If you are in the process of buying a home, chances are that you have heard of there being buyer's and seller's markets. However, it will help to know what this means in relation to buying your next home. Here is an overview of both of these real estate market conditions.
A buyer's market is when real estate conditions favor the buyer. This typically means that there are more homes for sale than there are home buyers, which leads to homes being on the market for a very long time before someone makes an offer on them.
When conditions are in the buyer's favor you have a bit of room to negotiate when it comes to making an offer. You are more likely to have an offer accepted below the asking price because the seller is looking to find someone to buy their home and may not want to wait any longer. You can also be more aggressive with asking for repairs to be made or ask for credit as closing for things that you discover are wrong with the property.
A seller's market is the exact opposite of a buyer's market, which is when the market conditions favor the seller. There are going to be fewer homes for sale and many buyers looking to make a purchase. The problem with these market conditions is that making an offer on a home can be competitive.
You'll have multiple buyers making offers on homes at the same time, which means you need to make an offer that sticks out to the seller and makes them want to accept it. This can be done by offering more than the asking price and other buyers, making an all-cash offer that does not depend on financing to be approved, giving up contingencies such as the right to walk away after a home inspection, or even offering more earnest money to show that you are serious.
One thing that triggers a seller's market is really cheap financing. When interest rates are at all-time lows, this seems to be what motivates people to buy a home. They want to take advantage of those low interest rates and lock in a purchase for the next 30 years. Even though a buyer may pay more for a home, they will still see savings over many years by paying less in overall interest.
Reach out to a company like Prince of Wales Realty for more information.