A question we in the property industry often receive from property owners or from those who made the decision to dip their toe in the property market, are whether it is a seller’s market or buyer’s market and whether it is a good idea to sell or buy. The decision to buy or sell is often one of a personal nature and depends on the individual’s situation at the time.
In an attempt to answer this pertinent question and to assist our clients in making an informed decision, we will proceed to give some insights in the two phenomena’s. A seller’s market occurs in the environment when there is more demand for homes than there is supply. This will entail that a seller will have more leverage than the buyers. The effect is that a seller may receive more than one competing offer. From the buyers point of view it means that they will not be able to negotiate as much with the seller on price or other conditions. In this environment the old saying that cash is king prevails. A buyer that has cash can move faster and close a deal quicker than a buyer that may have to sell his home first.
In a buyers’ market, as you can logically determine is a more favourable environment for buyers as there are more homes that need to be sold than buyers that is willing or able to buy. Buyers will be able to negotiate on price and on conditions and will be able to take their time with the purchase.
Many sellers will decide to hold on to their home during a buyer’s market until the market turns, but most sellers may not be in such a privileged situation and will be forced to act even if the market is not favourable. It has been proven over centuries that there will always be a right buyer for the right property. Keeping this in mind a seller can consider the following when entering a buyer’s market:
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Be realistic. Set a competitive price for your home to ensure that it will receive fair attention from prospective purchasers. Priced to high will result in your property being overlooked.
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Ensure that your home is in an exquisite condition. Consider staging and ensure that maintenance is done. A fresh coat of paint and a neat garden can do wonders.
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Be open to negotiations. Pricing to high with the idea of dropping price later on may be detrimental. Negotiations can also include negotiating on certain conditions rather than just on price.
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Maximise exposure. It is essential in this environment to ensure that your property is well marketed and receive maximum exposure to attract as much as possible potential interest.
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Use a reputable Realtor that has knowledge of the area and that will be able to assist you in determining the right market price of your home. The Realtor is usually connected and will be able to refer you to a staging agent and a reputable maintenance contractor if required.
On the other hand in a seller’s market a buyer can consider the following:
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Be realistic. Ensure that you have made a list of essential requirements that you cannot disregard and those that you are more flexible on. It is most likely that you will have to compromise on certain items, but knowing beforehand will give you an edge later on.
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Be fair when making an offer. A fair price offer will harness a more favourable result than taking a chance on a lowball offer.
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Make a good first impression. Building a good relationship with the seller when given the opportunity may influence the seller’s decision to accept or decline your offer.
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Move fast. Speed is at the essence. If you are interested in the property insist on making an offer as soon as possible after viewing to ensure that you beat the competition to it.
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Beware of purchase remorse. Do not act to hastily. Be patient. The right home is out there. Rather be patient than making a wrong choice due to panic buying.
The property market is determined by supply and demand and move through cycles.
With the right knowledge and professional assistance you can venture into the prevailing climate without dread.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions or for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)