Experts Reveal 6 Signs of Buyer’s Market and How You Can Benefit
Written by
Laura Beck
Edited by
Renee Ross
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Timing is everything. The best time to buy a home is when it’s a buyer’s market. If you’re looking for a home in a buyer’s market, that usually means you have more leverage than the seller does. You have more options to choose from, and more room to negotiate, so you’ll probably spend less money overall.
If you’re patient, you can wait for this to happen before you start looking to buy a home. But how do you know if you’re in a buyer’s market or not? We spoke to experts who identified a few ways to tell.
There Are Many Homes on the Market
When there are more houses available than there are buyers, you have plenty to take your pick from. That’s the classic sign of a buyer’s market. Your chances of finding the right home at a price you’re comfortable with are much higher. There’s also more competition among sellers. This can mean prices go down even more and it’s easier for you to negotiate.
“When the pool of buyers is lower, sellers are more desperate for them to pay attention to their house,” said Doug Van Soest, cofounder of SoCal Home Buyers. “This means you could strike a favorable deal because the seller doesn’t have a whole range of other options.”
And when there are more homes on the market there’s less pressure on you. Because you’re not competing with other buyers, you can take your time and make sure you’re making the best decision.
Houses Stay on the Market for a Long Time
In a buyer’s market, sellers usually have a tough time finding buyers. That means that homes tend to stay listed for a lot longer. This might give you a lot more leverage when it’s time to negotiate.
“Realtors can sometimes be cagey about how long a property has been on the market, because they know buyers will assume homes that have been up for sale for a long time have something wrong with them,” Van Soest said. “Instead, use sites like Zillow to see how long a property has been available.”
A house that has been sitting unsold for several months usually means that the seller is more motivated to make a deal. They may be open to negotiating on the price or they might accept offers with favorable terms, like covering closing costs.
Prices Are Low
Low prices are one of the big advantages of a buyer’s market. Since fewer buyers are competing for homes, sellers usually have to lower their asking prices to get people interested. This can mean big savings for you — especially if you’re looking in an area where home values have been inflated. So you can get more for your money and maybe even get a home in a better location than you thought you could.
“This is the most attractive part of a buyer’s market, as it means you can often close a great deal,” Van Soest explained.
Not only do you have the chance to buy a home for a lot less, but you might also be able to get better financing options including lower monthly payments. That will also make it more affordable over the long run.
Mortgage Rates Stabilize or Fall
In a buyer’s market, mortgage rates don’t keep going up. They’ll stay where they are or even drop so that more people are encouraged to enter the market. Lower rates make it more affordable to finance a home. Your monthly mortgage payments will also be lower — you’ll pay a lot less over the life of the loan.
“Lower mortgage rates make it easier for buyers to qualify for loans and afford more expensive homes,” said Jared Mizrahi, owner of PCI Auctions. “Buyers can stretch their budgets further and take advantage of the increased negotiating leverage that comes with a buyer’s market.”
If you’re already preapproved for a loan, this is the right time to lock in a lower rate and get a better financial deal.
Homes Are Finished to a Higher Standard
In a buyer’s market, sellers know they have to stand out to get noticed. So you might see homes where they’ve gone all out on renovations, new appliances or fresh landscaping. They need to make their property more appealing to get you to look at what they’re selling. They can also pay for repairs that need to be done before closing.
“In a buyer’s market, buyers often have room to negotiate on things like inspections and improvements that must be made before the sale,” Van Soest said.
This is all in your favor because it means you’re more likely to find a turnkey home. You’ll be able to move right in with little to no additional work.
Sellers Offer Incentives
When sellers start offering incentives to sweeten the deal, then you know you’re in a buyer’s market. That might mean things like covering closing costs, offering home warranties or including furnishings or appliances with the sale.
“In a buyer’s market, sellers are more willing to sweeten the deal to attract interest, whether it’s through covering additional costs or offering perks,” said Allen King, sales manager at Widespread Rentals.
All this will make buying a home a lot more attractive — it means you’re saving money on upfront costs. As a buyer, you can take advantage of these offers to lower your overall expenses.
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