Does It Really Matter If It’s a Buyer’s or Seller’s Market?
There’s never a shortage of analysis in the real estate industry. The question everyone wants to have answered is usually the same: what’s the market like right now? Following that one comes: how can I use those conditions to my advantage? At times, the terminology we use might seem to determine when the market is most likely to help a certain position. We generally call these situations a “buyer’s market” or a “seller’s market” to denote who receives the biggest advantage from the market’s conditions. Regardless of which one the compass needle currently points towards, the real question is: does it matter? Will buyers face real difficulty in a seller’s market and vice versa?
To understand the answers to these questions, it’s helpful first to know exactly what we mean when we use these terms. First, the “seller’s market.” This is what every homeowner wants to hear when they’re ready to list a property for sale. In this scenario, inventory is tight. There aren’t many houses for sale in a given area, and what does go up for sale tends to go quickly. The conventional wisdom here states that sellers can dictate somewhat higher prices and may even enjoy bidding wars between buyers. The dream, of course, is to sell above asking price — but even in a seller’s market, that’s not always likely.
Naturally, the opposite — the “buyer’s market” — reflects the inverse of that situation. In this case, there is an overabundance of housing inventory and sometimes (but not always) low demand too. These elements yield a situation where buyers can have their pick among a huge number of houses. Sellers may be more open to negotiation and homes sell below list price more frequently. It’s often understood that the buyer has the most power in these situations. So if you’re in the camp opposite from the current market disposition, will you have trouble?
The answer is “yes and no.” Yes, the state of the market does matter — but no, that doesn’t necessarily mean that a seller will always struggle in a buyer’s market. What it does mean instead, however, is that you must work a little harder. Understanding your area and the buyers or sellers in your market will help you make better choices. Let’s consider one specific example in a seller’s market.
To succeed as a buyer in a market with low inventory, you must stay on top of the changes. What sold recently? What’s going up on the market right now? An agent can help you stay on top of these tasks, alerting you to when new homes that fit your requirements enter the market. It doesn’t mean you have to settle for a lesser home — just that you may need more time to find the right one. Likewise, as a seller in a buyer’s market, one must put more effort into marketing. When you stand out from the crowd, it’s easier to make a sale.
Sometimes, the market balances out and the playing field levels. When it tilts in one direction, though, don’t despair. The right strategy can still see you through to success. Just remember that no market trend lasts forever.