What is a Buyers Market and a Sellers Market
Today I want to talk a bit about this thing called Buyers Market and this other thing called Sellers Market.
We will start off with a quick definition.
Is when a market is good for a Buyer. What that means is that buyers are able to get houses or get properties at good prices.
What influences that is usually because there is a lot of properties on the market, properties aren’t selling so therefore when buyers are looking for properties, they can go out and see all these properties out there and sellers are motivated.
Because sellers are motivated, buyers can get good deals so therefore it’s a buyers market.
What influences this situations such that there is an inventory of properties on the market. It’s usually one or a number of things, first one being seasonal.
So July and August not a lot of people want to buy properties. December and January time frame similar thing. People are spending their money on Christmas and they are waiting for another time. Also, i’ts in the middle of school year or they have already finished their purchase for the next school year.
So those are when it’s not a very good time to sell your home, so if you do happen to put your home on the market i t’s not going to be a good time to sell because of what I just explained.
So it’s a buyers market. So if you are out there looking and there is an inventory because you can’t sell it, thats not a good time to sell your home.As an investor it is a good time to buy one.
Another influence is interest rates.
So if interest rates are high not a lot of people are buying. So again, it’s a buyers market because now you can buy. Now the down side to that is you are going to buy at a higher mortgage but again the properties are cheaper so it works out in the long run.
That is the effect of a buyers market. What that means is that because there is more inventory on the market that you will be able to get that house for a better price than you would if it was a seller market.
A seller market is when the market is at a situation where it’s good for the seller. That means that the seller can get a higher price than what they have asked for. I have seen markets where a person puts the property on the market, and because of the situation.
There is not a lot of inventory, people are looking for homes and the seller gets 1-3 offers on that home. This creates a bid war. Thats usually, again because its peak time, people are looking for homes, it might be a peak area, it may be that interest rates are super low and it may be that people can get approved easily.
There is a lot of activity in the market. Sellers can get a good price on their property so thats not good for a buyer. You are now buying the property at a higher price because they can afford to offer it at a higher price.
This all boils down to supply and demand. Because there is not a lot of inventory, supply is low so therefore they can demand a higher price. You as a buyer would have to pay that higher price.
Now I am putting this all in the context of you as a buyer. As an investor looking for a property, obviously you want to buy when it’s a buyers market.
You want to get your property at a lower price and then you want to sell in a sellers market. You want to leverage both situations. Trying to do that is virtually impossible.
What I suggest as an investor is just buy the property when you need to buy the property. You make a reasonable offer. Especially if you are doing Rent To Own. If you can get the house at a reasonable price, the tenant is going to pay anyways.
The same with a rental, when you are buying a rental you should never buy for price (review to my other videos on this) you should always buy for cash flow.
You should take into account to make sure from a cash flow perspective that all your costs are covered and that your property will actually make profit based on the purchase price.
If you are not embarrassed by your offer, you probably offered too much.