Differentiating Between a Seller's and a Buyer's Market


Differentiating Between a Seller's and a Buyer's Market

Are you thinking about buying a home or selling one this year?

Before you do either of these things, you should always try to figure out if it's a buyer's market or a seller's market in Australia at the moment. By following the latest market trends, it'll make it easier for you to decide if now would be a good time to buy or sell a home.

In 2023, it's been a little tricky trying to determine if Australia is in a buyer's market or a seller's market. Property sales have slumped in recent months because of the uncertainty surrounding the real estate market as a whole.

But as we inch our way closer to the end of the year, the buyer's market vs. seller's market debate in Australia should become clearer. It'll provide you with the information you'll need to decide if you should buy or sell a home in 2023.

In the meantime, it would be worth learning more about differentiating between a buyer's market and a seller's market. See what sets them apart below.

What Is a Buyer's Market?

If you're interested in buying a home, you should try to wait for a buyer's market to do it. A buyer's market will give you access to more homes overall and allow you to invest in a home for the right price.

As its name would suggest, a buyer's market is a market that is more favourable for those buying a home as opposed to selling a home. You'll be able to get more bang for your buck when you purchase a home in a buyer's market.

You also won't have to worry about going through bidding wars in most cases during a buyer's market. It'll make buying a home a more stress-free experience than it would be otherwise during a seller's market.

Signs of a Buyer's Market

There will be times when it'll be clear that Australia is in the middle of a buyer's market. But there will also be other times when it won't be quite so obvious.

It's why you should familiarize yourself with the signs of a buyer's market. It'll help you identify a buyer's market so that you can strike while the iron is hot. Here are several of the most common signs of a buyer's market.

More Homes for Sale

When the Australian real estate market is a buyer's market, there won't be any shortage of options for those shopping for homes. You'll be able to find so many homes for sale in the areas that you'd like to focus on while conducting a home search.

A buyer's market will take place when the available home inventory is higher than the demand for homes for sale. It'll provide you with an excellent opportunity to pretty much take your pick when you're in the market for a new home.

Lower Home Listing Prices

You're going to get access to more than just a plethora of homes for sale when it's a buyer's market. You'll also find that most homes will be on the lower end of the spectrum in terms of price.

So outside of being able to pick and choose which homes you might want to invest in, you'll also be more than satisfied with the prices you see on the houses for sale. You might be able to afford a much larger and nicer home during a buyer's market than during a seller's market.

Longer Home Sales

During a seller's market, some homes will sell within a matter of just days once they hit the open market. It won't give buyers very long to decide whether or not they'd like to put in offers on houses.

But during a buyer's market, the opposite will be true. Homes will go up for sale and sit on the market for weeks and sometimes months.

When this happens, it isn't uncommon for the listing prices on homes to come down even lower than they already are. If you're willing to wait on a home you like, you might be able to get a better deal on it by practising patience and letting it sit a little longer.

More Offer Contingencies

In recent years, more than one-third of Australians have agreed to buy homes without putting them through home inspections first. They've skipped home inspections to make their house offers more attractive to sellers.

But home buyers won't have to worry about doing this when they're buying in a buyer's market. They're more than welcome to include as many offer contingencies as they'd like when purchasing a home.

Sellers will often allow these contingencies because they know that, if they don't, buyers will be willing to walk and find other sellers who will accept them. It puts sellers at the mercy of buyers, who can pick and choose which contingencies they want to include in their offers.

Less Stress for Buyers

There is always going to be at least a little stress associated with buying a home. Over the last few years, surveys have suggested that more than half of Australians suffer from mental health issues caused by the home-buying process.

But you'll be happy to hear that buying a home in a buyer's market should result in less stress for you overall. You'll have more time to make important decisions related to buying a home. It'll lower your stress levels and make shopping for a house a more enjoyable experience.

What Is a Seller's Market?

If you've bought or sold a home in Australia over the last couple of years, you did it during a seller's market. A seller's market will often lead to a lack of homes for sale and put buyers in a position where they have to pay top dollar for homes, including houses that aren't always in the best shape.

A seller's market is called a seller's market because it enables those selling a home to make a pretty penny on it while also selling it quickly. Those who have entertained the idea of selling their houses should look to strike fast when the real estate market becomes a seller's market.

They'll also need to keep in mind that once they've sold their homes, they'll likely need to turn into buyers who will be at the mercy of other sellers to some degree. But they should be able to make enough money on their own home sales to afford to do it.

Signs of a Seller's Market

Just like there are certain signs that'll indicate Australia is in the midst of a buyer's market, there are also signs that the country is in the middle of a seller's market. If you own a home, you might want to take advantage of it by selling your house to the highest bidder.

Before you do this, though, you should keep your eyes peeled for signs that'll show you that a seller's market is taking place. Take a look at a few signs of a seller's market below.

Fewer Homes for Sale

Are "For Sale" signs few and far between when you drive around in your specific city? This is typically the first sign that'll show that a seller's market is on the horizon.

During a seller's market, there won't be enough homes for sale to go around for all the people shopping for them. It can lead to a lack of available home inventory and send people scurrying to any and all homes that hit the open market. The demand for homes will be incredibly high.

Higher Home Listing Prices

Since there won't usually be any homes for sale during a seller's market, those selling homes can get away with slapping higher price tags on them. They're able to command higher offers by asking for as much money as they want for their houses.

Even homes that might need to have some work done to them will sell for significantly more than they would during a buyer's market. People will sometimes be so desperate to take ownership of homes that they'll be willing to pay higher prices for them than they would under normal circumstances.

Quicker Home Sales

During a buyer's market, there will inevitably be homes that'll be for sale for months on end. People won't be in a huge hurry to purchase these homes since they won't face much competition when putting in offers on them.

The exact opposite is true when it's a seller's market. A home might hit the market on a Monday morning and already be under contract within 24 hours. It can make shopping for homes frustrating for some buyers who won't be ready to commit to investing in homes that quickly.

When selling a home in a seller's market, you'll need to be prepared to get flooded with offers. When you're buying a home in this kind of market, acting fast will be your only option.

If you drag your feet at all when buying a home in a seller's market, you might miss your chance to even get an offer in. There are often deadlines put in place by sellers who want to get the best offers possible for their houses.

More Offers on Homes

When purchasing a home in a buyer's market, you might end up putting in the only offer a home gets. It's why you'll be able to get away with lowballing a seller at first if you'd like to take that approach.

This isn't going to be an option when you're putting in an offer on a home in a seller's market. There might be dozens of other offers that come in for this home at the same time. If yours is laughably low, a seller will throw it right out and refuse to even consider further offers from you.

Home buyers will need to put their best foot forward when making offers during a seller's market. They might even have to go as far as to make an offer for more than the listing price.

More often than not, you're going to end up in the middle of a bidding war when buying a home during a seller's market. If you aren't willing to pay more than a home's listing price, you might not stand much of a chance of winning.

Fewer Offer Contingencies

Buyers will need to do more than just make strong financial offers when buying a home during a seller's market. They'll also need to limit the number of contingencies in their offers.

Why? Well, if you put in an offer that includes a home inspection contingency and another potential buyer leaves this contingency out, which offer do you think will get accepted? Unless your offer blows the other one out of the water when it comes to the amount of money you're willing to pay, your offer will get rejected in favour of the other offer.

All of this can send your stress levels skyrocketing when you're buying a home in a seller's market. But it can also simplify the home-selling process for sellers and allow them to keep their stress levels in check.

Buying and Selling Homes at the Right Times Is Key

Whether you're going to be buying a home or selling a home soon, you should make sure you know if it's a buyer's market or a seller's market first. Knowing this will help guide you through many of the decisions you'll need to make.

It'll also give you a better idea of what might be to come for you. You can maintain a more optimistic frame of mind when you understand what the real estate market is going to be like.

Would you like help buying or selling a home? Ipswich Real Estate is here to help with all your real estate needs.

Contact us now to get started.