Whether you’re a seller or a buyer, your #1 goal is always to get the most bang for your buck. If you’ve been a homeowner, you’ve probably heard a real estate agent use the terms “seller’s market” and “buyer’s market” once or twice. Understanding what these terms mean is critical to a successful real estate transaction, whether you’re selling your home or buying a new one.
We believe that educating our clients is a big part of making sure they have a good experience with us. So in this article, we’ll discuss exactly what buyer’s and seller’s markets are, their advantages and disadvantages, and how to determine what kind of market you’re dealing with at any given time.
What is a Buyer’s Market?
A buyer’s market occurs where there is more supply than there is demand. In other words, there are more people trying to sell houses than there are people trying to buy houses. This typically results in buyers having a rather large selection of homes to choose from, which gives them the upper hand when it comes to negotiating price. Sellers who are listing their home in a buyer’s market may have to lower their home’s price in order to compete in the market.
What is a Seller’s Market?
A seller’s market occurs when there is more demand than supply. So if there are more people trying to buy houses than there are actual houses available, you’re dealing with a seller’s market. This is the scenario where bidding wars are very common, and buyers should be prepared to offer more money or bring cash to the table, in order to get what they want. For sellers, this makes things easy, as they just have to sit back and wait for the best offer to come in.
Determining Current Market Conditions in Wilmington, NC
A lot of times, the real estate market in a given area will fluctuate seasonally. Wilmington and the surrounding areas depend heavily on tourism, so where, in other areas, you might see more homes listed during the summer, you’re not as likely to see that here. Summer is the prime rental season in Wilmington, so we tend to see more listings go on the market in the “off-season” than any other time. Likewise, the tourists, traffic, and high temperatures don’t make summers in Wilmington the most desirable time for buyers to look for a home.
That’s not to say you can’t buy or sell in Wilmington during the summer, it’s just not as common as it might be in someplace like New England, where home shopping during the summer is much more preferable to home shopping in five feet of snow. Apart from the weather, there are several other indicators one can look at to determine the current real estate conditions in Wilmington:
- Consider the local job market. Lots of jobs and new business opportunities may indicate a seller’s market whereas fewer jobs can often put cities in a buyer’s market.
- Check how quickly the “inventory” of homes changes. If there are plenty of homes available but they stay on the market for a long time, that’s a sure sign of a buyer’s market. However, a limited inventory of homes that are listed one day and sold the next is a clear indication that you’re in the middle of a seller’s market.
- Observe price fluctuations. If over a period of a few weeks or months, you notice that the same homes are available and their prices have been slashed, you’re dealing with a buyer’s market. However, if prices keep trending up and up, the sellers have the advantage.
- Determine the ratio of regular listings compared to foreclosures/short sales. A seller who is listing their mint-condition home for its maximum value may have a hard time competing with the foreclosures and short sales that can be awfully tempting to a buyer on a budget.
- Check interest rates. If you’re taking out a loan to buy a home (and most people are) you’ll obviously want to obtain the lowest interest rate possible. If rates in Wilmington are low, it’s a good time to buy.
Pros and Cons of a Seller’s Market
As a seller in a seller’s market, you’re probably going to get the price you want for your home, if not more. The downside of this is that even though it’s unlikely buyers will be too picky or ask for many contingencies, your home needs to be able to attract the interest of buyers right away or it will get lost in the shuffle.
As a buyer in a seller’s market, finding the right home could be pretty tough. You may have to go through dozens of listings before you find one that you like and have your offer accepted on. You may find yourself in bidding wars or having to settle in order to purchase a home during this time, and the whole process may take a lot longer than you’d like.
Pros and Cons of a Seller’s Market
As a seller in a buyer’s market, your home may sell very quickly or it may not. A lot of this depends on how many foreclosures and short sales there are in your area, as well as direct competition from homes similar to yours. Be ready to price your home competitively and be willing to negotiate if you want a quick sale.
As a buyer in a seller’s market, you’re going to have plenty of options to choose from and it’s unlikely you’ll get into a bidding war. In fact, you’ll probably be able to talk a seller down on price, especially if their home has been on the market for a while, and maybe even get your closing date moved up.
Buying and Selling Homes in Wilmington
Real estate isn’t always a one-sided thing, and it’s important to note that optimal conditions can exist for both sellers and buyers at the same time. The best way to make sure you’re benefiting from your real estate transaction is to work with one of the experienced Wilmington realtors agents at Network Real Estate. Give us a call at 800-747-1968 to set up an appointment with one of our agents today!