Timing is one of the most important issues to consider when buying a home. If you decide to buy when demand is high and supply is low, those who are selling generally have the upper hand in negotiating a sale. However, if there is more supply than demand, you will have the leverage that you need to get a great deal on your next home purchase.
What is a Seller’s Market?
A seller’s market occurs when there are more buyers than there are available homes. In such a scenario, a seller may get multiple offers when they put their home up for sale, which means, they can pick and choose any offer that best meets their needs. For this reason, buyers may need to pay more than list price and may not be able to ask for seller’s concessions as part of the deal.
What is a Buyer’s Market?
A buyer’s market occurs when there are more homes for sale than buyers. A buyer’s market may also occur when there is sufficient demand but those looking to buy are unable to get the financing needed to complete the transaction.
During such a market, buyers may be able to get homes for less than list price and negotiate concessions from the seller or other perks. In some cases, sellers may leave appliances and other furnishings within the home.
Our Top Tips for Buying During a Seller’s Market
In a seller’s market, the seller has the power. So, if you find something you like, you need to work fast to lock it down.
If you’re planning on building a new home in a seller’s market, then you’ll need to put down a deposit on your preferred lot quickly – sometime even that same day. If it is the exact one you’ve been looking and has unique features such as mountain views or is located near greenspace, then you can bet others will find it attractive too. And you don’t want to come back to find that lot gone!
Once you’ve made a decision on your new home – whether resale or finding that perfect floor plan from a builder – sew that deal up! Get your pricing locked in so you aren’t hit with higher interest rates and there are no issues with financing.
Keep in mind that during a seller’s market, the cost of construction materials and the cost of land generally increases too, so that will be a factor in your budget.
While it may be harder to get the property you want at a lower price, there are still deals out there. For instance, you could target quick possessions homes. The added benefit here is little to no wait time for your new home!
Why You Want to Buy During a Buyer’s Market
There are many good reasons as to why you want to wait for a buyer’s market to purchase your next home.
One of the best reasons for building during a buyer’s market is choice. More often than not, you have a lot more selection than during a seller’s market. More lot options, more model options – take your pick!
Building new also gives you more leverage in the home buying process. You’re able to choose exactly what you want. You are able to personalize your home to suit you and your family, from the colours to the flooring.
As for financing, you can expect lower interest rates on your home loan. This is because banks and other lenders want people to borrow money to spur the economy. During a seller’s market, banks will increase interest rates to slow down the rate of inflation that may occur during strong economic times. Which means the opposite happens during a buyer’s market.
Buying a home is a significant investment, which means that you want to get the most for your money. In a buyer’s market, you have the upper hand in negotiations, which typically enables you to pay less and get more than you would during times when there are more buyers in the marketplace.
Typically, most people can’t time their home purchase to coincide exactly with the housing cycle. Nevertheless, knowing how to buy in each of these markets will help you get the best deal and the ideal home for your family.