Housing market news has taken the spotlight several times over the past couple of years, thanks in part to the COVID-19 pandemic and how it affected the ways people lived and earned a living.
It was a strong seller’s market for quite some time, and people are hopeful it will swing back in favor of buyers.
A seller’s market means the demand for homes is exceeding the supply. A buyer’s market is the opposite; there are a lot of homes out there for sale and much fewer potential buyers.
So, what does this mean, and what are the pros and cons for each?
In a seller’s market, what we are seeing currently, the buyer has very little negotiating power, if any. Sellers know people are clamoring to get a home and so don’t feel pressured to give into particular asks from a potential buyer.
In a buyer’s market, they could ask a seller who has had a home on the market for quite some time to sweeten the deal by including payment of some necessary repairs or covering some closing costs.
This is because they may be aware of how long a home has been on the market and could infer the seller is eager to get rid of the property.
If you’re a seller you’ll want to utilize a seller closing costs calculator to see what you would be expected to pay and where buyers make ask for compromise.
When the demand far outweighs the supply, sellers have a major advantage. Homes sell faster, spurring bidding wars between potential buyers.
In this market cash is often king, as is offering over asking price. Many folks end up paying much more than the listed price for a home in order to secure it.
On the other hand, when it’s a buyer’s market bidding wars are mostly non-existent. Home prices actually decrease as sellers begin to compete with each other to catch the eye of the scant amount of buyers out there.
You always want to do research on the homes surrounding the one you are looking to either buy or sell, no matter what side of the market you’re on. The difference is how you utilize the data once you have it.
In a buyer’s market you can take your time comparing prices of homes that are on the market with those who have recently sold to make sure you aren’t overpaying.
If you like a home and find it overpriced, you have a better shot at negotiating a smaller fee.
In a seller’s market you’ll use this information to price your home fairly according to the localized market in order to attract buyers.
Some sellers actually price their homes a little lower than the fair market value to encourage bidding wars among prospective buyers.
Sellers will want to take their time reviewing offers, making sure the financial strength of the buyer is sound.