If you follow the real estate market, you’ve probably heard a lot of talk about “seller’s markets” and “buyer’s markets”, but have you ever given these terms a closer look to really find out what exactly they mean and how they impact Canadians on a personal and financial level?
The truth is, buyer and seller markets reference two types of market conditions that greatly impact the purchase and sale of real estate across the country. They are general blanket statements that speak to a variety of factors that contribute to the overall behaviour of consumers in the real estate market.
As experienced real estate agents in Hamilton, we know how to navigate a buyer’s market vs. seller’s market. Let’s dive in.
What is a Seller’s Market?
A seller’s market is typically classified as any market condition where the consumer demand outpaces the supply, giving the power to the seller, although it’s most commonly used in real estate.
When it comes to real estate, the seller’s market definition is when there are more buyers in the market than there are homes available to sell. With more interested buyers flooding the market, sellers have the leverage to dictate higher prices and more favourable terms for their real estate sales.
Seller’s market conditions often result in multiple offer situations on homes and even bidding wars in some cases. Bully offers and offers with little-to-no conditions are also common as buyers must make their offers as appealing as possible to win.
It’s also common to see homes sell faster in these conditions and for well above the asking price. As a result, selling your home in a seller’s market is often considered easier than in other markets.
What is a Buyer’s Market?
As you might expect, a buyer’s market is the opposite of a seller’s market. This market condition occurs when the number of interested buyers is outpaced by the inventory of homes available. In these conditions, the power and leverage go to the buyer, not the seller.
In a buyer’s market, it’s common to see homes sit unsold for longer, sales under the asking price, and more favourable terms and conditions for buyers.
A surplus of available housing leads to the slowing down of rising prices in the market, and in many cases, homes only sell after significant price reductions.
What Type of Market are We in Right Now?
The COVID-19 pandemic brought about one of the most competitive seller’s markets in history. Record-low interest rates combined with buyers wanting to move away from urban city centres resulted in a mass migration of sorts to suburban communities and smaller cities.
Generally speaking, we have seen sales numbers hit record highs since the start of the pandemic, and every time things appear to be cooling down, they go right back up again.
We’re in a classic seller’s market at the moment with an overabundance of buyers and record-low inventory creating conditions that are incredible for sellers but challenging for buyers.
Today, it’s not uncommon to see homes sell after mere days on the market for well above the asking price with little-to-no conditions. Buyers are going above and beyond to win bids and take advantage of low borrowing rates that were a result of the pandemic recovery plan.
At Michael St. Jean Realty, we have the markets covered. Read our monthly market report blogs here or sign up for our newsletter here and get the latest real estate news delivered right to your inbox.
How to Sell Your Home in a Seller’s Market
Although it might seem like you can just put a “For Sale” sign on your lawn and sell your home in the blink of an eye in a hot seller’s market, that is not always the case. Consumers still expect a certain level of attention to detail and quality when purchasing a home.
Sellers still need to properly prepare their home with repairs, staging, photography, and videography in some cases. The home still needs to present a great value and appeal to what buyers are looking for.
In a seller’s market, pricing becomes a big factor when the property is just listed. Many sellers actually choose to list low to start in these conditions, in the hopes of creating a frenzied bidding war situation. Although homes tend to sell above-asking in a seller’s market, you still need to get the pricing right to spark interest.
If a home is priced too high to start, even in a competitive seller’s market, buyers won’t see the value and won’t respond to your listing. In a seller’s market, pricing is everything.
What You Need to Know About Buying in a Seller’s Market
Buyers are easily discouraged in a seller’s market. With so much competition and so little available inventory, it can be a difficult, stressful experience. Especially if you have just sold your home and now you need to find a new one.
However, there are ways for buyers to find success in a competitive market like the one we are currently in. Here are some tips to make the process easier:
- Secure your financing early. This will help you act faster when making an offer. Time is of the utmost importance.
- Have your deposit ready. A deposit needs to be at least 5-10% of the total purchase price in liquid cash (certified cheque or money order). However, a higher deposit might be seen more favourably by sellers in a multiple offer situation.
- Make sure your offer is strong and uncomplicated. For example, include a shorter closing date or remove other conditions that you feel comfortable taking out.
- Be prepared to walk away if the price goes too far above its actual value.
In a seller’s market, we often recommend that homeowners buy their new home with a longer closing date before selling their existing home. Selling is typically easier in these conditions and buying first will take some of the pressure off your family.
Selling a House in a Buyer’s Market
Real estate is generally considered to be a seasonal industry. And the busiest seasons are typically spring and fall, however, most agents will tell you that the best time to sell your home is actually whenever you are ready to sell it.
Even in a buyer’s market, where available inventory outpaces the number of interested buyers, there are ways to find success. However, you may need to be patient.
In this type of market, sellers should make their homes as appealing as possible to buyers. Ensure that it stands out and really shines. You can do this by preparing your home with thoughtful upgrades and staging.
Minor kitchen and bathroom upgrades, fresh paint, and landscaping are just a few small things you can do to appeal to a modern buyer.
If your home requires a little more work, repairs like installing energy-efficient heating and cooling systems, installing new windows and doors, and replacing the roof are all big-ticket items that smart buyers love to see.
In addition to preparing your home for sale in a buyer’s market, you will need to make sure your listing images and video are of the highest quality. Buyers respond well to images.
Pricing is also important in a buyer’s market. So it’s best to confer with an experienced real estate agent on the specific pricing strategy that would work best for your property type in your area.
How to Buy a Home in a Buyer’s Market
In a buyer’s market, the buyer has more leverage and power during negotiations. Buying a home is often considered “easier” in a buyer’s market. However, it’s still important to consider the goals and motivations of the seller when creating your offer. If your offer is way off the mark, the seller still has every right to reject your offer outright.
Although buyers can expect to get a “better deal” in a buyer’s market, they should still be flexible, agreeable, and open to negotiations.
How an Experienced Real Estate Agent Can Help in All Markets
Regardless of the current market conditions, the best way to navigate buying and selling real estate in any market is to work with an experienced real estate professional. Whether you’re buying and selling luxury homes or planning a move from Toronto to Hamilton, an experienced local real estate team can help.
Our priority is to understand the market conditions and apply them to your unique situation, providing you with trusted advice to help maximize your success.
For sellers, this means providing assistance preparing your home for sale, staging, photography, marketing, and advocating for you throughout the process to get the best possible outcome. Your agent will negotiate on your behalf and work with you to get the highest price and most favourable terms for your home.
For buyers, the benefit of working with a professional real estate agent is getting expert navigation and advice when on the hunt for your new home. Your agent can also leverage personal connections and insider industry knowledge to show you off-market listings, new developments, and more.
Wondering how to best navigate the current real estate market? Let the experts at Michael St. Jean Realty help. You can call us at 1-844-484-SOLD or email us here.
