Understand what time of real estate market you're in and what it means for you and your goals.
There is a lot of confusion between these two terms, and we see it a lot when dealing with potential clients. Most of the public seems to think that when prices are up, we are in a Seller's Market, and vice versa for the Buyer's Market. While the market values of real estate can certainly be a testament to which type of market you're in, there is much more to think about to make an informed and accurate assessment.
A "Seller's Market" is characterized by an increase in demand for real estate which causes there to be more buyers in the market than there are homes for sale.
- Lowering Interest Rates - as interest rates decrease, buying power will increase, creating more homebuyers and possibly enticing others to capitalize on the low borrowing cost. If there is a fear of rates increasing, many buyers will be afraid of missing out on the lower rates and start their home search.
- Positive Economic Outlook & Productivity - when potential homebuyers feel confident in the market, or labor forces increase in an area, this tends to influence home sales. New businesses can attract an influx of residents who will also have an impact on the real estate market.
How to Buy in a Seller's Market
- Be Pre-Approved & Know Your Goals - talking to a good local mortgage lender and getting pre-approved is the first step in buying a home. It gives you hard numbers and figures so you can know what you will pay and what your costs will be. If you have questions about getting connected with a good mortgage lender, go to our Treasure Coast Mortgage Pre-Approval page and we'll help you out.
- Stay Vigilant and Flexible - the perfect home at the perfect price could come up and you might have to take an hour or so out of work, or during your lunch break, to go see it. The best homes sell very quickly in a Seller's Market, so expect to be one of the first to see it. If you see a home on the Treasure Coast MLS Search that looks interesting, you can request a tour right from that page to ensure you're getting in ASAP.
- Make a Strong Offer - the first side of this is the numbers: have a strong purchase price (it's not uncommon to pay over asking price in a seller's market) and ensure you're financing and escrow deposit depict you as a capable buyer. On the other side, capitalize on tactics to tug at their emotions. Write a letter to the owner with a picture of your family, tell them how you see yourself and your growing family in the home, etc.
A "Buyer's Market" is a situation where the supply of homes for sale exceeds the demand for houses in that market. In these circumstances, sellers find themselves with more competition than usual, leading them to be more flexible on their sales price. Some of the most common causes of Buyer's Markets include:
- Rising Interest Rates - as interest rates rise, buying power goes down and the number of homebuyers in any given real estate market decreases.
- Increased Inventory - many sellers wanting to unload their properties at once can cause an imbalance in the real estate market. New developments and new construction homes can also cause a boost in inventory that can create especially lower prices for older or functionally-obsolete homes.
- Fear or Uncertainty - living in Florida, the potential for hurricanes or flooding can create a lack of demand for homes in certain area or methods of building. Many weary homebuyers will look for newer homes built to the most recent codes to hedge any risk. General market uncertainty can also inhibit home purchases; when people are afraid the market will drop, they are hesitant to spend more than they could at another time.
How to Sell in a Buyer's Market
- Price your Home Correctly - in a highly-competitive market, there is no "wiggle room" in pricing. Any fluff in your price tag could be the difference between a potential buyer scheduling a showing and turning elsewhere.
- Market your Home like HGTV - Stage your home beautifully for showings (think sight and smell) and spend time on curb appeal that will be the first impression. Get stunning professional photography to show your home in it's best light. If you plan to list your home, contact us to ensure you'll have a top Treasure Coast Realtor to deal with the 9-to-5 marketing and prospecting that it takes to sell homes in difficult times.
- Be Accommodating and Flexible - some buyers might have to see the home first thing in the morning or during your family dinner time; aim to be as flexible as possible. Remember, no one can make an offer on a home they haven't seen.
I hope this information was valuable for you. This is another topic that I find myself discussing constantly with clients and I feel it is worth sharing with anyone else who may be interested. If you have any thoughts, questions, or ideas about the real estate market on the Treasure Coast, we're always at your complete disposal.