Read or heard about a buyer’s or seller’s market and not quite sure what they are?
Then allow us to give you a hand!
This article will not only define these two concepts, but also explain the difference between a buyer’s and seller’s market. We also give you tips on how to make the most of each market depending on whether you are looking to buy or sell. Depending on what you are doing, this can help you maximise your chances of a successful bid, or get the best possible price for your home.
Let’s start by defining a buyer’s market, and what signs to look for.
A buyer’s market is when conditions favour the purchaser or buyer. This typically means there are more listings than buyers, which acts to put more pressure on sellers to negotiate or reduce the price of their property. Listings often take longer to sell, so the ‘days on market’ metric reflects this, and prices tend to be more stable in a buyer’s market. If any of the following are occurring, it's likely you are in a buyer’s market:
If you are a buyer, how do you make the most of these types of conditions?
If you are purchasing property in a buyer’s market you still need to be savvy to get a good deal. This means knowing what the true value of the property is, so you don’t make a lowball offer and miss out on it all together. You should also have pre-approval from your home loan provider all sorted out. Sellers may also want to negotiate a little, so don’t expect everything to go your way.
Equally, you need to be savvy as a seller in this type of market, because you are likely to be competing against many other properties. This means you need to set a realistic price and be prepared to wait longer to sell. You also need to put maximum effort into marketing and presenting your property, so it stands out. This could include spending extra on staging it, and using a professional service. You should also consider adding extra features to your listing, like a video or VR tour of the property - so you stand out!
Let’s now look at the reverse scenario, and what you need to know about a seller’s market.
A seller’s market is when there is a relative shortage of property listings compared to the number of people looking to buy. This often creates a real urgency in the market and buyer’s tend to increase their offers or bids to secure a property. Look for these signs to confirm that you could be experiencing a seller’s market:
If you are buying a home in a sellers market be prepared for some competition - and you really need to have all your ducks in a row. You need to be quick making an offer, and it needs to be fair - and never lower than the asking price. Sometimes offering a sizeable deposit may help sweeten the deal, as will giving the seller extra time to pack up and move out after settlement.
If you are selling your property in a hot real estate market you have the chance to maximise your return on investment. The key is to be patient and not accept the earliest offer you get, though you should be ready to settle quickly when the time comes. With prices moving fast, you also need to keep up with pricing your property competitively - something an experienced real estate agent can help with. It’s also important to check you have a buyer who has all their finance organised, and doesn’t waste your time.
If you are wondering if there is a middle ground, where no one set of conditions dominates, the answer is, yes! This is known as a balanced market, where there is a generous number of listings on the market and a reasonable number of buyers. Property prices tend to be stable and homes sell in an average amount of time.
In most markets around the country, the data suggests that we are in a buyer’s market. Vendors are taking longer to sell their homes and with bigger discounts. Back in June, CoreLogic’s head of research, Tim Lawless, said that there were more homes to choose from among a smaller buyer pool… This was most pronounced in Sydney and Melbourne, but is now spreading nationwide.
If you need a reminder what conditions appear in each market, here is a handy graphic to help you remember what to look for.
You should now have a good overview of each type of market and know how to navigate each depending on whether you are buying or selling.
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