Buying or selling a home can be a lot like playing a game of cards: You gotta know when to hold ’em and when to fold ’em. To determine the best moments to buy and sell, most people look to the real estate market—whether it is a buyer’s market or a seller’s market.
But what is a buyer’s market? And to what degree should you plan to buy or sell based on the type of market you’re in? We gathered a team of real estate professionals to break it all down.
What is a buyer’s market?
As you might have guessed, a buyer’s market favors buyers, not sellers. But what, exactly, does that mean?
“It means external conditions—like supply and demand, comparable sales in the neighborhood, the economy, public opinion, confidence in the future, and changes in the tax laws—favor buyers,” says Robert Elson, a real estate agent with Warburg Realty in New York.
These elements create an perfect scenario for buyers in the real estate market.
“First, we go through a period of approximately six months—or longer—where we see prices start to steadily soften as time goes by, coupled with rising inventory and interest rates dropping,” says Bill Kowalczuk, a broker at Warburg Realty. When this happens, buyers have many more properties to choose from.
“The larger the rise in inventory, the more negotiable the properties become,” he says.
In a buyer’s market, buyers are more likely to get a great deal on a purchase.
“If you are in the market for a new home, it’s an ideal time to make your move,” says Jordan Skurnik, a licensed real estate salesperson at Citi Habitats in New York.
Why? “You may be able to use the excess inventory to your advantage and secure your dream home for a lower price,” Skurnik says.
And, due to the fact the market is much less competitive, he says you are likely to have more time to make a decision and much less chance of getting caught up in a bidding war.
You may be able to finagle some additional perks, as well.
“With little competition, buyers can negotiate with sellers to include a home warranty, cover part of the closing costs,” says Candice Williams, a Re/Max Space Center realtor in League City, TX.
Plus, buyers in this situation typically control the closing date, she says.
But don’t get too excited. No one’s giving their home away in a buyer’s market. While you can get a deal, you may not get a steal.
“If your budget allows for $800K, don’t aggressively go after million-dollar properties,” warns Daniele Kurzweil, a licensed real estate salesperson with the Friedman Team at Compass in NYC. It’s still smart to stick to your budget, so you can avoid financial trouble if the markets shift in the future.
As you can imagine, a buyer’s market is not a particularly good time for sellers.
“Because so many other sellers are competing for the same group of buyers, sellers may find their properties languishing on the market, sometimes for a year or more,” says Dolly Hertz, licensed associate real estate broker at Engel & Völkers New York Real Estate.
It can be fine to make certain your home is move-in ready and shows nicely in photos. If the home isn’t move-in ready, Williams says sellers need to be open to providing additional concessions, such as paying closing fees or a carpet or paint allowance.
“Also, if your home has a unique or uncommon feature—a larger than average backyard, secret room, etc.—it’s important to highlight that feature to buyers,” Williams says.
Looking to sell your home? Click here for some tips.