Welcome to the "Buyer's Market"

Many home buyers I converse with are pretty quick to ask "...because it's a buyer's market, right?" Without hesitation I assure them that in general - they are right. So what is the buyer's market and why is it important to consider as a buyer or seller right now? The term is simple enough as an economic definition, but I want to be sure some of the technicalities aren't missed, so here it goes...

A buyer's market, sometimes referred to as a "soft market", is defined as a market that has more sellers than buyers. Housing inventories in this type of market are saturated and buyers are anywhere from fewer to scarce. To some degree, there is an oversupply of houses relative to the demand. The problem with the term "buyer's market" is that it rarely encompasses the degree of this imbalance. In a market that is extremely "soft", buyers obtain an entirely new level of authority over sellers.

I will demonstrate some numbers in an example: I sit down with a couple looking for a 3 bedroom, 2 bathroom home with a garage and more than 1200 square feet of GLA (gross living area; above ground). They want to live in North or West Ames, where there are 68 houses listed; quite an abundance. Of these, maybe 13-16 of them meet their specifications. Over the coarse of the next 2 weeks I show them 14 houses of which they find 4 very desirable. The next week we look at those top 4 homes a second time and after some long discussions and side-by-side comparisons my buyers decide to make an offer on a house.

The take-away from this example is threefold. The first key is that because of the high number of houses listed, the buyers found 4 that they were willing to act upon, having options all the way down to the wire. This leads to our second point: if the negotiations on the first choice house aren't going well or don't come to fruition, the buyers can simply turn to any of the 3 other predetermined houses that they like. The third and final point is extremely important for sellers. Price your home competitively!!! Unless you have a product that is more unique and desirable than the rest of the market's, the price is what may very well keep your home from being one of the top picks in the first place. It's easy to say that you'll list your home at a higher price and leave more room for negotiating, but the truth is that you can't negotiate an offer you don't receive. The odds that somebody else will price their house to sell are stacked against you in this type of market.

High competition means sellers need to take the extra steps to sell their house fast and for near asking price...
1. Price your home competitively. You have one chance to make a first impression, so don't let it be one that is asking too much. In addition, you will get the highest buyer interest in the first few weeks of having your home listed, which needs to be taken advantage of.
2. Update and Prep to show. If something will obviously need to be done to a house in the near future, take care of it up front, adjust the price appropriately, and make your home more appealing and less of a "project". There are too many foreclosure project houses out there, and most buyers looking at owner-occupied homes have reasonable expectations. Clean, depersonalize, and de-clutter your home so buyers can "see themselves" living there.
3. List your home with an experienced realtor who has a thorough marketing plan. Your real estate agent's experience, advanced marketing exposure, and intensity in their business can easily be the difference in selling your home.

Home buyers can also do more to maximize their home buying experience in this type of market.
1. Deeply analyze your needs. With an overwhelming amount of options, try to narrow what you are looking for down to something more specific, and widen your parameters if nothing is showing up. Looking at a variety of 30 houses is wasteful of your time and unnecessary if you don't know what you exactly want yet.
2. Don't over pay for a home. Have your agent do a CMA and make recommendations on a home's market value. If there are a few houses that would work well for you, start with your favorite and see if you can get it at a reasonable price. If you can't come to terms than walk away and try another house. Saving considerable dollars is easy if you not only shop the houses, but the sellers to see who is more motivated to strike a deal.
3. Get an exclusive buyer agent! Find a realtor who specializes in finding you the perfect home and can give you more time and effort than an agent trying to market homes at the same time.

To conclude, the "buyer's market" generally favors home buyers and makes selling more challenging. Home buyers need to know exactly what they want to filter through the inventory, and sellers need to go the extra mile to make their product stick out in buyer's minds. Home buyers can save money if they search for deals and negotiate the deals further, and for sellers it is absolutely crucial to initially price their home correctly. If you are thinking of buying a home the time is now if you are financially sound. Get in touch with The Steve Bock Team to find out how we can sell your home in this tough market, or how an Exclusive Buyer Agent can make finding a home less work and time effectively spent. Keep an eye out for our next blog soon and keep well!

Nate Bock, Exclusive Buyer Agent