Buying or selling a home can be a lot like playing a game of cards: You gotta know when to hold ’em and when to fold ’em. To determine the best moments to buy and sell, most people look to the real estate market—whether it’s a buyer’s market or a seller’s market.
What is a buyer’s market?
As you might have guessed, a buyer’s market favors buyers, not sellers. But what, exactly, does that mean?
“It means external conditions—like supply and demand, comparable sales in the neighborhood, the economy, public opinion, confidence in the future, and changes in the tax laws—favor buyers,” says Robert Elson, a real estate agent with Warburg Realty in New York.
These factors create an ideal scenario for buyers in the real estate market.
“First, we go through a period of approximately six months—or longer—where we see prices start to steadily soften as time goes by, coupled with rising inventory and interest rates dropping,” says Bill Kowalczuk, a broker at Warburg Realty. When this happens, buyers have many more properties to choose from.
“The greater the rise in inventory, the more negotiable the properties become,” he says.
What does it mean for buyers?
In a buyer’s market, buyers are more likely to get a sweet deal on a purchase.
“If you are in the market for a new home, it’s an ideal time to make your move,” says Jordan Skurnik, a licensed real estate salesperson at Citi Habitats in New York.
Why? “You may be able to use the excess inventory to your advantage and secure your dream home for a lower price,” Skurnik says.
And, because the market is less competitive, he says you are likely to have more time to make a decision and less chance of getting caught up in a bidding war.
You may be able to finagle some additional perks, as well.
Plus, buyers in this situation typically control the closing date, she says.
But don’t get too excited. No one’s giving their home away in a buyer’s market. While you may get a deal, you may not get a steal.
“If your budget allows for $800K, don’t aggressively go after million-dollar properties,” warns Daniele Kurzweil, a licensed real estate salesperson with the Friedman Team at Compass in NYC. It’s still smart to stick to your budget, so you can avoid financial trouble if the markets shift in the future.
What does this mean for sellers?
As you can imagine, a buyer’s market is not a particularly good time for sellers.
“Because so many other sellers are competing for the same group of buyers, sellers may find their properties languishing on the market, sometimes for a year or more,” says Dolly Hertz, licensed associate real estate broker at Engel & Völkers New York Real Estate.
It can be advantageous to make sure your home is move-in ready and shows well in photos. If the home isn’t move-in ready, Williams says sellers should be open to offering additional concessions, such as paying closing costs or a carpet or paint allowance.
“Also, if your home has a unique or uncommon feature—a larger than average backyard, secret room, etc.—it’s important to highlight that feature to buyers,” Williams says.