BUYER’S MARKET OR SELLER’S MARKET? | WHAT’S THE DIFFERENCE & HOW IT AFFECTS YOU

Have you ever wondered when the best time to sell or buy a house is? Some seasons are better than others, but it has so much more to do with supply and demand than the time of year. Do you know which type of market is most favorable to you? Let’s break it down!

WHAT IS A BUYER’S MARKET?

A buyer’s market happens when supply exceeds demand. In our industry that means having more than 6 months of inventory – I will explain later what inventory means.

In a buyer’s market, homes can linger on the market for a while. There aren’t enough buyers pursuing homes for whatever economical reason, and there’s an abundance of homes to choose from.

The conditions of this market are favorable to the buyer, not the seller.

Tips For Buyers

In this type of market, you have plenty of time to choose the right home. You don’t have to act fast in fear of missing out or getting beat by someone else. So take your time. Depending on the property and it’s conditions, you may have some room to negotiate.

Tips For Sellers

Competition is steep in this market! Seems every corner you turn there’s a house for sale. If you find yourself selling in a buyer’s market, don’t sweat it. We can get it done. It just may take a little time.

We need to make sure you stand out in this crowd like a purple cow! You can do this by making repairs to your house bringing it to top shape. Clean, de-clutter, de-personalize, get professional staging, price correctly, and your agent should be marketing like crazy!

Check out a video we did covering prepping your house for sale here. You can also download an information sheet on how our team markets property for sale here.

Tips For Investors

Now’s your time to shine! If you have the capital saved up, this is where you want to start picking up “buy and holds” (rentals) and quick flips.

But make sure you stay aware and take caution on your selections. Not every house is worth going for. So stick with your number, like you normally would, and only purchase the property if it makes sense.

Also note, for quick flips in a buyer’s market, make sure you have enough spread to cover holding time, negotiations, and contributions.

WHAT IS A SELLER’S MARKET?

A seller’s market is the exact opposite of a buyer’s market. This type of market occurs when demand far exceeds supply.

There is a housing shortage driving the prices higher. Our inventory levels are below 6 months (don’t worry, I promise I’ll get to that in a minute).

In this type of market homes sell faster, buyers typically end up in bidding wars, and the housing prices rise.

As of this writing, this is the type of market we are currently in.

People have been saying for years that the real estate market will slow down, but it’s only gotten crazier. There’s no telling when it will slow back down. I have some ideas, but that’s beyond the scope of this article.

Tips For Buyers

ACT FAST! You need to hire an agent or team that really knows what they are doing.

You and your agent need to set up saved searches, that way your agent is notified the second a property comes on the market that matches your criteria. Your agent should be able to correctly fill out an offer and have it done in a timely manner. They should be able to communicate well with other agents, as time is of the essence in this type of market. And they should be able to educate you on tricks to make the offer more appealing to the seller, other than price.

Nonetheless, expect to lose out on a few homes before you finally get the one. The important thing here is to not get discouraged! Keep pushing through. Reach out to our team if you need some help finding a home.

Tips For Sellers

Even though the conditions of the market are in your favor, you should still prepare your house properly before you list it. And keep it clean. Make the showing experience for potential buyers a pleasant one.

Read this very carefully – The last thing you want is your house to sit on the market without any offers in a wild seller’s market. That looks really bad! And buyers will begin to wonder what is wrong with your house.

Price appropriately, don’t over-do it! Don’t chase the market. Let the buyers push up the price naturally.

Carefully consider offers. Some agents in this market will offer you substantially over list price just to secure the deal. Only to ask for a major reduction in price during their option period. And keep in mind, the house still has to appraise for contract price.

Be aware of contingencies like appraisals, financing, buyers have a house to sell first, etc..

If you want us to go into detail with you on what selling your house looks like today, give us a shout or schedule a listing appointment with us here.

Tips For Investors

In this market, it gets increasingly difficult to find deals. You may need to get creative to find something that fits your numbers.

Finding deals on the market can be really difficult. Start networking with other investors and wholesalers, get creative with your advertising, and most importantly, be patient. Don’t force a deal just to get one. That can end in a disaster. The right deal will come along, so just be patient with it.

WHAT DOES INVENTORY MEAN?

So, let me explain what inventory means in our industry when we discuss market conditions. Hypothetically speaking, if no more houses were to come onto the market, how long would it take to sell off everything that is currently listed for sale? When we say “6 months of inventory” we are saying it would take 6 months to sell off everything currently on the market.

6 months of inventory is considered a balanced market.

Below 6 months of inventory is a seller’s market.

Anything above 6 months of inventory is a buyer’s market.

FINAL WORD

Regardless of what market we are in, there are pros and cons to each. Buying real estate is a fantastic investment, and if you decide to sell, you are capitalizing on the equity in the home.

Buying and selling a house in Houston can be fun and exciting. Reach out to our team if you want to know what your house could sell for in this crazy market, or if you want an excellent experience house shopping with us!

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