Purchasing a home is a significant investment, and the housing market plays a major role in what buyers and sellers can do.
There are mainly two markets—a seller’s market and a buyer’s market.
It’s incredibly beneficial for home buyers to understand what defines a seller’s market vs a buyer’s market and what each means for you.
We’ll explain the benefits of a buyer’s market over a seller’s market, and we’ll share some tips for buyers and sellers in either market.
There’s a lot of ground to cover—let’s GO!
What is a seller’s market?
A seller’s market is when more buyers are looking to buy a home than there are available homes on the market; this can also be referenced as the demand exceeds the supply.
There are a few ways to determine if it’s a seller’s market, such as if homes are selling quickly, if homes are sold for higher than the listed price, and if there are bidding wars between potential buyers.
This means the buyer must work harder to secure their dream home in a seller’s market.
The housing market continuously fluctuates, and a seller’s market is influenced by a couple of factors, such as the economic growth of an area and trending interest rates.
If the area where you’re looking to purchase a home is experiencing substantial economic growth, you may have to prepare to buy a home in a seller’s market.
Low national interest rates are another factor that influences the housing market. You can expect to see more interested home buyers if mortgage rates are trending on the lower end.
What is a buyer’s market?
A buyer’s market is the flip side of a seller’s market—when more homes are available than there are potential home buyers.
When the supply exceeds the demand, home buyers can take their time finding the right home and are in a position to negotiate with the seller.
In a buyer’s market, you’ll notice more homes listed and on the market for a while.
You’ll also be able to negotiate the price and contingencies of a purchase contract with the seller. This means if you notice the roof has a leak or the furnace is in rough shape, you can ask the seller to either update the home or lower their price.
One major contributing factor to a buyer’s market is a struggling economy. If unemployment is on the rise and there are talks of a recession, many potential buyers may decide to wait for a more stable economy.
However, this can work in another buyer’s favor as there will be less competition.
Which market is better?
Obviously, home buyers prefer a buyer’s market over a seller’s, and vice-versa. Can you blame them? Each market provides the controlling party with more benefits, so the preferable market depends on which position you’re in.
Buyers can take their time searching for a home and making an offer in a buyer’s market. While this may not seem like a big deal, you may have to settle for a home that wasn’t your first or second choice, and most likely at a higher price, in a seller’s market.
Sometimes buying a home as-is is the only option for buyers in a seller’s market and that can cost buyers more in the long run. In a buyer’s market, you may not have as much competition so you will likely won’t get caught up in any bidding wars.
If you have to make an over-asking offer, you’ll need to ensure your financials are in place to avoid future hardships. Otherwise, it might be best to wait until the market changes in your favor.Check your mortgage options
Tips for buyers & sellers
Whether you’re buying or selling your home, let’s go over some helpful tips for each market.
Tips for buyers in a seller’s market
Home buyers can improve their chances of securing their dream home in the following ways:
- Obtain a mortgage pre-approval
- Submit an offer above the asking price
- Write a letter to the homeowner
- Being prepared & move quickly
- Accept the home as-is
Tips for sellers in a seller’s market
While selling your home is an advantage in a seller’s market, you can increase your chances of a quick sale by:
- Repairing & cleaning the home
- Considering all offers carefully
- Pricing the home fairly
Tips for buyers in a buyer’s market
As buyers have the upper hand in a buyer’s market, they’re sure to get their dream home if they follow these steps:
- Get pre-approved
- Take time to shop for homes & make an offer
- Get a home inspection
- Compare the value of other homes in the area
- Review how long a home has been on the market
- Consult your wishlist
- Remember your budget
Tips for sellers in a buyer’s market
If you’re selling a home in a buyer’s market, you can increase the chances of selling your home by:
- Repairing the home as needed
- Dropping contingencies
- Considering all offers
- Being flexible in price and conditions
- Marketing & staging the home
How to get started buying a home
If you’re interested in purchasing a home and want to get started,begin the home-buying process by speaking with a loan officer.
They can review your financial scenario and which mortgage products best suit your needs.
This starts your journey in the right direction as you have a clear picture of what you can expect and how much of a home you can afford.
The experienced lending officers at GO Mortgage are ready to discuss our home loan offerings with you. When you choose GO Mortgage, you can expect:
- Products with low down payments
- Fixed or adjustable interest rates
- Lower interest rates with higher credit scores
- Flexible term lengths
- Personable and experienced guidance
If you’re ready to purchase your dream home or are just seeking to learn more information, fill out our questionnaire to begin the process.