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Bear vs Bull Real Estate Markets

June 11, 2021

Understanding the Housing Market: Seller’s vs. Buyer’s Market

Supposedly glamorous territory, the world of real estate is sometimes scary and complicated. With a seemingly constant stream of new terms and concepts, it can be hard to keep up with all the latest happenings. Of course, while it can be an intimidating and demanding profession, it’s also gratifying. But to get ahead, it’s essential to know the ins and outs of the market, like what to expect in a buyer’s market and a seller’s market. Let’s discuss what these two different market conditions entail and what you can do to make the most of your time in both.

What Is a Seller’s Market?

In a seller’s market, houses are in high demand and short supply. Buyers are eager to buy, meaning they’re willing to offer more money than a home is worth to get it off the market. This leads to increased competition between buyers and sellers. Naturally, sellers will choose the highest bidder, essentially making it a seller’s market. This means that they’ll be able to ask for more money when selling their home than they would in other situations. As a result, the homeowner has more control over the buying process.

What Is a Buyer’s Market?

On the flip side, a buyer’s market brings much-needed balance back to the table. The advantage here is in the buyers’ hands. In a buyer’s market, homes greatly outweigh the demand. When there is more supply than demand, prices are typically lower, buyers are more willing to negotiate, and homes sell slower. So as a buyer, you can acquire your dream home without any of the headaches of a seller’s market.

3 Major Differences Between Buyer’s and Seller’s Markets

1. Expectations:

When considering a purchase in a seller’s market, you should be open to a bidding war if you’re interested in a particular home. This means being ready to play hardball with your negotiation and perhaps making an offer lower than the asking price. On the other hand, if you are trying to sell your home in a seller’s market, you may be surprised at how willing buyers are to negotiate. They may be offering more money than the home is worth and not even trying to negotiate.

2. Who Has the Power:

In the buyer’s market, the buyer has more control as the sellers are facing more competition. Buyers can therefore be more aggressive with their offers and can negotiate better deals. In a seller’s market, however, the seller can be more controlling and demanding when negotiating a price or demands. They know that quality homes are in short supply and can hold out for a higher price.

3. Time Frame:

In a seller’s market, buyers must be prepared to make an offer immediately because of the fierce competition from other buyers willing to pay top dollar. Conversely, in a buyer’s market, interested buyers can take their time to find the right home and get it at the right price. With less competition, buyers generally have a considerable timeframe in which to make their decision and investment.

Conclusion:

The two market conditions can be equally lucrative and rewarding for buyers and sellers. However, when you’re looking to make a real estate purchase, it’s essential to understand the differences in market conditions. Understand that both seller’s and buyer’s markets are just as challenging and valuable as the other and be ready to master them accordingly. If you are new to real estate, be sure to consult a local real estate agent to learn more about the process and get the advice you need.

Bear vs Bull Real Estate Markets