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What Is A Buyer’s Market
By Tisza Major-Posner | May 15, 2007
Right now whenever you hear, read or see anything about Real Estate the phrase “Buyer’s Market” is usually somewhere nearby. What is a Buyer’s Market? What does it mean to you as a prospective home seller or a prospective home buyer? Why should it matter to you and How can you make it work for you?
A Buyer’s Market happens whenever supply of something exceeds demand. When the term is applied to Real Estate it means that a six-month or greater supply of inventory is available.
Right now in Claremont, California, we currently have 126 properties listed on the Multiple Listing Service or MLS. They range in price from $334,900 to $2,750,000 and have been on the market for an overall average of 56 days.
The most recent market statistics for closed home sales in Claremont in April 2007 show that 108 homes were available and 28 homes sold. Claremont homes sold for an average price of $648,571, for an overall value increase of 6% in a one year period (April 2006 – April 2007). Claremont had 3.9 months of standing inventory. Is Claremont in a Buyer’s Market? According to those numbers, no it is not. But, Claremont is the exception, not the rule.
WHAT DOES THIS MEAN TO YOU AS A PROSPECTIVE SELLER? It means that in order for your home to sell it needs to be in the topmost percentage of homes available for sale based on price and condition.
Right now, you as a seller can not afford to make a mistake when pricing your home. It also means that your home needs to be in better condition than the competition to sell. Now is not the time to think that a broken fence, a dead lawn, tired flooring or dirty walls won’t matter. They will matter a great deal. So before you consider listing your home for sale, fix the fence, replant the lawn, spruce up your flooring and paint those dingy walls. Or price it accordingly. If you are willing or able to price your home lower than fair market value, the chances of it finding a buyer sooner are better.
You need to make your homes appearance and its price as attractive as possible. With more homes available on the market buyer’s are expecting to get more for their money, not less. Times change, prices change and market conditions change
The days of sticking a sign in the yard and watching the bidding war ensue are, for the foreseeable future, a memory.
WHAT DOES THIS MEAN TO YOU AS A PROSPECTIVE BUYER? It means that the number of homes you have to choose from is larger than it has been for years. And, with interest rates still low, the odds of finding your dream home, and facing less competition for it when you do, are also better than they have been in years.
It also means that to take advantage of the current market you as a buyer need to make sure that when you head out into the marketplace you are not just ready to shop, but prepared to buy. Have your financing ready to go, and by this I mean consult with a lender, crunch the numbers, really do the math, so you know how much house you can comfortably afford. Have your earnest money readily available and be prepared to be fair and realistic.
Remember, just because there may be more homes available, the good ones still go pretty quick. The really good ones (read that very well priced in great condition and a desirable location) go shockingly quick and still usually receive multiple offers. So if you are not prepared, really prepared you still could lose out. It only takes one other player in the game to take you from being the “buyer” to being the “back up offer”.
You should also spend some time deciding what your “must haves” “could haves” and “should haves” are. You can get some of them, you may get most of them but you won’t get all of them. Know before you even start to shop what your deal makers and deal breakers are and you will be even further ahead of the game.
HOW CAN YOU MAKE A BUYER’S MARKET WORK FOR YOU AS A SELLER? Simple, make sure that your home is better than anything else that is comparable in terms of price and condition. Price is really an even bigger key here than condition. Ugly houses still sell and still may sell pretty quickly, but they sell for far less than their nicer looking counterparts.
By ensuring that your house is the best “deal” you can use the other homes available similar to your home in location, size and age to help sell your home for you. Because people can truly comparison shop in a way they haven’t been able to do for years, you need to make sure that when prospective buyers come to view your home, they are seeing it at its best and are not being shown your home to make someone else’s look better.
It also means that you probably won’t wind up selling your home for more money than you expected, if you priced your home appropriately to begin with it probably won’t be selling for a whole lot less than you needed either. And, when you get to turn around and become the buyer of your next new home, you will have all the same advantages, more to choose from, in nicer condition and lower pricing to boot!
HOW CAN YOU MAKE A BUYER’S MARKET WORK FOR YOU AS A BUYER? Use the slower pace of the marketplace to your advantage. Know what you are looking for and then set about finding it. You don’t have to grab the first house you see just so you aren’t “shut out of the market”. Take the time to get your team in place before you enter the game. Choose your Lender and your Realtor®. Have your financing ready to go, a firm idea of what you need and what you want and then be prepared to move forward as soon as you find it.
Take care, help lots of people and have a nice day,
Tisza
Topics: Buying and Selling Tips |
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May 16th, 2007 at 11:18 am
Now that’s some good information! I hope your customers take notice.
September 1st, 2008 at 5:20 am
thanks for the detailed information on my question whats a buyers market