When considering a move in the real estate market, there is often too much emphasis placed on whether it’s a buyer or seller’s market. So many times, we hear people say, “It’s a great time to buy but not sell,” or vice versa.
But the truth is it really doesn’t matter as long as you’re strategic and understand how the dynamics of any market can work in your situation. First, let’s look at the different market types to understand them in summary:
What Is a Buyer’s Market?
A buyer’s market is when supply exceeds demand. This is when real estate inventory is high, with plenty of homes for sale but a shortage of motivated home buyers to take up the slack. These conditions give buyers leverage over sellers because when supply is high, and demand is lower, the market forces Sellers to respond.
In a buyer’s market, real estate prices forcefully decrease, and homes stay on the market longer. So, sellers must actively compete to attract potential buyers. While there are a number of factors that can be leveraged to gain a competitive advantage, typically, sellers will also drop their asking prices to gain the best advantage in the market.
Also, they are much more willing to negotiate offers to prevent buyers from walking away with selling prices more variant from asking prices and will also accept offers with conditions such as the sale of a purchaser’s property and longer home inspection or financing clauses.
One thing about a Buyer’s market is that they don’t last long. Once buyers realize they have the advantage, it doesn’t take long for them to saturate the market, bringing either more balance or tipping things the other way with a return to competitive offer situations.
Regardless of the market, a real estate agent with negotiation expertise can help you get the best results. Learn more in How Does Real Estate Negotiation Work In Today’s Market?
What Is a Seller’s Market?
A seller’s market is when demand exceeds supply. This is when there are many motivated buyers, but the real estate inventory is low. Since there are fewer homes for sale, sellers are at a distinct advantage. In a seller’s market, homes sell faster, and buyers many times must compete in order to secure a property.
This market status often makes buyers willing to spend more on a home than they initially planned. So, sellers can boost their asking prices. This increased interest means that buyer’s power to negotiate is diminished and they are more willing to accept properties in conditions less than desired.
Due to the shortage of properties, these conditions often lead to bidding wars. In a bidding war, buyers will make competing offers and drive up the price many times above what the seller initially asked for.
A successful sale always begins with knowing how much your home may be worth. Get an accurate picture by booking your free home evaluation right here.
What Is a Balanced Market?
A balanced market is obviously where supply meets demand. In other words, the number of homes for sale is equal to the number of people trying to buy them. This market situation features more stable property prices where homes are sold at or near the asking price, and the months of inventory match the longer-term averages, which are 4-6 months.
Basically, everything becomes a lot more reasonable for both sides of a transaction. That’s not to say that skill, expertise and preparation are not required to navigate buying and selling in this market. It is just that the playing field is more level, so skills can really shine.
Looking for even more tips to get the best result when selling your home? The posts below are a great place to start:
- 5 Tips For Selling A Waterfront Home
- Should You Stage Your Home Before Selling?
- Should You Sell the House During a Divorce?
What Is the Best Market to Buy and Sell Then?
The short answer is that there are advantages in every market as long as you are strategic. But here are a couple of examples: Right now is actually a great time to climb the property ladder and upsize.
When people say, “It is a good time to buy but a bad time to sell,” they are overlooking the results of buying and selling in the same market. So, whatever percentage of a hit you’re taking on the sell, you can expect to save on the buy.
So, the math really depends on what you are planning to buy. Most buyers, on average, are looking to climb up the next rung of the property ladder versus looking to downsize.
Are you ready to start searching for your next home in Barrie or Simcoe County? The posts below can help:
- 5 Tips When Buying A Waterfront Home
- Why Buy a Home in Snow Valley?
- What to Look for in a Waterfront Home in Barrie
Understanding the Math of an Off-Market
If the home you were planning to sell is worth 15% less than its $1,000,000 value before the drop in prices, then you are missing out on $150,000. That’s a hard number to get your head around, for sure.
Until you consider the other side of the transaction. If you are looking to buy a home in a new area that you have always wanted for $1,500,000 then with the same percentage dip in pricing you are actually saving $225,000! Net gain- $75,000!
Not only are you able to save $75,000 overall by upsizing in a down market in this example, but you are also more likely to have greater inventory to choose from when purchasing, as well as the ability to have conditions in your offer, such as financing, an inspection, and also a condition on the sale of your property. All this in a buyer’s market!
Information and strategy are the foundation of selling your home in any market. You can get both in our Guide to Selling right here.
Buying or Selling in a Buyer’s Market
The flip side of this example is also true. When the market is surging, it’s a great time to sell if you are downsizing. Although the $700,000 condo you plan to buy may now cost $805,000 your $1,500,000 home is now worth $1,725,000. So, in this situation, you have a net gain of $120,000 by choosing to sell in a hot market.
And yes, it can be competitive in a hot market, where you may not even have any conditions in your offer, but many downsizers own their home outright or at least have enough equity in their home to not need a financing condition when purchasing. And with an experienced agent and maybe some savings that downsizers are likely to have, surprises without a home inspection are likely to be handled well.
If you’re not upsizing or downsizing because you’re a first-time homebuyer or an investor, then the path of market behavior is historically very clear. It’s great to try to buy in a down market, but if the market has no sign of declining, you’re still better off getting in sooner rather than later.
The Cost of Waiting
We have seen and heard of countless buyers who kept waiting for a market dip, and although they may finally get that 15% dip they were hoping for, they watched the market go up 50% while waiting. There is a well- known real estate saying, “time in market is more important than timing the market.”
Trying to time the market perfectly is nearly impossible and can cost you a lot of money. Every situation isn’t simple, nor is the real estate market itself. Real estate can be complex, especially in a fast-moving market like we have seen over the last few years.
The Weeks Group Barrie real estate agents have been deeply involved with our clients and the communities we service. We understand the performance in the market of different price categories (under 600k, 600-750k, 750k-$1M, $1-2M, and $2M+), or property types (condos, towns/semis, detached and waterfront), to find opportunities for clients in any situation and in between the cracks of any given market or season.
These blogs are meant to be informative and interesting to real estate followers, but they only scratch the surface of the value a skilled professional can provide. Work with us in person, and you will benefit from our decades of secrets and strategies.
Do you have more questions about your advantages and challenges in the current market? Our Barrie real estate agents are happy to help. Reach out today to 705.305.4174 or email hello@weeksgroup.ca for more information.
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