Any experienced real estate agent will tell you that market conditions have a definite effect on the price a property will ultimately fetch when it goes to market. Notoriously hard to predict, the property market will ride the tides of the many economic factors that influence it at any given time.
Most real estate agents will distinguish between a buyer’s market and a seller’s market. As the terminology implies, the former will favour buyers when a property is eventually sold, while the latter will entail that the seller stands to make the biggest financial gain from the transaction.
Of course, this is an oversimplification of these important terms – according to Investopedia, a buyer’s market is at play when “supply exceeds demand, giving purchasers an advantage over sellers in price negotiations (we’ve added the emphasis). Consequently, the opposite is true when we refer to a seller’s market, in which conditions – demand exceeding supply, specifically – favour the seller when it comes to negotiating a selling price.
Many sellers may be hesitant to put their property on the market when the real estate agent helping them to sell draws their attention to the fact that a buyer’s market is in effect in the real estate market, thinking that this automatically means that they will certainly get a price that is less than satisfactory. It is important to remember that buyer’s or seller’s markets only give each respective party a leg up when it comes to negotiating the price of the property in question.
Why do buyer’s markets benefit buyers?
As has been elaborated on, supply and demand are key factors driving either buyer’s or seller’s markets. In the realm of real estate, “supply” will refer to the amount of properties that are on the market at any given time, while “demand” will mean the amount of potential buyers that are searching for a property to spend their money on.
As in any other industry, more supply will put buyers in a better position to find a property they like at a price that suits their pocket. It makes sense that a greater variety of properties that is available to a smaller pool of potential buyers – especially homes in the same price class – will benefit buyers when it comes to negotiating the price of the property they are interested in.
In this scenario, sellers have to take advantage of the interest there is in their property, especially if it is competing with many other comparable properties in the same city or suburb.
Expectations when selling a home in a buyer’s market
When initially discussing the sale of your property, a real estate agent that knows their stuff will be upfront about the expectations a seller can have in terms of the price their property is likely to fetch, as well as how long the property is likely to be on the market before being sold. When property conditions favour buyers, real estate agents will probably advise that a property may spend a little more time on market before selling, considering the many other competing comparable properties. While this is definitely not set in stone, there is also a stronger chance that the advertised price of the property may be affected by negotiations, and could therefore be lower than expected.
It becomes clear that the sale of a particular property in a specific city or suburb is intimately intertwined with what is happening in the local property market at a specific time.
Of course, comparable properties, or “comps”, for short, always have an effect on the price a home is likely to sell for.
In fact, an experienced real estate agent will heavily rely on what comparable properties are on the market for when suggesting an asking price for your property. This forms a part of the comparative market analysis a real estate agent does when recommending a selling price.
This analysis takes into account the property and its features, its vicinity to schools and amenities, and the price that comparable properties in the city or suburb are selling for, amongst a host of other things.
It includes looking at the internal characteristics of the property (its size, the number of rooms, the quality and condition of the home’s construction, and the appliances installed in the home), the external characteristics of the property (the condition of the home’s exterior, the style of the house, kerb appeal, and the property’s access to amenities), the location of the property (taking into account the desirability of the neighbourhood it’s located in, and how far it is to amenities), the price of comps, and the supply and demand in the area.
Preparing to sell in a tough market
Should your real estate agent tell you that a buyer’s market is in effect, you should keep in mind that it could – but this is not always the case – affect the time a property spends on market, as well as how much the property is going to sell for in the end.
Tougher market conditions negate a more targeted approach, which makes your property stand out from the rest. If you are still looking to sell in the shortest possible amount of time, at the best possible price, here are a few handy tips:
Hire an experienced agent
Perhaps the best way to navigate the property tides when they get a little choppy is to get a real estate agent that is qualified, experienced and has knowledge of the property market they do business in.
These are key factors when interviewing potential agents to help you sell your property. When deciding between agents, it is of cardinal importance to make sure that they are qualified and registered to operate in the state you are selling in. This is easy to verify online, and will ensure that a fly-by-night that has neither the knowledge, nor the paperwork to work in the industry does not swindle you.
It is just as important to gauge whether the agents you are interviewing have been working in your specific city or suburb for long. When an agent has worked in the local real estate market through many seasons, they gain an intricate knowledge of how the market is likely to perform in specific types of circumstances.
You want a real estate agent that can predict the outcome of the sale of your property with reasonable accuracy, which is why you should not skimp when searching for an agent. An online property finder like Perfect Agent is a great tool in this regard, as it recommends a number of agents, based on your unique needs and requirements, saving you time in searching for an agent that is qualified and experienced to help you sell quickly.
Update your home to attract buyers
When your property is just one among a great many others, you want to make sure it stands out from the crowd. Unless you are selling a fixer-upper – in which case you can expect the property to be on the market a little longer than similar counterparts that are ready to move into – updating your property can go a long way in securing a sale faster than you might have expected.
Small cosmetic and other repairs and renovations needn’t cost an arm and a leg, but do pay off when potential buyers agree to the price, terms and conditions set out by your agent when listing your property on the different marketing platforms.
As mentioned earlier in this article, who has the negotiating power is what differentiates a buyer’s market from a seller’s market. In this regard, it is worth your while to minimise the chances of buyers wanting to negotiate the price down. When there is nothing to cite as complaints or reasons for wanting to pay a lower price, there is less of a chance that you’ll get a price that is lower than you advertised the property for.
Setting a realistic asking price is one of the most complicated parts of the selling process, as it requires taking many different factors into account. It is always recommended that you take advantage of the expertise of your real estate agent when it comes to deciding on a price that is fair, both to you and to prospective buyers.
Pricing a property competitively doesn’t necessarily mean sacrificing too much profit – it does mean not overpricing your home, though. Remember: people selling comparable properties in your area will also try to avoid setting a price that is too high. A competitively priced property is one that doesn’t sell itself short, but also doesn’t sell something it is not.
Maximise marketing tactics
If you’re selling in a buyer’s market, effective marketing is key to making sure all prospective buyers are aware that your property is on the market. Ask your agent to enlist all the available platforms in their marketing efforts, including marketing via online property portals, social media sites and platforms, and more traditional mediums like newspaper classified ads and word-of-mouth.
Getting word out about the impending sale of the property is vital – ask your agent what the best way is to do this.
A buyer’s market doesn’t automatically imply lower property prices and more time spent on market. When a seller has the right real estate agent by their side, has updated the property to attract the attention of potential buyers, and is advertising as widely as possible, buyers are sure to take notice and interest.
Still haven’t found an agent that understands your needs? Let Perfect Agent recommend a range of agents to choose from.