Buyer’s Market Misconceptions

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Real Estate, Shout Outs

We hear the term “buyer’s market” almost constantly, but does anyone really know what it means?

Plainly put, once an available inventory of properties surpasses 7 months worth, it is called a buyer’s market, meaning the buyers have a lot of choices, and some negotiating power.  Sellers are challenged by lots of competition and pricing pressure, having to offer something better than the other houses, be it many upgrades to the house or sales incentives, the likeliness of extended time of the market, and more than usual negotiating.  There is some challenge to the buyers too because when a really good deal presents itself, there is usually competition and instead of the planned low to start offer, a highest and best is needed.  The Tampa/St. Pete/Clearwater area is a good example of good buying opportunities.

Misinformed buyers hungry for a deal interpret it to mean that every house is in a distressed situation, therefore the sellers are desperate to give their homes away at almost any price.  Some buyers are so passionate about this belief that they get indignant when the seller turns down their low offer.   The simple fact is that not every house for sale is a short sale or a foreclosure.  There are many people who just “want” to move and have the luxury to wait for a reasonable buyer or a shift in the market.  The smart seller does, however, realize that he can let the house go for less than he would in a more stable market because he is going to make up the difference in price when he buys his new house.  So in that case, the buyer is getting a good discount on the house and that would be a good example of a buyer’s market.  Unfortunately, the buyers have been led to believe that they will be able to get much greater discounts than is actually realistic.

Another simple fact is that even in the buyer’s market there are certain areas and neighborhoods, such as Miami, Orlando, and Sarasota that are still selling like hotcakes and demanding top dollar.  They will not accept your offer of 30% less no matter how you try to convince them that the market dictates they should.  Their sales are hot and they have no reason to accept low ball offers.

The best way to proceed with your offer in this market is to decide whether you are shopping for your dream home or a deal and bid accordingly because, although it may work out that way, you can’t aim for both.