The terms “buyer’s market” and “seller’s market” are well known. The meanings are obvious from how the expressions are worded. In either case, they both connote a balance tipping one way or the other in favour of a particular party. On the one hand, the market benefits those who are selling their homes; on the other, the buyer benefits from the market. In a buyer’s market, the number of buyers seeking houses is fewer than the number of properties listed for sale. In contrast, the opposite is the case in the case of sellers over buyers. The market moves in cycles either way. What is important is knowing the difference so that you obtain the best value for your dollar. However, a more expansive explanation of what makes a buyer-seller market is provided below.

What Is a Buyer’s Market?

In a buyer’s market, real estate becomes more affordable as the supply of property exceeds the demand. Because more houses are on the market than there are buyers, this exerts downward pressure on prices. This is not the happiest situation for sellers, as properties tend to sit on the market for a long time. In real estate jargon, this is known as “time on the market.” The property’s time on the market alone has consequences for the eventual sales price. The buyer assumes a stronger position in the negotiation process, and the house invariably sells for less. This leads to an adjustment in property prices across the board. Sellers must either wait for the market to turn around, or lower their prices. The purchaser may benefit from the buyer’s market, to begin with. However, it may affect growth potential in the short term if prices continue to decline.

What Is a Seller’s Market?

A seller’s market is the exact opposite of a buyer’s market. In this phase of the market, buyers outnumber sellers. The number of people looking to purchase a home is greater than the listed properties. This market is advantageous to the seller as they can sell the property quicker and enjoy the leverage of a favourable asking price. Time on the market is usually low in a seller’s market. The median home and unit prices are high. Given that the vendor has the power in the deal, they are unlikely to budge on price. They are coming from a stronger bargaining position than the buyer. Buyers compete for scant properties in “bidding wars”. Tackling a hectic seller’s market requires special finesse and the best advice from a qualified real estate agent. There is no time to delay in a seller’s market, and the buyer must be prepared to move quickly.

Sellers And Buyers Market Examples

From 2006 through 2012, the United States witnessed a housing bubble and a crash. This was an example of a seller’s and buyer’s market being taken to its logical conclusion. Bad lending practices led to a global economic crash. Subprime lending, consisting of dodgy housing financing, lax rules, and historically low interest rates, created a monster. People were able to take out mortgages, leading to inflated property prices and high demand in a seller’s market. The subsequent rate of foreclosures and other factors led to demand dropping while supply skyrocketed. This created the mother of all buyer’s markets. In Australia, the effect of COVID-19 and halted immigration, along with interest-rate hikes, is yet to be determined on housing. At present, experts are not sure whether we are heading into a buyer’s or a seller’s market. While the last few years have seen a seller’s market, it is widely thought to be slowing.

How To Tell a Buyer’s From a Seller’s Market

No hard-and-fast rule dictates whether property markets are favourable to either buyers or sellers. In Australian cities, it’s a combination of both. There are pockets of areas that are seller’s markets and others that are buyer’s markets. In that sense, the market is favourable to both. This see-saw of supply and demand gingerly maintains the balance that sustains the market. Nevertheless, there are telltale signs to look out for when identifying either. The property sits on the market longer in a buyer’s market and shorter in a seller’s market. Auction clearance rates are lower in a buyer’s market than in a seller’s market. Prices are lower in a buyer’s market but higher in a seller’s market. Following this theorem, rental yields follow the aforementioned patterns. The simple equation is that if it favours the buyer, it is cheaper because there is more of it. And vice versa.

Tips For Selling In a Buyer’s Market

Selling in a seller’s market is a cinch. The property, if it is in the right locale and good nick, sells itself. But things are trickier in the buyer’s market, as you can tell from above. But, all is not lost. There are ways around a buyer’s market—effective strategies to sell your home quickly and without giving it away. Most of these are commonsense, but others can mean throwing in a few perks for the buyer. The trick is to beat the competition and offer more than your competitors do. The best piece of advice is to find the perfect real estate agent for you. Don’t automatically go with a big name agency, but do your research. The right agent knows the neighbourhood well. Best of all, they’ll know all the tricks of the trade for moving property in a slow market.

Set the right price. Make sure that you maintain your price respective to other homes in the neighbourhood. Cast a wide net: don’t wait for eyeballs to view your listing; get out in front. Discuss a sensible strategy with your real estate agent that includes a wider net, like advertising on social media. Be flexible. It’s no use sticking stubbornly to your ideal price in a buyer’s market. Be accommodating in other areas and make sure you can be available for a sudden inspection. Always keep your house ready for viewing. Incentivise: You can get a jump on other buyers if you throw incentives a buyer’s way. Think about including a fridge and washer if they’re needed. Offer to pay the council rates for the next few months! Most importantly, choose the best real estate agent for you!

Conclusion

Knowing whether you are in a buyer’s or seller’s market is crucial for anyone selling a house. It is equally essential news for property investors. While we would all wish that market conditions favoured us, that is not the nature of the beast. Fortune may play a leading part in whether or not the headwind favours us. However, life, as with the market, is not like that. There are periods where the data cannot determine whether the market will move either way. The best any seller can do in a buyer’s market is be prepared. In a seller’s market, buyers must be strategically attuned to identify every advantage that surfaces. The best way to improve your odds is by engaging a professional real estate agent. In such times, experience matters. Our team at Perfect Agent are standing by to match you with the perfect real estate agent for you!