Seller’s market, buyer’s market and balanced market– the differences

When you get down to the brass tacks of the real estate market, you will be overwhelmed with the several terms used. During your home buying or selling journey, you will come across those terms you are unfamiliar with, and in that event, it is important that you know certain important market terms. Supply and demand of real estate along with several other factors like mortgage interest rates, inflation, employment, investment, construction, immigration, government assistance programs, and the health of local and world economies is what determines the property market; it then dictates whether it is buyers market, sellers market, or a balanced market. Ever wondered the difference between seller’s market, buyer’s market, and balanced market? Let us help you decipher.

• Buyers market: When the number of homes is more than the buyers, it is a buyer’s market. In this scenario, the buyers will spend more time looking for homes, talking about the price; it can be stable or dropping depending on several other factors. In this type of market, the potential buyers are given more to choose from, seeing that the number of homes is more than the buyers. All these things will leave an impression that buyers have stronger leverage when negotiating.
• Sellers market: In contrast, a seller’s market is when there are more people looking to buy and less number of homes available. This is said to have an effect on the price and it will go up higher than the long-term average rate of inflation. In general, this is specified by sales-to-active listings ratio say 20% or higher than that, having said that, multiple offers give great negotiating power to the seller and in that event, conditional offers may be rejected in this scenario.
• Balanced market: Everything becomes poised in this case. The amount of homes for sale and the count of potential buyers are one and same. This paves way to equal competition and leaves way to reasonable and beneficial offers to both the buyers and sellers. It goes without saying that, in this case, the prices remain stable.
Now that you are aware of the three different types of market, it is imperative that you consider all of them while buying a property. The negotiations and listing price will be affected depending upon the type of market you are in.