Over the last handful of years real estate markets across the country have favored home sellers. Over the last two years it has been absolute nirvana!
Sellers have called the shots and have soundly taken them. Home sellers have had the luxury of looking over multiple offers for their homes.
At times the offers have been too good to be true. Selling tens of thousands over asking, having no inspections, and even buyers paying cash have become the norm and not the exception. While all real estate is local, it looks like that is about to change in many areas of the country.
So what happens when you go from a seller’s market to a buyer’s market? Let’s have a look.
What is a seller’s market?
A seller’s market is generally shaped by the following:
- More demand than there are homes for sale
- Bidding wars with multiple offers
- Escalation clauses are seen regularly in offers
- Terms in offers heavily favoring sellers
- Fewer real estate contingencies
- Days on market very low
- In some circumstances sellers may have to pay capital gains taxes, due to rapid rise in home values.
With a seller’s market, homeowners will get the very best terms and conditions in offers. Buyers are often in competition over and over again with other buyers. Many buyers put offers on numerous homes before landing one.
What is a buyer’s market?
A buyer’s market is just the opposite. The buyer is in control because there are more homes for sale than there are buyers.
There are far more opportunities to find your dream home while also getting the best deal. On most occasions buyers don’t need to fear getting into a bidding war with other buyers.
They also don’t have to write crazy terms to land a home. Homes will stay on the market a lot longer.
What is a balanced market?
When real estate markets change, they rarely go from one kind of market to another overnight. More often than not, there is a transition that takes place.
That transition usually includes a balanced market. A balanced market is what most real estate agents prefer because it ensures that both buyers and sellers are able to find and compete in the best deals.
There will be competition between both groups and no one group has an advantage over the other.
In many areas around the country, it is likely there will be a balanced market. Even in balanced markets, you can expect there will be certain price points where buyers or sellers have the upper hand.
For example, some price points will have low inventory and others may see a more significant rise in inventory.
Supply and demand will still be a significant driving force in who has the upper hand.
How do buyers and sellers know if it is a balanced market?
When real estate markets change, it becomes even more vital to rely on the expertise of a local agent.
Keep in mind that some agents have been through multiple up and down markets while others have not. It can be shocking for some agents who have entered the business in one type of market vs another.
Can you imagine entering the market as an agent three years ago? Most homes sold in a week over asking price. It can be shocking when properties are sitting on the market for a couple of months instead.
Real Estate veterans remember those days. They are actually normal. Having been in the real estate business for the past thirty-five years, a changing market is old hat. Transitioning to a different kind of market is nothing new.
A skilled agent needs to be able to verbalize exactly what is happening locally.
Buyers and sellers need to be armed with the most up to date information. What are the current market conditions? Where are the markets heading?
Without proper guidance clients can make significant financial mistakes.
The national headlines may not apply
Real estate agents need to educate their clients that national headlines might not apply to their local market. Some areas of the country may be much stronger than others or vice versa.
Now more than ever buyers and seller will look to real estate agents for sound advice. While nobody has a crystal ball it is essential to stay on top of housing trends and where they are headed locally.