Buyer’s Versus Seller’s Property Markets



As you start the process of preparing to sell your home, there are many different factors to take into consideration. You’ll need to think about the current state of your house and whether or not it needs any repairs, for example. However, one important issue that many people don’t take the time to think about is the current state of the property market. This can be a grave mistake, because the type of market can have a serious impact on whether or not you are able to sell your home for the price you desire.


It’s recommended to discuss all of these different issues with a real estate agent as you start to make the preparations to put your house on the market. A good agent will look at the market not only in general terms, but also in your specific area.


The property market is often referred to in a metaphorical temperature sense as being either hot or cold. This is important to look at, not only for those who view their house as a home but also as a financial investment. From an investment perspective, the difference between a hot and cold market is a large one. If you choose to sell at the wrong time, you could end up taking a large financial hit that is completely unnecessary. It’s possible to avoid this outcome by looking at current conditions before you put your home on the market.


Buyer’s (Cold) Property Market:


The term “buyer’s market” simply refers to when the conditions are favorable to those who are buying property. This occurs when there are more people selling homes than there are potential buyers to purchase them. If buyers have a wide range of houses to choose from and little competition, the market is in their favor. This would be a good time for first-time home buyers to enter the market, as they can potentially find their dream home at a lower price.

This is also known as a cold real estate market, because it doesn’t favor property sellers. Those who are in a rush to sell will be more open to negotiations that could favor the buyer, leading to buyers making purchases for less than the original listed price.


Signs of a Cold Real Estate Market:

  • There is a higher number of homes on the market than in previous months or years.

  • The amount of inventory on the market spans a time period of over half a year

  • Current listing prices are lower than previous sales prices.

  • Fewer people are buying homes, leading to a lower overall closing percentage.

  • The average house price is falling Real estate advertisements are more prominent in a bid to attract buyers.

  • Property are spending a longer time period on the market

How to Determine the Months of Inventory on the Market:


Find out how many active listings were on the market in the previous month. Find out the total amount of transactions that were closed or sold in the previous month. You can then divide the amount of total listings by the amount of sales, and this will give you the total amount of months of inventory which remain. For example, if there were 10,456 listings in the past 30 days, and 1,221 of these were sold or closed, this leaves you with about 8.5 months of inventory left on the market. This would be an example of a cold market. You can ask a real estate agent for an assessment of the market if you’re not sure. Get in touch with your agent.


Seller’s (Hot) Property Market


On the other hand, when the property is “hot” it’s a good time to think about selling your property. This occurs when there are more buyers looking for property than there are properties up for sale. This leads to potential buyers who are willing to pay more than the listed sale price in order to secure the property they want. For sellers, this is good news because it can often result in a quick sale with a higher sale price than you had expected.


Signs of a Hot Property Market

  • When compared with previous years or months, the number of listed homes on the market is low

  • Fewer than six months’ worth of inventory is currently on the market

  • Listing prices are higher than the prices of prior sales

  • The overall closing percentage is higher due to more people buying homes

  • The average price of homes is on the rise

  • Advertisements are smaller because there is already a high buyer demand for homes

Neutral Property Market


In addition to the buyer’s and seller’s markets, there is a third potential type of market to contend with. If the real estate market doesn’t favour the seller or the buyer, it is referred to as a neutral market. This could be caused by affordable interest rates leading to an even balance between buyers and sellers. There are no large ups and downs in demand, supply, or prices.


Signs of a Neutral Real Estate Market:

  • When you compare the number of homes on the market to previous years, it is average

  • There is anywhere from three to six months’ of inventory currently on the market

  • Listing prices are similar to prior sales

  • The average prices of properties are neither increasing nor decreasing

  • The number of buyers has stabilized

It’s important to learn how to recognize these signs to figure out what type of market you are working with. You can also ask your real estate agent for guidance. A professional in your area will be following sales closely and will know whether it is a hot, cold, or neutral market.

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