Have you ever thought about when the best times to buy and sell homes are? There are definitely seasons that fare better than others, but real estate market fluctuations have a lot more to do with the supply and demand of properties than they do with what time of year you should be buying. For this reason, when investing in real estate, it’s important to figure out what your local real estate market is currently saying.
In this article, I’ll discuss what it means to invest in real estate during a buyer’s market to help you make informed decisions about your next property investment.
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What Exactly Is A Buyer’s Market?
A buyer’s market happens when the supply of homes exceeds buyer’s demand for them. These specific conditions give home buyers the upper hand over sellers because when supply is higher and demand is less, the market has to respond.
In a buyer’s market, home prices fall, and they tend to remain on the market a lot longer. What does that mean for sellers? It means they need to compete with each other in order to attract a smaller pool of potential buyers. Ideally, sellers will reduce their listing prices in order to gain an advantage in the market. Additionally, they tend to be much more open to negotiating and keeping buyers from walking away from deals.
Tips For Buyers
Purchasing a home is ideal during a buyer’s market because prices are lower and there are less buyers competing for the same properties.
Here are a couple steadfast tips:
Be Patient
In the midst of a buyer’s market, it’s wise to be patient and take your time finding the right property, mainly because there is far less worry that you’ll lose the home you’re interested in purchasing.
Be Familiar With Availability
Look at as many properties and homes as possible before submitting a final offer. Knowing the local availability will only work in your favor, because not only does it guarantee you find what you’re looking for, it also gives you stronger negotiating power.
Analyze Comp Properties
Familiarizing comparable properties on the local market is vital to effective negotiations. By reviewing the comps, you can use their pricing in your favor. You can do this yourself or with the help of a realtor or real estate expert.
Pay Attention To How Long It’s Been Listed
The longer period of time a property has been on the market, the more power you have when negotiating the final sale price. Even if you don’t ask for a lower price, you can still workout contingencies, repairs, and seller concessions.
How To Tell If It’s A Buyer’s Or Seller’s Market
Before investing in real estate, there are ways to determine the kind of market your local real estate market is experiencing.
These include:
Current Inventory
Take a look at all the properties currently available on the local market. The more houses, the more likely it is that you’re in a buyer’s market. On the other hand, if there seems to be less homes available, you’re likely in a seller’s market. To get an exact read on the inventory, divide the number of properties currently listed by the number of properties that have sold within the last month. If the number is anything above seven, it’s a buyer’s market. If the number is below five, it’s a seller’s market. Any numbers in between is what’s known as a neutral market.
Recent Sales
Review the recent sales of homes and comp properties to your own property or the one you’re interested in buying. If you’re finding that most places are selling above asking prices, that’s a good sign you’re in a seller’s market. Conversely, if prices are coming in lower, that’s indicative of a buyer’s market.
Property Prices
During a buyer’s market, it’s not uncommon for sellers to drop their listing prices. When looking at new properties, make sure to review the price history. If you notice that home prices have been recently reduced, that’s a solid sign you’re in a buyer’s market.
Market Movements
Knowing whether or not property prices in your area have been inflating or deflating is one of the strongest indicators of a buyer’s or seller’s market. The easiest way to gauge this is to pay attention to current real estate market trends.
Days On the Market
Last but not least, the number of days that a property sits on the market is another strong marker for determining a buyer’s or seller’s market. Naturally, properties sell quicker in a seller’s market than they do in a buyer’s market, so use the data you find to your advantage.
Learn How To Successfully Invest in Real Estate
If you’ve been thinking about investing in real estate, now is the time! Strike while the iron is hot, I always say! Whether it’s a buyer’s market or seller’s market, with the right training and guidance anyone can be a successful real estate investor.
Ready to get started? Contact my team today.
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