What's the Difference Between a Buyer's and Seller's Market?
You've heard about the real estate market favoring either the buyer or the seller. But what exactly does that mean when you're trying to buy or sell a house?
What is a buyer's market?
In a buyer's market there are a lot of homes for sale, but not a lot of people who want to buy them. That means that it's going to be easy to buy in this type of market, but a lot tougher to sell.
How do I buy a home in a buyer's market?
There aren't too many buyer's markets in the 2018 real estate landscape, so if you're buying it one, congratulations! The world is your oyster! Here's what to think about.
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Be ready to negotiate
If you were hoping to pay less than asking price on a house, then now's the time! Talk with your real estate agent to decide what a reasonable offer is and how much you're willing to increase.
You might even want to put an escalation clause in your offer. That gives your real estate agent the ability slowly increase your offer up to an agreed upon point, which means you won't have to be answering a million phone calls in the middle of the workday day to seal the deal.
Keep an eye on the market
Sure, you're in the driver's seat now, but that can all change in a couple months if home inventory in your area starts to disappear. Make sure you don't miss your window and find yourself suddenly in a seller's market.
Look for price reductions
During a buyer's market, a sell is much more likely to reduce their home's price, which means you might end up getting way more house than you expected for the same budget. Be sure you're checking the listings often to find homes with newly reduced prices. And don't forget to let your real estate agent know that you're interested in price reductions so she can keep an eye out too.
If you're using Zillow for your home search, you start saving homes that you like, but that are priced a little too high. Then you can set up your email preferences so you get updates on the home. That way you'll know right away if the price has dropped.
How do I sell a home in a buyer's market?
Selling in a buyer's market can be an exercise in patience. But if you set your expectations and put in the work, you can attract the right buyer.
Set reasonable expectations about your price
We repeat: Set.reasonable.expectations. We know you were hoping to make more off this sale. And we know how well loved your house is and how much time and effort you put into maintaining and upgrading it. But your potential buyer doesn't care about any of that. All they see is that your house is priced way above comparable homes in your area.
Work with your real estate agent to figure out where your home should be priced in this market. If you're really not comfortable with that price you have to be prepared for it to either take a long time to sell or not sell at all.
Clean and stage
Buyers are going to be extra picky. During a seller's market, it might not matter if you left the bright green paint on the walls of your kid's room or if the carpet had a few small stains on it. Make sure everything is immaculate and that a buyer can walk in and really picture themselves living there. Start by:
- Painting the walls a neutral color
- Removing any family pictures from the walls and tables
- Decluttering and organizing
- Putting clothes and jackets you don't need into storage so the closets look bigger
Get more tips from our home staging expert.
Set up your curb appeal
If the outside of your house isn't well-groomed, your potential buyers might have their mind made up before they even get in the house. A buyer's market means potential buyers are less likely to overlook the little things and more likely to balk at all the mini-projects they see adding up around the house. So make sure you:
- Pressure wash your driveway and siding
- Update the landscaping
- Spray for any visible pests, like ants
- Fix any chipped or peeling paint
Be ready to compromise
Remember, there are plenty of other homes that the buyer can get for a great deal. So it doesn't make sense for you to dig your heels in if the buyer has a reasonable (or even semi-reasonable) request.
- Remove a dead tree in the backyard
- Restain the fence
- Move out quicker than you expected
Offer to cover closing costs, throw in the dining room table that the buyer was admiring, or include a home warranty.
- closing costs
- the dining room table (or chandelier, or rug, or whatever else) that the buyer was admiring
- a home warranty
What is a seller's market?
In a seller's market there are a lot of people who want to buy a home, but not a lot of homes for sale. That means you might end up getting top dollar when you sell in this type of market.
How do I buy a home in a seller's market
Buying a home in a seller's market isn't ideal. With the right mindset you can still find a great home in your price range.
Be open minded
You can picture the perfect house, but that home might not exist in this market in your budget. So, you'll need to keep an open mind about the types of homes your Realtor is showing you. Sure, it'd be great if you didn't even have to paint once you move in, but in this type of market, you'll have to ask yourself how much a 100% move-in ready house is really worth to you.
It's in our nature to want to get a good deal. But a seller's market isn't the time to experiment with super low offers. Remember, there's another buyer waiting behind you who's willing to pay asking price—if not more.
Be ready with a buyers letter
A Realtor helps a seller sell a house, but a buyer letter helps sell yourself. The idea is that if the seller has two very similar offers, yours and someone else's, then your letter will help them get to know who you are and want to choose you over the other, faceless buyer.
We always recommend getting pre-approved before you start your home search, but it's even more important in a seller's market. Not only does it show a seller that you're really serious about buying a house right now, it also shows them that you're financially able to buy theirs.
Once you put in the offer, make sure you're always available to your real estate agent. Even if she put the offer in at 9 a.m., she might need to contact you at 9 p.m. to present a counteroffer.
How do I sell a home in a seller's market
Selling in a seller's market means you're likely to make a good profit on your home — and you'll probably do it quickly! Here's how to get started.
You want to price aggressively in a seller's marketing, but don't get too overzealous. Talk with your Realtor about comparable homes in your area to try to set the right price. If your home's not selling, you might have to come down in price a little.
Stage the home
Don't use a seller's market as an excuse to slack off on cleaning and staging that you'd normally do when you sell a home. If you want to get the best price, you'll still need put as much effort into your presentation as you would if you were in a buyer's market.
Get ready for multiple offers
Having multiple offers can be great for your bottom line, but it can also be a little overwhelming! Should you counteroffer to try to get an even higher sale price? Does the highest bidder need to move more quickly than the next highest bidder? Who has contingencies and what are they? Talk with your Realtor about all the likely scenarios so you can start thinking about what you'd do in each situation before it comes up.
Be prepared to be a buyer
Unless you're moving into your second home or you're prepared to rent, selling your house will mean you're going to quickly become a buyer. Since your area is in a seller's market, you shouldn't waste any time looking for your next home. Start the process while yours is still on the market so you don't get left out in the cold.
It might sound like there's a lot to think about, but the truth is you can have a great homebuying experience no matter what the market's doing. Get some tips in our first-time buyer section.