When buying or selling property, it’s important to know the difference between a buyer’s market and a seller’s market, and how the market can impact your desired outcome. Here is a quick overview on the different types of markets and their key characteristics.
What does a buyer’s market look like?
A buyer’s market is when the number of properties on the market exceed the number of buyer’s looking to purchase property. This makes sellers compete with one another, and often a buyer can find themselves with bargaining power in the transaction.
In a buyer’s market, properties often sell for less than the asking price, and they are on the market for longer periods of time. Because there is less interest, vendors need to price their properties competitively to gain interest and offers.
Key factors that contribute to a buyer’s market include:
- High interest rates
- Difficult lending requirements from banks and brokers
- Job stability
How to recognise a buyer’s market when you see one
Here are a few ways to ascertain that the market is swinging in favour of the buyers.
- Less people looking at buying and attending open homes
- Price reductions on properties that have been on the market for a while
- High volume of properties for sale
When you are a purchaser in a buyer’s market, it helps if you are a step ahead of the competition. You will need to have all of your finances in place, and be ready for any type of sale from auction through to private treaty. It is essential to have your building inspector ready to go in either type of sale, so keep Action Property Inspections in the loop the minute you have an offer accepted as time is of the essence. We can then book you in for your building inspection and give you a full report to help you with the next steps on your purchase.
What does a seller’s market look like?
When the demand for property exceeds the supply, you will find yourself in the trenches of a seller’s market. In a seller’s market, properties sell extremely quickly, auction clearance rates are at an all-time high, and buyers are often frustrated as a result of missing out on properties that tick all of their boxes.
In a seller’s market, median housing prices are high because of the extreme demand, and properties often sell well over the asking price due to the competition.
Key factors that contribute to a seller’s market include:
- Low interest rates
- Government grants or schemes
- Loose lending requirements from banks and brokers
How to recognise a seller’s market when you see one
There are a few key indicators that will help you to identify a seller’s market when you’re in one.
- Higher priced properties
- Lots of people attending open home inspections
- Few sales listings available
- Quick sales
- Bidding wars and sales over the asking price
- Increase in properties for auction
If you are a purchaser in a seller’s market, you will need to move quickly because in some circumstances there may be multiple offers, and the vendor will be looking to make a quick sale. You want someone who will prioritise your business and give you the information you need to move forward with your transaction. But it is really important not to race into a purchase without using your head, because you don’t want to be stuck with a property that is defective because you’re desperate to buy anything. A building inspection can help you detach from the emotional side of property purchasing and give you a proper idea of the value of the home.
When is a good time to buy or sell a property?
There are times when the market is what real estate agents refer to as a ‘balanced market’ which means that the supply and demand on property are relatively similar. When the market trades this way, prices are usually stable and properties sell in a good amount of time.
The thing to remember is the decision to buy or sell might not always be as convenient as waiting for the market to cool down and balance out. Life can sometimes determine when a property needs to be sold, with a sudden change in family circumstances dictating the need to sell. It is possible to buy and sell in all three markets, the key to success is understanding which market you’re in and preparing yourself accordingly.
Having an existing relationship with your building inspector means you will be ready to go once you’ve had an offer accepted on a property or found the home of your dreams going up for auction.
Need a building inspection on the property of your dreams? Get in touch today.
