THE HONEST BROKER: ARE THE TABLES TURNING TO BENEFIT BUYERS?
In recent years, sellers have had the upper hand and real estate has been a seller’s market which means that sellers were getting “above asking”, “asking”, or “close to asking” price for their properties. A seller’s market benefits and favors the sellers as opposed to buyers who have to bid higher than they would like.
However, with this recent downturn in the economy, loss of jobs and income, will the tables turn from leaning toward the seller and begin towards leaning in the buyers’ favor?
This may potentially occur as the pool of eligible buyer’s contracts, and sellers with properties on the market will have to compete to get contracts on their homes. The financially sound buyer pool will then be able to use this to their advantage and perhaps get a better deal than they were able to get just 2 months ago.
Think of the market as a balanced scale in relation to the theory of supply and demand.
If both sides of the scale are evenly divided, the pool of buyers and sellers are equal. However, if there are more buyers than sellers, then the scale gets tipped to the sellers creating a sellers’ market. The demand for properties is higher than the amount of properties for sale which actually keeps property pricing high. The seller can demand their price and will tend to get it.
However, the reverse is also true. If the amount of properties on the market is higher than the amount of people presently able to purchase, then the buyers can negotiate the price downward. There is a surplus of property and a smaller pool of willing and able buyers. The seller then has to compete for those few buyers available. This will be an issue for those sellers that have to sell now. However, sellers who have time to see how the economy does in the near future may want to sit tight for a few months.
The next few months will be crucial to determine if the sellers’ market will continue after a short period of time, if this is only a temporary situation, or flip to become a buyers’ market.
Stay well and stay healthy.
Diane Lott, Broker
Paradise Found Realty, Inc. of Palm City
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