While we aren’t in a buyer’s market yet, it’s still good to know how to navigate through one. Thanks Sandy Dodge for pulling this information in one place
Much can be determined about the conditions of a local real estate market by its supply and demand. When the supply of available homes is greater than demand, it’s referred to as a buyer’s market. Reduced listing prices, longer days on market, and an increased number of re-listings are also signs of a buyer’s market. While the current market is far from favoring buyers, it’s still a good idea to understand how a shift in the conditions could impact your search for a new home when the time comes.
What is a Buyer’s Market?
A buyer’s market creates ideal conditions for those looking to purchase a home. With more homes on the market than buyers, sellers must compete to gain their attention. In a buyer’s market, inventory is high, which means buyers can take their time in finding the right home as there is simply more to choose from. It’s common for homes to be on the market for longer periods of time. Sellers will sometimes need to drop their price to gain a competitive advantage, a selling tactic that is not nearly as common in hotter markets. To get a gauge of your local market conditions, talk to your Windermere agent about the current home price, sales, and inventory figures in your area.
How to Approach a Buyer’s Market
It’s understood that a buyer’s market favors buyers, but how can they utilize this advantage as they explore available listings? For one, buyers can be picky about finding the right home. Unlike a seller’s market, buyers have the luxury of weighing comparative advantages between homes knowing that time is on their side.
The conditions of a buyer’s market favor the buyer when it comes to negotiations as well. With fewer people buying homes, sellers are willing to be more flexible during the negotiation process, which gives buyers leverage. This underlines the benefits of working with a buyer’s agent. Buyer’s agents deliver significant value to the clients they represent in their ability to find the right home, streamline the buying process, and handle the negotiations and offer phases of a home purchase.
If you are selling a home while looking to purchase, you likely have the opportunity to make your offer contingent on the sale of your existing home, whereas in a seller’s market, there is a low chance of getting a contingent offer accepted. Contingent offers can be tricky, but when done correctly, it means that you don’t have to buy if you can’t sell.
When an agent sees that a home has been on the market for quite some time, that will fuel their ability to negotiate a lower price. In these market conditions, the chances are low that buyers will enter a bidding war or that a home will suddenly sell overnight to a competing offer. However, once buyers have identified their top candidate home, they should work with their agent to form a strategy for making a successful offer.
Sellers will be doing the most they can to make their homes stand out amongst the high number of available listings. It’s common for them to make repairs, upgrades, and other improvements to their homes before placing them on the market to entice buyers. Accordingly, a buyer’s leverage in negotiations carries through to contingencies, where they can work with their agent to negotiate repairs—a proposition that sellers will be more open to, given the limited number of buyers.