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2017-03-06 22:08:41
How do we know what market we are in? Seller's? or Buyer's?

How do we know what market we are in?

It’s only natural to want to figure out what type of market you’re entering when you decide to list your home for sale. There are distinctive differences between a buyer’s and seller’s real estate market that are worth learning about.

Seller’s markets are characterized by:

  • A low inventory of homes for sale.
  • Increasing home prices.
  • Multiple offers on homes in good shape.
  • Buyers have little bargaining power.

Low Inventory

The most common cause of low inventories in a real estate market is a combination of few homeowners listing their homes and strong buyer participation in the market. It’s a matter of supply and demand.  Texas is a business friendly states and large companies are moving jobs here.  We have reasonable cost of living.  It is believed that 1 Jumbo Jet lands at DFW with people with one way tickets (hundreds of people daily).

Increasing Home Prices

The economic principle of supply and demand works with most commodities, including real estate. When buyer demand is high but the supply of available homes is low, those homes that are available increase in value.  

Multiple Offers are Common

When a few homes are on the market and plenty of ready and able buyers needing a home, multiple offers become common. Sellers receive some very nice offers.  Buyers are trying to sweeten the deal to be the chosen offer.  

Buyers are in the Passenger Seat

Sellers are in the driver’s seat in this market. They dictate the terms, they set the price and they have all the power when deciding who will purchase their home. It’s frustrating for buyers to know that they have no wiggle room for negotiations and must come in with their highest and best offer.

The Opposite Of These Characteristics is a Buyers Market

Turn these seller’s market characteristics backward and you’ll have a description of a buyer’s market. Inventories of available homes are greater, there are few buyers in the market for a home and prices typically are negotiable. Buyers dictate the negotiations and sellers may find themselves taking less for the home than they hoped or offering concessions to buyers to entice them to buy the home.

You are probably thinking well if I am a First Time Home Buyer then I will just wait till we are in a Buyers Market, and that is understandable.  Another factor in purchasing a home is the interest rate you pay for your loan.  Right now we are experiencing low interest rates 3.5% to 4.5% as a write this blog post.  Historically 8 to 10 years ago interest rates were around 7% to 8% and farther back in the 80's interest rates were 15%-20%. 

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