Did you know US house prices are growing by 10.3% year on year? This staggering figure suggests that very soon, house prices will be extremely high. But do you know if that is necessarily a good thing?
While high prices seem good for property owners, pricing people out of the housing market can lead to huge slumps. Read on as we discuss everything you need to know about a buyer’s and seller’s market.
What Is a Seller’s Market?
A seller’s market is a condition where there is demand for a product, but a shortage of goods or commodities for sale. This puts the power in the hands of the person selling. They can decide prices and choose who and where they want to sell.
In the housing market, this usually occurs when high demand, or lots of people buying, enter a market with few properties for sale. The power is in the hands of the seller, creating a seller’s market.
How to Define a Sellers Market
Imagine you are in a desirable neighborhood in a great town. You have access to good facilities, amenities, and are close to good schools. Lots of people want to move there, but there are few houses available and you are one of the few people putting a house up for sale.
Your property would attract multiple viewings, and most likely multiple bids. It is common for bids to go over the asking price, as people strive to get the property in the area they desire. You would also be more likely to have the sale made on your contractual terms.
Contractual terms could be leaving repairs for the new owners. It could stretch to leaving furniture and fittings in the home for them to remove.
What Is a Buyers Market?
A buyer’s market is the opposite of a seller’s market. In this situation, the goods and commodities are freely available, but there are not enough customers to sell them. In the housing market, this transfers as an abundance of properties but not enough people to view or make offers.
In this case, the power shifts to the person buying. They may be able to negotiate the price of a property down. They may even be able to negotiate contractual terms that are favorable to them.
For example, imagine you are selling your property. You are in a great area, but sustainable growth has meant that many houses are now expensive, and many people have decided to sell. In addition to this, a large local business has closed meaning people are leaving the area to seek work.
The area suddenly becomes less of a hot property. Many homes are on the market and the desire for them has weakened. It becomes a buyers market.
How to Buy a House in a Seller’s Market
In summary, buying in a seller’s market puts the power in your hands. You can command a higher price, or decide the terms of your sale. Speak with a real estate agent to discuss it.
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