usually available, enabling buyers to take their time and compare options. Nobody is desperate and, therefore, at leisure to negotiate favorable terms. Additionally, buyers have more leverage in negotiating the final price as sellers compete for their business.
A buyer’s market is also characterized by longer listing times, easier lender qualification, an excess inventory of homes, declining or stable list prices, and fewer bidding wars. Buyers have more control and flexibility in their purchasing decisions and are advised to take their time to find the right home. After a home inspection, they can feel comfortable negotiating repairs and upgrades to incentivize the purchase.
The Difference Between National and Local Markets
It’s important to note that real estate market conditions can vary by location and change over time. While it may be a great time to buy according to national average statistics, your local market may have higher than normal home prices. On the other hand, the news can be spreading scare stories about buying, but your city has an abundance of listings and reasonable prices.
Long story short – a buyer’s market in one area may not be the same as in another. This is why it’s essential to conduct thorough research and consult with a realtor to understand the specifics of the market you’re interested in. Whether you’re looking for a primary residence or to add another property to your investment portfolio, understanding the ramifications of each local market you’re interested in is crucial.
Questions Buyers Can Ask Their Local Real Estate Pro:
What type of market do you think this local market is in?
A local agent that has worked in a specific area for a while will have a good idea about whether their specialized area favors buyers or sellers
What market trends have you seen in this area in the last 12 months?
A real estate agent familiar with a market will know the ups and downs, triumphs, and challenges associated with that specific area.
What is the current supply of homes in the area?
Fewer homes mean more bidding wars, while more homes favor buyers.
What is the general activity of potential buyers in this market — Is there much buyer demand?
The number of preapproved buyers who have enough cash for a down payment affects how much leverage you have in the market in question.
How can we make a strategic sale price offer in this market?
Agents that work in a specific market know how to make a contract offer price that will entice the seller. Strategies differ in various markets, so trust their expertise.
Are there any new homes or older homes in the area?
The quality and age of homes in the market affect home values and influences your offer price and how aggressively you can negotiate seller concessions.
Is a cash offer better, or can I use lending?
Prospective buyers can get even more advantages by paying cash instead of using lending. It can also be a considerable advantage in a seller’s market when home sellers can pick among many offers. 100% cash offers are practically a sure thing, which makes them strategic in specific markets.
Is the current market friendly for first-time home buyers?
Being a first-time homebuyer is usually tougher financially. If you’re looking for a market with less competition, ask your realtor to look for places with a higher number of homes available. This will increase your chance of finding a dream home by giving you more leverage and options among comparable properties.
How to Buy a Home in a Buyer’s Market
To buy a home in a buyer’s market, you won’t need to stress out a lot. Many conditions favor you, and you just need to follow your lender and real estate agent’s lead. Doing prep to be able to buy a home also helps immensely. Whether you need to spruce up your credit score or find out your top dollar for house prices with a lender, having all your finances ready is a significant plus whether you’re in a buyer’s or seller’s market.
To get the best deal out of your home sale or purchase, contact the real estate professionals at Marketplace Homes.
Summary: A buyer’s market is a real estate market that favors the homebuyer. There are usually many homes available, which makes a good listing more common, so buyers have more choices and leverage. When conditions favor the buyer, real estate agents advise them to ask for seller concessions like closing cost help. There are typically longer listing times and fewer bidding wars in this environment.