What's the difference between a buyer's and a seller's market? It's important to understand the state of the market before entering your home-buying experience.
When you’re planning a move, whether you’re upsizing, downsizing, or shopping for your first home, the state of the market can have a significant impact on the home-buying experience. It is important for buyers and sellers to understand the elements that impact the housing market.
What is a Buyer's Market?
A buyer's market occurs when there are more houses for sale than there are buyers. This condition puts buyers in a position of strength when they negotiate with sellers.
Characteristics of a Buyer's Market
Here are some of the key characteristics of a buyer's market.
- Housing prices may be low
- There are many houses available to buy
- Economic conditions may be on the downturn
- Overbuilding may be an issue
House Buying Tips for a Buyer's Market
The condition of the real estate market may dictate your strategy for buying a house. Here are some tips for buying a house in a buyer's market.
- Offer less than the asking price. If a home has been on the market for a while, sellers may be willing to accept a lower price to close the deal.
- Ask the seller to cover closing costs. Even if you can't negotiate a lower price, you might save some money if the seller will agree to pay your closing costs.
- Ask for repairs or improvements. Another negotiating tactic is to ask the seller to repair their home or make improvements to it before the closing takes place.
- Add contingencies to the purchase agreement. Finally, you may want to consider adding contingencies related to the home's appraisal, inspection, financing, and closing. These things can save you money and make it easier for you to back out of the deal if it doesn't work for you.
What is a Seller's Market?
A seller’s market occurs when there are more potential buyers in the market than there are houses for sale. A home buyer who wants to buy a house may find themselves in competition with other buyers.
Characteristics of a Seller's Market
Here are some key characteristics of a seller's market.
- Housing prices may be high
- There are few houses available to buy
- Economic conditions are likely to be good
- New developments may be scarce
House Buying Tips for a Seller's Market
Buying a house in a seller's market may be less than ideal, but there are still things you can do to facilitate the process as a potential buyer.
- Get pre-approved for a mortgage. This may give you a leg up if you're bidding against a potential buyer who hasn't been preapproved.
- Shop for homes under your budget. If you can find a home that suits your needs with an asking price that's lower than your budget, you'll have room to bid up if you need to.
- Pay more than the asking price. In a seller's market, it's not uncommon for buyers to offer more than the listing price in an effort to get the house they want.
- Offer incentives to the seller. In some cases, you may be able to win over a seller by offering a short escrow period or allowing them to rent back the property while they look for a house or prepare to move.
- Hire an experienced real estate agent. Having an experienced real estate agent at your side can help you navigate the ins and outs of buying in a seller's market.
- Waive contingencies. We don't recommend this option, but sometimes buyers agree to waive typical contingencies related to the inspection, appraisal, and sale to beat out other buyers.
Should You Wait for a Buyer's Market to Buy a House?
One of the questions we get asked frequently is whether it's best to wait for a buyer's market to buy a home. While it's undeniable that it's easier – and in many cases more affordable – to buy when the supply of homes for sale is high, it's not always possible or practical to wait for a buyer's market.
It's important to remember that you don't have any control over market conditions. The market is constantly changing and the factors that affect it shouldn't dissuade you from house hunting at the time when you need to buy a house.
The process of buying a house will always be partially influenced by market conditions. Understanding the differences between a buyer's market and a seller's market can help you negotiate the best possible price as you work toward your dream of homeownership.
Are you looking for the house of your dreams? Use a real estate agent approved by SIRVA to help you every step of the way. You can get $500 for every $100,000 in home value.*
Real Estate Rewards
Earn cash back on your home sale or purchase when you use a participating realtor.Learn more
*To qualify for cash back reward (in cash back states), you must use a SIRVA-referred real estate agent. Program designed as a referral service to provide you the opportunity to select a real estate agent to meet your needs. You must evaluate the brokers, agents and their services and make selections and decisions based upon your best judgment, interest, priorities and concerns. Call 800-228-3097 or visit myrewards.sirvahomebenefits.com/UnionPlus for important program details and state restrictions.
SIRVA is an independent provider of services. Union Plus is not affiliated with SIRVA and does not manage SIRVA or its programs. SIRVA is paying Union Plus for advertising services including dissemination of information about SIRVA and its programs to participating unions and their members as well as participation in Union Plus events and programs. No referral, recommendation, service representation or exclusivity requirement is intended by the Union Plus’s mention or dissemination of the SIRVA name and delivery of this information to participating union members. It is important that you evaluate the information provided and make decisions based upon your own best interest, priorities, and concerns. Certain state restrictions apply to the real estate cash back program.