Buyer’s Market vs. Seller’s Market in Property, Explained

You may have heard the terms “buyers’ market” and “sellers’ market,” but what do they mean? Are they directly related to the best time to buy or sell property?

Some seasons are busier than others, but when it comes to economics, supply and demand matter more in the property market. Therefore, it’s important to keep an eye on the property market and determine if it’s a seller’s market or a buyer’s market before making a purchase or selling. While doing your research is always recommended, it’s even better to consult with a senior conveyancer before listing your property or submitting an Offer to Purchase.

In short, a seller’s market is favourable for sellers, while a buyer’s market benefits those looking to purchase property. This article explores in more detail what it means to be in a buyer’s market and a seller’s market.

What Is A Buyer’s Market?

In real estate, a “buyer’s market” refers to favourable conditions for people looking to buy homes. This happens when there are many homes for sale, giving buyers plenty of options. At the same time, fewer people are looking to buy property. Several factors can contribute to these conditions, including interest rates, economic trends, and the time of year. In a buyer’s market, homes may take longer to sell, and sellers often have to lower their prices to attract buyers.

What Is A Seller’s Market?

In contrast, when the demand for properties exceeds the supply by a large margin, a seller’s market emerges. Simply put, when there aren’t enough properties available, the situation benefits sellers over buyers. Several interconnected factors contribute to this scenario. Strong economic growth, low interest rates, or a shortage of quality homes in a specific area can all contribute to a seller’s market.
In a seller’s market, properties sell quickly and buyers, who are competing, may need to outbid each other to purchase a home. Buyers are often willing to spend more on a home than usual in these market conditions. As a result, sellers may be able to raise their asking prices.

Strategies for Buyers in a Buyers’ Market

In a buyer’s market, where prices and competition are lower, buyers can use these tips to find a suitable property and potentially save money:
1. Get a home loan pre-approval letter before you start shopping.
2. Don’t rush into making an offer until you find the right home.
3. View as many properties in your price range as possible.
4. Consider making an offer that’s below the asking price.

Strategies for Buyers in a Sellers’ Market

In a seller’s market, competition is fierce and time is crucial when making a purchase. To increase your chances of success, follow these steps:
1. Obtain home loan approval in advance.
2. Submit an offer promptly upon finding a suitable home.
3. Provide the largest possible down payment to demonstrate that you are a serious buyer.
4. If permitted, consider making backup offers on homes that are contingent or pending.

Strategies for Sellers in a Buyer’s Market

When you have many options, consider these suggestions to make your home stand out:
1. Sweeten the deal by providing incentives to make your property more appealing.
2. Maintain repairs and landscaping to boost curb appeal.
3. Remove photos and personal items from your home to help buyers envision themselves in the house.
4. Price your home correctly.

Strategies for Sellers in a Sellers’ Market

Here are some tips for sellers in a competitive market:
1. Avoid setting a deadline for reviewing offers. In a seller’s market, there are often multiple bids, so it’s best to carefully review all of them before making a decision. The highest offer may not always be the best one.
2. Reduce your budget for cosmetic upgrades such as staging and renovations. In a competitive market, buyers may be more willing to overlook outdated interiors and cosmetic issues.
3. Consider hiring a top real estate agent who understands the demands of a seller’s market.

Is It a Buyer’s Market or a Seller’s Market?

When buying or selling property, it’s essential to know your market and understand how different markets operate. Being aware of market factors that lead to a buyer’s or seller’s market will help you plan your timing and approach accordingly. Here are some indicators to watch out for –

Inventory

A large number of properties for sale, especially those that have been on the market longer than usual, usually indicates a buyer’s market. On the other hand, limited inventory combined with fast house sales could indicate a seller’s market due to increased competition among buyers.

Recent Sales

To get an idea of the current market, research recent sales of houses similar to yours or ones that catch your eye. Look for houses that are the same age, size, and location, and have a similar number of bedrooms. If homes are selling for more than their listing price, it’s likely a seller’s market. If they are selling for less than the listing price, it may be a buyer’s market.

Interest Rates

You can also gauge the market by observing interest rates. Higher interest rates may cause some buyers to leave the market, indicating a buyer’s market. Lower interest rates tend to attract more buyers, suggesting a seller’s market.

Time On The Market

An important indicator of the housing market is how long a property remains on the market. In a seller’s market, houses tend to sell quickly, while in a buyer’s market, contracts are signed at a slower pace.

Average Home Price Trends

When property prices are declining, it may indicate reduced seller competition, creating a favourable environment for buyers. Conversely, rising prices may signal the emergence of a seller’s market. In summary, each market condition presents unique opportunities and challenges.

Regardless of whether you are a buyer or a seller, it is crucial to understand the prevailing market conditions and seek professional advice before entering the market formally. To make well-informed decisions, consult with a Senior Conveyancer before taking any action. Feel free to contact us for assistance.

Kindly be advised that AWD Law does not enter into litigation on behalf of clients. Our conveyancers specialise exclusively in the development of vacant land, property transfers, bond registrations, administration of deceased estates and notarial practice. Should you require assistance with a litigation, kindly contact The Legal Practice Council.