With the weak economic outlook persisting, we can expect the current buyer’s market phase to last until well into next year, but what does this mean for buyers and sellers?
Seeff gives a few tips:
What is a seller’s market?
When the economy and property market is in a positive growth phase, buyer demand for property tends to be high with loads of competition for properties. During such a phase, sellers are in the driving seat and they can generally call their prices and buyers will pay higher prices just to get their hands on their dream property. This is referred to as a sellers’ market.
What is a buyer’s market?
When the economy and property market goes into decline, there are usually fewer buyers while the number of properties listed on the market increases. In such a case, buyers are in the driving seat and they can usually call the prices. This is usually referred to as a buyers’ market.
By now, sellers and buyers should be well aware that with the economy and property market in decline, we are firmly in a buyers’ market, but all is not lost because there are opportunities in every market.
Selling in a buyers’ market
The most important thing to bear in mind, is that your asking price needs to match the market. If it is too high, you will simply scare off potential buyers and they will look elsewhere. Remember, buyers have many properties to choose from and they will want good value for their money.
It does not meant that you have to sell for cheap. In fact, far from it. If the buyer is serious, they will put a serious offer on the table, but they will be well aware of the market conditions and current selling prices. If you are asking a price that is higher than the current selling prices, your property will in all likelihood just stay on the market.
Another piece of important advice, is to guard against giving a mandate to an agent on the basis that they can get you a high price. Before you agree, ask for a Comparative Market Analysis and ensure that they include the last five sales in the area so that you can see what has sold and for how much. If the recommended price is too low, then your best advice might be to take your property off the market until it improves.
Buying in a buyers’ market
This is of course the best position that you would want to be in, if you are a buyer. It generally means that you are in a fairly good negotiating position, but it does not necessarily mean that sellers will be open to bargain hunting it. Sellers will still expect to receive a fair price for their property.
The best advice if you are serious about a property is to put in a serious, but not overpriced, offer. Be sure to leave a bit of room to negotiate, but don’t take too big a risk. A good property at a fair price will always attract buyers regardless of the state of the market, especially in high demand areas.
Another piece of good advice, is to get a pre-qualification done if you require a home loan. That way, you can shop around for your property knowing that you are in a good position to negotiate. If you are able to put down a reasonable cash deposit, you will be in an even better bargaining position.
Finally, if you find a property that you really like and it is well priced, don’t risk losing it. Rather secure it while the market is down, because it is almost impossible to predict what the market will do next.