Why You Shouldn’t Let Buyers’ Markets or Sellers’ Markets Scare You Off
Anyone who’s dipped their toes into the real estate world has most likely heard the term “buyer’s market” or “seller’s market.” Depending where who you are (the buyer or seller), these words can inspire dread, or delight. However, are we giving these buzzwords too much weight? Can the myth behind buyer and seller’s market be busted?
What is a Buyer’s Market? What’s a Seller’s Market?
Before we dive in, let’s take a step back to your Economics 101 lecture hall.
The terms buyer’s market and seller’s market all revolve around the classic principle of supply and demand. When the housing market is flush with homes, the supply is up, demand is down, and it’s considered a buyer’s market. Buyers can be choosier and might be able to make lower offers, and sellers may more readily accept those lower offers, as they aren’t getting as many. A buyer’s market typically benefits the home buyer, not the seller.
A seller’s market, on the other hand, takes place when the demand for homes is high, but the supply is low, i.e. there are lots of people looking to buy, but few homes on the market. Sellers might get multiple offers on their home, buyers might be more likely to enter bidding wars on a property. A seller’s market, you guessed it, benefits the seller.
With that straightened out, the question remains: Do buyer’s and seller’s markets actually exist?
The concept of buyer’s and seller’s market is real and important in real estate, but not on the scale you might think. There are national trends when it comes to home buying and selling, but it can be challenging to apply them to the sale of your home, explains Pittsburgh-based real estate agent Sara Leitera: “I tend to steer away from those terms just because the market is ever changing.” Things tend to move quickly, and sometimes the trend over time matters less than what’s happening right now.”
Instead, it’s about education at the local level, Leitera reasons: “I concentrate on just trying to provide [buyers and sellers] with accurate information because if you go off of the national trends, Pittsburgh doesn’t fit into that category. Your neighborhood probably doesn’t fit into that category.”
Ultimately, national trends won’t apply perfectly to where you’re looking to buy or sell. Other local and individual factors come into play.
Bobby West, another Pittsburgh-based agent, relies more heavily on the trend of buyer’s and seller’s market, but only to an extent. “When you bring the national stats down to house by house, street by street, it’s hard to apply the macro to the individual case. So I always tell people, ‘Don’t be worried about it. We’ll keep it in mind, but look at the statistics of the neighborhood.’” National averages can be beneficial, but only to an extent. In certain cities, buyers and sellers can vary neighborhood by neighborhood, or even street by street.
Ultimately, national trends won’t apply perfectly to where you’re looking to buy or sell. Other local and individual factors come into play. Consulting the data around recent sales in your neighborhood, or even just noting how many homes are currently on the market in your area, will likely give you a better read than a national trend of buyer’s or seller’s market.
So the myth behind buyer’s and seller’s market holds some truth, but only on the very local level. Averages on a national scale won’t tell you much about your local sale. That being said, these market conditions do exist, and certain actions can help you navigate them better.
What If You’re a Buyer in a Seller’s Market?
Don’t be discouraged to be a buyer entering a seller’s market. While homes may be in high demand, the right expectations from the start help. West tells his buyers, “you’re going to have to be patient because unless you’re a cash buyer who’s willing to waive inspections, you have to accept the fact that we’re going to lose out on some of the homes.”
Bidding wars and competitive cash offers might crop up after you make an offer on the home. You might not have the ability to compete financially, but there are other options available. West encourages buyers to present offers in person with a kind letter to the sellers, giving them a chance to get to know you. “We’re going to include pictures of your dog, try to make you a human instead of a number,” West says.
What if You’re a Seller in a Buyer’s Market?
In a buyer’s market, sellers have to price aggressively to sell, explains West. With solid research on the neighborhood and the right pricing, the place should be off the market quickly. “If it’s sitting on the market for more than 15 days in a buyer’s market, you should try to reduce the price.”
For a seller in a buyer’s market education and statistics are the biggest asset. Sellers have to back up their listing price with data, explains Leitera, “if it’s not selling, then go back and see, what has sold in the days since it’s been on the market. What price points seems to be selling faster?”
Don’t Let Fear Keep You From Buying, or Selling
Buyers and sellers markets do exist, but most real estate agents agree that market conditions shouldn’t keep you from buying or selling a home. “There’s always going to be a flux between the polar ends of the market space,” says West. “But you know, there’s obviously a big gray area in between.” Markets will be a mix of buyer and seller always — it’s rare to see an extreme one way or the other.
Buyers won’t know what’s out there until they start making offers, and sellers won’t know if their home has a chance until they put it on the market. While local trends can inform what kind of market you’re getting into, it’s unpredictable.
The buyers and sellers myth is more of a numbers game than anything. Looking at local data can help inform your actions as a buyer or seller, but in reality, you won’t know how the market serves you into you dive in.
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