The real estate industry has its own set of lingo. For a lot of us, especially first-time buyers, it can be difficult to determine what all these terms mean and then how to act accordingly. Luckily, though, we’re here to do the decoding so that you don’t have to.
Today, we’re tackling the terms “buyer’s market” and “seller’s market” and helping you understand the differences, how it affects your chances of becoming a homeowner, and what you can expect from each type of market.
Traditionally used to refer to market conditions where the buyer has an inherent advantage over the seller. Typically, these are times when there’s plenty of housing inventory, and buyers seem to have their pick of available properties to choose from.
Since the market is flooded with homes to choose from, properties have a tendency to stick around longer. When that happens, sellers get nervous. The added pressure of potentially not being able to sell their home means that in buyer’s markets, sellers are often flexible on sale price.
As a buyer, you can use this uncertainty to your advantage to score a great deal on a home. Of course, you’ll want to do some research before deciding how far below asking you can reasonably offer. However, if you’re really looking to save, we recommend focusing on homes that have been on the market for a while or that have recently had a reduction in price.
A “seller’s market” the seller inherently has an advantage over the buyer. This is where housing inventory has a tendency to be few and far between, leading sellers to have a greater pool of interested buyers to choose from — and, driving housing prices up.
In this case, since housing inventory is so low, houses that do go on the market tend to get a lot of attention. There’s a strong chance that sellers will have multiple offers to choose from, and, because of that, available properties tend to go under contract very quickly at or above asking price.
The good news is, as the seller, there’s not much you need to do to take advantage of this situation. For the most part, you’re free to sit back and let the offers come to you. However, in order to put yourself in the absolute best bargaining position, it never hurts to make sure that your property is in top shape before listing it for sale.