Is it a buyer's or seller's market? | Real Estate Agent | BMO Harris
 
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Young homebuyers shaking hands with real estate agent

There are natural ebbs and flows in the real estate market, sometimes in favor of buyers and other times, sellers. A buyer’s marketThird Party Link is when more people are selling homes than buying them, meaning there is an excess of supply. On the flip side, a seller’s marketThird Party Link is when there’s a shortage of homes up for grabs. Currently, the overall prediction is that the American real estate market will favor sellersThird Party Link.

Related: How feelings may impact the home-buying process

Here are a few tips to help you determine if you’re in a buyer’s or seller’s market, plus ideas on how to help your clients strike the best deal in either scenario.

First, find out if you’re in a buyer’s or seller’s market by answering the following questions:

  • How many homes are on the market? If there are many, you’re likely in a buyer’s market.
     
  • Are homes selling fast? Pay close attention to how many days the home has been on the market. If the numbers are low, you’re probably in a seller’s market.
     
  • What price point are homes selling at? Consider pricing trends – is there a tendency to cut prices or are homes generally selling above list price? If homes are selling above list price it could indicate a bidding war, and therefore a seller’s market. However, if homes are constantly dropping in price that would be indicative of a buyer’s market.
     

Related: 4 client red flags to look out for

What to do during a buyer’s market

If your client is a buyer:

  • Research how long their preferred home has been on the market to determine how much negotiating power your buyers may have.
     
  • Investigate how many homes are on the market and what comparable homes are listed for, in an effort to get your buyers the best price.
     
  • Explain that they’re likely to have more options and negotiating room if the seller is motivated.
     
  • Consider going for a price that’s slightly below or at asking.
     

If your client is a seller:

  • Determine how motivated they are to sell – if they need to sell quickly, have a discussion about reducing the price to edge out other homes on the market.
     

Related: The best price is not always your client’s price

  • Be flexible – both with the terms of sale and showing times to make it easier for potential clients.
     
  • Don’t leave things to chance – be sure all repairs are made (big or small) to ensure the home is in the best possible shape. You don’t want to lose a buyer due to a small detail such as dirty carpets or messy bedrooms!  

 

Related: 7 homebuyer turnoffs your sellers should know about

What to do during a seller’s market

If your client is a buyer:

  • Remember that supply is less than demand, so homes are more likely to be higher priced. Look at comparable houses and figure out a price that’s fair – but don’t push your clients higher than they’re comfortable or far beyond the home’s worth.
     
  • Be quick and controlled – homes are likely to sell fast, so act quickly to give your clients the best chance. (You may also want to have a bidding war strategy planned ahead of time!)
     
  • Educate your clients on what’s important – help buyers see past the paint colors or flooring to focus on the bones of the home.
     

Related: DIY at home and your client could save 50%

  • Consider searching in an up-and-coming area, where your buyers may be able to get a great house for a more reasonable price.
     

If your client is a seller:

  • Get the home listed quickly – markets can shift so it’s important to take advantage of a seller’s market while you can.
     
  • Explain the increased likelihood for a bidding war and help them decide how they would want to handle it.
     
  • Being flexible on sale terms may bring in more possible buyers, therefore driving up the price.
     
  • Consider which renovations will help increase their return and which ones won’t have an impact.
     

Whether you find yourself in a buyer’s or a seller’s market, there are ways to work within the current environment to get the best outcome for your clients. Do your research and you’ll also position yourself as a knowledgeable agent, which can bode well for word-of-mouth.
 

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