Have you ever thought about the best timing for buying or selling your home? Although certain seasons may witness higher activity levels, the fluctuations within the real estate market are primarily driven by the dynamics of supply and demand, rather than the time of year. Hence, it becomes crucial to stay informed about the housing market and determine whether the greater Boise area is currently experiencing a buyer's market or a seller's market.
What is a Seller’s Market?
A seller's market occurs when the demand for homes surpasses the available supply. In simpler terms, there are numerous interested buyers, but the inventory of real estate is limited. This puts sellers in a favorable position.
In a seller's market, homes tend to sell quickly, and buyers find themselves in competition with one another to secure a property. These market dynamics often lead buyers to be willing to spend more on a home than they would in other circumstances. Consequently, sellers can increase their asking prices. Moreover, the high level of interest means that buyers seldom have the leverage to negotiate and are more inclined to accept properties as they are.
The scarcity of housing in such conditions frequently leads to bidding wars. During bidding wars, buyers make competing offers, driving up the price, usually surpassing the initial asking price set by the seller.
Tips for Home Buyers in a Seller’s Market
In situations where the housing market experiences a scarcity of available homes and a surge of interested buyers, acting swiftly becomes crucial.
Act promptly. If you come across your dream home during a seller's market, it is advisable to take swift action. Delaying your decision could result in the property being no longer available when you're ready to make an offer. Familiarize yourself with the process of getting preapproved for a loan in advance, ensuring your financing is in order when the need arises.
Acknowledge your disadvantage. When making an offer, bear in mind that you are at a disadvantage in a seller's market. It is not the opportune time to push for contingencies, concessions, specific closing dates, or extensive repairs. Instead, focus on what matters most to you. Consider whether certain stipulations are worth jeopardizing the chance of acquiring the property. If possible, making an all-cash offer can be advantageous, as sellers prefer buyers who can purchase without financing concerns.
Exercise patience. If you repeatedly find yourself losing out on homes of interest, it is vital to remain patient and avoid becoming disheartened. Many buyers experience frustration during a seller's market. In bidding wars, inexperienced buyers often offer more than the actual value of a home or their comfort level, solely to secure the desired property. This is typically an unwise decision.
Avoid settling. Conversely, some buyers may end up making offers on homes they wouldn't otherwise be interested in due to frustration from constant disappointments. Remember, purchasing a property is a significant investment and a long-term commitment. Settling for a home simply because it is available is not advisable. Unless immediate relocation is necessary, it is better to wait for the market to cool down and resume your home search.
Tips for Selling Your Home in a Seller’s Market
In a seller's market, where sellers face competition to attract buyers, it is valuable to understand how to generate interest in your property.
Maintain cleanliness and organization. Begin by ensuring that your home is in good condition, thoroughly cleaned, and well-organized before marketing or showing it to potential buyers.
Set a fair price. While homes often sell for higher prices in a seller's market, it is still beneficial to price your home fairly. By setting your asking price at or slightly below the fair market value, you are likely to attract more interested buyers. Some sellers opt to list their homes slightly below the assessed value to stimulate bidding wars.
Evaluate offers diligently. It is particularly important in a seller's market to carefully review the offers you receive. Sellers often prioritize selecting the highest offer and overlook examining the financial strength of each buyer. Merely stating a specific amount does not guarantee that buyers can secure those funds, as lenders do not permit borrowing more than the assessed value of your home. Avoid accepting unrealistic offers that may lead to the deal falling through, forcing you to relist your home. The longer your property remains on the market, the more skeptical buyers become, giving them greater negotiation power.
Verify preapproval. For buyers seeking financing, it is crucial to ensure they have obtained preapproval for a loan. Preapproval entails a thorough assessment of buyers' finances and credit history, increasing the likelihood of obtaining a loan for a specific amount. On the other hand, prequalification provides only an estimate of buyers' financial status.
Consider contingencies. Be attentive to offers that include contingencies, such as mortgage contingencies, home sale contingencies, appraisal contingencies, and inspection contingencies. These stipulations allow buyers to withdraw from the sales contract if certain conditions are not met.
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What is a Buyer’s Market?
A buyer's market arises when the supply of homes surpasses the demand. In other words, there is an abundance of available real estate inventory, but a limited number of interested home buyers. These conditions give buyers the upper hand over sellers, as the market adjusts to the higher supply and lower demand.
During a buyer's market, real estate prices tend to decrease, and homes remain on the market for extended periods. As a result, sellers find themselves in competition with one another to attract potential buyers. In order to gain an advantage, sellers often reduce their asking prices. Moreover, they are more open to negotiating offers to prevent potential buyers from walking away.
Tips for Home Buyers in a Buyer’s Market
During a buyer's market, it is the opportune time to purchase a new home due to lower prices and reduced competition from other buyers.
Take your time and make thorough decisions. In a buyer's market, there is less urgency to worry about missing out on a property you are interested in.
Stay informed about available options. It is highly advantageous to explore multiple properties before making an offer. Having a comprehensive understanding of the market will not only help you find your ideal home but also provide you with stronger negotiation leverage, particularly regarding price.
Evaluate comparable properties. Familiarizing yourself with similar properties on the market is crucial for effective negotiation. Analyzing comparable sales (comps) allows you to leverage pricing information to your advantage. Additionally, a real estate agent or REALTOR® can assist you in analyzing comps through their Multiple Listing Service (MLS). For instance, if you discover a three-bedroom house listed at $700,000, but find several similar three-bedroom homes priced at $550,000, you can conclude that the house is likely overpriced in the current market.
Consider days on the market of the listing you are looking at. The longer a home has been available for sale, the greater negotiating power you possess to secure a lower price. Even if you don't request a significant price reduction, you can still negotiate for contingencies, seller concessions, and necessary repairs.
Tips for Selling Your Home in a Buyer’s Market
When selling your home during a buyer's market, it's essential to take every possible step to make your property stand out.
Address necessary repairs. With a larger selection of properties available to buyers, they tend to be more discerning. Prior to listing your home, ensure that any required repairs are completed and consider making minor improvements to enhance its appeal.
Clean and depersonalize your home. Dedicate ample time to envision how potential buyers will perceive your property. If they cannot picture themselves living in your home, they are less likely to make offers. Therefore, thoroughly clean your home, eliminate clutter, and enhance your landscaping. As you stage your living spaces, aim to depersonalize them as much as possible by removing family photos, personal items, and any indications of your presence.
Market it professionally. The significance of effective marketing increases during a buyer's market. Invest in high-quality, professional photographs of your property. If your home will be vacant or your decor appears outdated, consider hiring a stager. With professional assistance, you can transform your rooms to achieve a cohesive and polished look.
Competitive pricing is crucial. Ensure that your home is competitively priced for a successful sale. Survey similar homes on the market to understand their asking prices. Set your list price at or below the comparable properties in your area. When receiving offers, evaluate them fairly, considering that you have less negotiating power. Offering to cover a portion of the closing costs and requested repairs can be a strategic approach.
Is Boise a Buyer’s or Seller’s Market?
Before engaging in a real estate transaction, it is essential to determine whether your area is experiencing a buyer's market or a seller's market. Here are some indicators that can help you assess the market conditions:
Real estate inventory: Take a look at the current available homes on the market. A larger inventory suggests a buyer's market, while a scarcity of listings indicates a seller's market. To gauge the inventory accurately, divide the number of homes on the market by the number of homes sold in the last month. A result above 7 indicates a buyer's market, below 5 signifies a seller's market, and anything in between indicates a neutral market.
Recent sales: Evaluate the recent sales of comparable properties to determine the market trend. If homes have been consistently selling above the asking price, it suggests a seller's market. Conversely, if they have been selling below the asking price, it indicates a buyer's market.
Pricing: In a buyer's market, sellers often reduce their asking prices. When reviewing current listings, check the price history. If you notice a significant number of price reductions, it indicates a buyer's market. However, be cautious as some sellers may have unrealistic price expectations. Look for a consistent trend rather than isolated incidents.
Time on market: The number of days a home remains on the market is a strong indicator of market conditions. Homes sell faster in a seller's market and take longer to go under contract in a buyer's market.
Market trends: Monitoring the overall direction of home prices in your area provides a reliable indication of whether it's a buyer's or seller's market. You can easily assess this by referring to market trend reports. Working with a team of experienced Boise real estate agents will help you understand current market trends.
As of spring 2023, Boise, Idaho is still experiencing a strong seller's market, characterized by low housing inventory and high buyer demand.
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Final Thoughts
Understanding the current state of the market is crucial when engaging in property transactions. For buyers, targeting a buyer's market is advantageous, where an abundance of homes is available and competition is lower. On the other hand, sellers aim to list their properties during a seller's market, characterized by fewer homes for sale and high buyer demand.
Regardless of market conditions, enlisting the services of an experienced real estate agent is paramount. Their expertise and skills enable you to navigate the housing market successfully, giving you a competitive edge regardless of market strength.
When buying a home, don't be discouraged by a seller's market. Instead, let it guide your decision-making process. In a fast-paced market, homes tend to be snatched up quickly. Therefore, it's crucial to obtain preapproval for financing as early as possible, ensuring you don't miss out on your potential dream home.
Related: Top 10 Tips for First Time Home Buyers in 2023
King and Edge Real Estate
At King and Edge Real Estate, we pride ourselves on being premier property experts and agents dedicated to delivering world-class service to our clients in Boise, Eagle, and Meridian. Our top priority is earning and maintaining the trust of our clients while always prioritizing their interests. We love what we do, we love connection, and we love real estate. We’d be honored to work with you. Contact the team at King and Edge Real Estate today to discuss selling your home in the Boise, Stacey, Meridian, or Eagle area.
