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Buyer’s, Seller’s, and Neutral Markets: Why They Matter

Posted by admin on August 5, 2022
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If you’re interested in real estate, selling cars, or anything business related, you have heard these terms at least once. And everyone seemingly has their own opinions about which state the markets are in at the moment.

Perhaps nobody is telling you why any of this matters. Because once you know why the state of your local market matters, you know which strategies, tips, and tricks will be helpful for you to make a sale.

 

What’s a Neutral Market?

Let’s start with the one most people don’t bother to discuss too often. A neutral market is when listings are comparably average to past years’ and comparable listings in your area.

A neutral market typically happens when the economy is stable and only sees moderate growth. As such, you will have an average amount of buyers and a decent amount of inventory to sell.

Usually, in a neutral market, it’s a coin toss as to whether or not you will score a sale at the list price. Still, it’s doubtful you will be able to sell at a price higher than the asking price.

 

It’s a Buyer’s Market!

A buyer’s market is challenging for a real estate agent but a great time for buyers. Unfortunately, a buyer’s market usually happens after an economic recession, high periods of construction, and a job market decline. Therefore, you won’t receive many buyers during this period, which is problematic. As a result, you might be selling homes lower than the asking price, resulting in lower commissions.

Sellers will typically take lower offers during this period to score a sale. In this market, you will even see sellers competing against one another for buyers.

Seller’s Market: Your Best Deals Are Made Here 

As a salesperson, it might be your dream that the market floats in the seller’s direction. Because during this market, you will most likely sell homes above listing prices. A seller’s market usually occurs when there is high job growth, an excellent economy, low home inventory, low-interest rates, and population growth.

A seller’s market can be a good time for you as a Realtor®, but it’s also incredibly tricky. You will achieve some great sales, but you might also suffer from a lack of inventory.

If you’re a buyer’s agent, you might struggle to find homes that fit your clients’ budgets. But you will most likely have no shortage of clients.

 

Pros and Cons of Each Type of Market

There are pros and cons to every type of market. For example, in a buyer’s market, you will have a lot of sellers and inventory as a seller’s agent. Still, you will have a hard time finding buyers. On the other hand, in a seller’s market, you will quickly sell houses, but your inventory might be low.

You might have difficulty finding clients in a buyer’s market as a buyer’s agent. In a seller’s market, you will have a lot of clients, but they will be paying at above-average prices, which can be out of their budget.

But no matter what state the housing market is in, your connections and network will be your backbone. So always help your fellow real estate agents, and they will return the favor!

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