Selling Your Home in a Buyer’s Market
Understand the differences between a buyer’s and seller’s market, and learn from our top-10 tips for selling in a buyer’s market.
By Emily Southey | 11 minute read
Looking to sell your home? Before doing so, it’s important to understand the current market so you can determine the most effective selling strategy. Selling a home in a seller’s market is vastly different from selling a home in a buyer’s market, which is what we will be discussing today. Keep reading to learn more about buyer’s markets versus seller’s markets, how to determine the current market, and 10 tips for selling a home in a buyer’s market.
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What Is a Buyer’s Market?
A buyer’s market is when supply exceeds demand. In other words, when there is more real estate inventory on the market than there are interested buyers. As you might suspect, in a buyer’s market, homebuyers have the upper hand. This usually leads to lower purchase prices and more advantageous sale terms for buyers. For the seller, it could result in a home sitting on the market for a longer period of time. Typically, sellers will reduce their listing prices in a buyer’s market to gain a competitive advantage. They may also be more willing to negotiate with buyers through counteroffers and accept offer terms (for example, conditions) that they otherwise wouldn’t in a seller’s market.
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Why a Buyer’s Market Turns Into a Seller’s Market
It’s important to note that the real estate market is cyclical. Therefore, just because it’s currently a buyer’s market doesn’t mean it will be this way forever. Since housing markets are based on supply and demand, both of which fluctuate, a buyer’s market can quickly turn into a seller’s market and vice versa. For example, since a buyer’s market is characterized by an abundance of inventory and minimal buyer interest, all it takes is a rise in buyer demand to tip the market. As soon as demand starts to increase, prices go up and the available inventory narrows. Over time, the supply can become so limited that it can’t keep up with buyer demands, and that’s when it becomes a seller’s market. It’s usually during a seller’s market that developers and investors are motivated to build or renovate homes to take advantage of higher home prices, which expands the supply of homes on the market. Eventually, once the demand for new homes is largely met, it slows down. A mix of slowing demand and larger supply (thanks to the newly built or renovated homes from developers) ushers in another buyer’s market.
“In a buyer’s market, homebuyers have the upper hand. This usually leads to lower purchase prices and more advantageous sale terms for buyers. For the seller, it could result in a home sitting on the market for a longer period of time.”
How to Determine if It’s a Seller’s Market versus a Buyer’s Market
If you’re wondering whether the current market is a buyer’s market or a seller’s market, you’ve come to the right place. By researching the following factors, you can quickly identify whether you’re in a buyer’s or seller’s market.
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- Real estate inventory: Take stock of the homes currently on the market. The more there are, the higher the odds that your neighbourhood is in the midst of a buyer’s market. Oppositely, if fewer homes are listed, then it’s likely a seller’s market. If you’re having trouble determining if the number of homes on the market is high, low, or average, follow this trick: Divide the number of homes on the market by the number of homes that sold in the last month. If the sum is above seven, it’s a buyer’s market, below five and it’s a seller’s market (anything in between is a neutral market).
– - Recent home sales: Another indication of the market conditions is recent home sales. Research home sales of comparable properties in your neighbourhood. If you discover that many sold over asking, it’s likely a seller’s market. In contrast, if most sold below asking, all signs point to a buyer’s market.
– - Length of time on market: The number of days a home sits on the market is another way to determine market conditions. Homes sell faster in a seller’s market and slower in a buyer’s market. Most online real estate marketplaces will show when a house was originally listed. If this number is high, chances are it’s a buyer’s market.
– - Listing price: Analyzing the listing prices of homes in your area is another way to determine whether it’s a buyer’s market or a seller’s market. In a buyer’s market, sellers typically drop their prices. Most listings give users access to the home’s price history. If you can see that the listing price has been reduced once or even multiple times, you can safely assume it’s a buyer’s market.
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10 Tips to Sell Your Home in a Buyer’s Market
Are you ready to venture forth and sell your home in a buyer’s market? Fear not! By following the 10 tips below, you will vastly increase the odds of a successful home sale in a buyer’s market.
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1. Hire an experienced REALTOR®
The first step to successfully selling your home in a buyer’s market is to hire an experienced REALTOR®. Find a REALTOR® with extensive knowledge of the local housing market and experience marketing and selling homes in a buyer’s market.
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2. Consider selling your home without a REALTOR®
Since you’re likely to get less money for your home in a buyer’s market, consider saving on costs by selling your home without a REALTOR® (known as FSBO, or for sale by owner). Although this method doesn’t give you the knowledge or resources of a real estate professional, it can help you cut down on costs since you won’t have to pay commission when your home is sold.
3. Make minor repairs
Before listing your home, conduct any necessary repairs. Since buyers have more options in a buyer’s market, they may be pickier. So spend the time repairing anything minor that will make your home more appealing (for example, painting or repairing window screens).
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4. Renovate your home to attract buyers
Some sellers might be inclined to go a step further than making minor repairs by renovating their homes to attract buyers. If a home renovation is feasible, choose an upgrade that will add the most value to your home. Many buyers claim that the following home features are most important to them: air-conditioning, smart home technology, energy efficiency, kitchens, bathrooms (especially ensuite master bathrooms), and private backyard/outdoor spaces.
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5. Hire a professional photographer to take the listing photos
“A picture is worth a thousand words” is a saying for a reason. Nowadays, most homebuyers start the house-hunting process online, looking at listing photos to determine if it’s worth visiting a home in person. For this reason, hiring a photographer to take high-quality photos is vital.
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6. Price your home competitively
Pricing a home in a buyer’s market is no easy task, but getting the price right is critical in such a market. If you price it too high, you run the risk of your home sitting on the market for months. But if you price it too low, you could appear desperate, leading you to accept a price below what your home is worth. Ultimately, the best way to determine how to price your home to sell is to conduct a comparative market analysis. If you’re working with a REALTOR®, they will likely do this for you, but if not, you will need to spend time researching how much comparable homes in your area recently sold for.
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Generally speaking, there are three main real estate pricing strategies: at market value, below market value, and above market value. Pricing above market value is typically not the best option in a buyer’s market, which means you’re looking at pricing it at or below market value. Pricing your home below market value (though not too much below) is often an effective way of attracting buyers. However, if you’d prefer to try pricing it at market value, consider hiring a home appraiser to visit your home and provide you with their professional opinion of its value.
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7. Incentivize potential buyers with perks
Sometimes throwing in something extra is all it takes to solidify a home sale in a buyer’s market. To incentivize potential buyers, your REALTOR® might suggest adding in a perk or two to sweeten the deal. Examples of such perks include agreeing to pay all or a portion of the closing costs, agreeing to pay for certain repairs before the closing date, agreeing to contingencies like appraisal, financing, or home sale contingencies, and including add-ons with the home purchase, such as window treatments, a home warranty, kitchen appliances, a barbecue, or lawn equipment. Throwing in any of the aforementioned perks could be what motivates the buyer to close the deal. Perks can be discussed during the negotiation phase of the home sale.
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8. Make a list of deal breakers
Our next tip for selling your home in a buyer’s market is to make a list of deal breakers. By this we mean, a list of offer terms and conditions that you simply are not willing to compromise on. As mentioned, buyers have the upper hand in a buyer’s market, which means they may try to demand more than they would in a seller’s market. For this reason, sellers must be prepared for negotiations. To ensure negotiations go as smoothly as possible, speak with your REALTOR® about what your ideal offer looks like. Be realistic about price and conditions. In a buyer’s market, you will likely have to accept certain conditions you aren’t over-the-moon about, but you should never agree to anything insulting (like a lowball offer) or something you can’t afford (for example, paying for the closing costs). Ultimately, making a list of deal breakers relating to conditions or purchase price will help you decide when to walk away from a sale.
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9. Prepare for a longer listing period
Anytime you’re selling a home in a buyer’s market, you should be prepared for a longer listing period. The reality of a buyer’s market is inventory is high and demand is low, so properties tend to sit on the market for longer than they would otherwise.
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10. Schedule an open house
Although real estate experts have varying opinions on the efficacy of open houses, most would agree that it largely depends on the market. In a seller’s market, demand is so high and supply is so low that most homes are likely to sell, even without an open house. But in a buyer’s market, open houses can be extremely valuable tools. Hosting even one open house can generate a considerable amount of interest and instantly opens up your home to a greater number of buyers. Plus, if you market it successfully and receive a higher number of attendees, it could create a sense of urgency, which is rare in a buyer’s market.
Frequently Asked Questions
How different is a buyer's market from a seller's market?
Buyer’s markets and seller’s markets are exact opposites. A buyer’s market is when there are more homes on the market than there are buyers. Therefore, listing prices tend to be lower, homes often sit on the market for longer, and buyers have more leverage in negotiations. In contrast, a seller’s market is when there are more buyers than there are homes for sale. Seller’s markets are characterized by higher purchase prices, fast home sales, and bidding wars.
Why is the buyer's market preferred over the seller's market?
A buyer’s market is generally preferred by homebuyers but not by sellers. Buyer’s markets usually offer more favourable conditions for buyers, such as lower purchase prices and less competition for homes. However, these conditions are not ideal for sellers, as it could mean selling your home for less than its worth or agreeing to conditions and other terms that leave you unsatisfied.
What to expect while selling your home in a buyer's market?
If you are planning to sell your home in a buyer’s market, it’s important to be realistic about two factors: price and the length of time your home will sit on the market. The fact of the matter is that most homes sold in a buyer’s market sell for less than they would in a seller’s market and sit on the market for longer before being sold.
What is the current market's status?
The current real estate market in Toronto, Ont., is a buyer’s market. After a seller’s market defined much of 2021 and the start of 2022, home prices have been steadily declining over the past five months. As housing markets vary by city or even neighbourhood, it’s important to research the current market in your area.
On the other hand, there are many reasons that REALTORS® and sellers continue to favour open houses. Open houses offer a more relaxed environment for prospective buyers to tour the home. They also generate foot traffic, and the heavier the traffic, the more likely it is that a serious buyer will schedule a follow-up visit.
How can I prep my house in a buyer’s market?
Preparing your home is a critical step if you want the best chance of selling it in a buyer’s market. To prepare your home for a buyer’s market, clean, declutter, and depersonalize your home. Homebuyers want to be able to envision themselves living in the home. But if it’s full of personal effects like family photos or knick-knacks, this will throw them off. Remove at least one-third of your belongings (for example, decor, furniture) before listing your home. The goal is to make the space as neutral as possible so prospective buyers can visualize themselves living there. Next, come up with a fool-proof marketing strategy. Marketing is important no matter when you’re selling but it can make or break a home sale during a buyer’s market. Have a professional photographer take photos of your home and consider hiring a professional staging company. We also recommend working with a REALTOR® who can ensure your home is marketed to the right audience. Our last tip for preparing your house in a buyer’s market is to price it competitively. Pricing your home to sell is the best way to successfully sell your home in a buyer’s market. Spend ample time researching comparable home sales in the area. From there, make sure your listing price is on par or perhaps even lower than the comps. Should a buyer make an offer, we also recommend sweetening the deal by offering certain perks like paying a portion of the closing costs, completing any requested repairs, or throwing in certain appliances or furniture.
Emily Southey
Wahi Writer
