What Is The Difference Between A Buyer’s And Seller’s Market?

Your success in the real estate business depends on the way you evaluate market cycles. You know what you want to achieve but you have to learn about factors that can affect the present and future of your investment. Before you invest in real estate for sale in Orlando FL, one of the important questions you have to answer is –

Is it a buyer’s market or a seller’s market?

Market Timing And Wealth Growth

Investors often think that location is the most important factor they have to consider. While it is true that a real estate property is not a depreciating asset, but there are some times when you do not get the deal you are expecting. You purchased a property in 2018 at $400,000. However, it’s 2020 and now you are being offered $350,000. This might happen. So, it is important to understand the market cycle. When asked, real estate agents often tell that it is always the right time to invest in real estate for sale in Orlando FL. It’s not because they are going to get their commissions.

They say so because they know that the value of the property is going to increase, which is true. We have seen real estate property value increasing even when during the times of recessions. However, what if you are not planning to hold that property long-term?

When it comes to an investment in real estate, it depends on the location and what you want and whether it is a buyer’s market or seller’s market. You can double your equity growth and cash flow if you time the market correctly.

When To Buy A Property?

You have to evaluate the market and following are the metrics you have to consider:

  • Population growth
  • Job growth
  • Affordability

Buyer’s Market Vs Seller’s Market

You should do proper market research before you invest in a real estate property. A good investor looks for an investment that is undervalued. If you invest in a property that is already at the top of the market cycle, your investment has nowhere to go but down.

You should buy in a buyer’s market and sell in a seller’s market. The buyer has more power in the buyer’s market. When the demand is low and supply is high, you can negotiate to get better deals. On the other hand, the seller has more power in a seller’s market.

Signs Indicating That It’s A Buyer’s Market

If you are a buyer, the following are the signs indicating that the market is going to be in your favor:

  1. Inventory of listings is high as there are more sellers and fewer buyers.
  2. There is an over six months of housing inventory.
  3. Current listing prices are falling as compared to the previous comparable sales prices.
  4. As the number of buyers is low, closing sale numbers are also low. 
  5. Median sales prices start to fall.

If the market is showing these five signs, this is the best time to invest in real estate because this is your (buyer’s) market.

Signs Indicating That It’s A Seller’s Market

A seller’s market gives an advantage to the seller. There are more buyers and fewer sellers. The following are the signs indicating that it’s a seller’s market.

  • The inventory is tight.
  • The same property is getting multiple offers.
  • Property prices are on the rise.
  • Sale prices are exceeding listing prices.
  • Days on the market are low.
  • Sellers are not offering incentives.

While buyer’s market is ideal for buyers, this does not mean that you cannot buy a property when it is a seller’s market. In the end, it all depends on what you want and where you want.