FAQ: What Is a Buyer's Market?
If you are a first-time homebuyer it is important to understand when it is the most advantageous time to purchase a home. In real estate, there is a buyer’s market and a seller's market. A buyer’s market means that homes are in abundance for sale with a limited number of buyers looking for homes.
Defining a Buyer’s Market
In a buyer’s market, the buyer has the power. Sellers are at a loss because they either need to negotiate and accommodate buyers or wait for the right buyer to come along. Sellers have a lot of competition to attract the right buyer, therefore it may be easier for them to offer incentives and negotiate with the homebuyer.
Signs of a Buyer's Market vs a Seller's Market
The key signs that indicate the type of market it is, are the length of time a home is on the market and the cost of the homes on the market.
In a buyer’s market, you will find that homes are listed for longer periods. While the homes are listed you may notice price drops in the cost of the homes. Sellers are more accommodating because there are more homes for sale than there are buyers.
On the other hand, in a seller’s market, there is a greater demand for homes than there are homes for sale. Homes might be listed one day and gone the next and the prices of the homes will continuously increase.
What This Means for Homebuyers
If you are a homebuyer in a buyer’s market, you have a greater chance of finding what you want in a home at the price that you want. Sellers understand that buyers can easily walk away unless they are willing to negotiate and/or offer incentives.
As a homebuyer, you want to be patient and take your time looking for a home. Make sure that you know what is on the market and compare properties. Look at how long a home is on the market. The longer a home is listed, the more power you will have with negotiating with the seller.
Several points can be negotiated when buying a home. This includes the cost of the home, contingencies, repairs, and seller concessions(closing costs). You have the power to ask for things to reduce the amount of cash that you need to come up with at closing or to reduce the price of the home.
You as the homebuyer are in control of the process. You have the power to ask for things such as extending deadlines for closing or inspecting the home. You can also negotiate the date that you take possession of the home. Sellers that are committed to the sale of their home are more likely to agree to these terms.
This guide was intended to give you a better understanding of how the real estate market affects the process of buying a home when the buyer is in control. The bottom line is that the ball is in your court and you can get more value for your purchase.