What Makes A Real Estate Market a Sellers Market Versus Buyers Market?

What Makes A Real Estate Market a Sellers Market Versus Buyers Market?

I am going to go through and help you identify the difference between a Sellers Market versus a Buyers Market.  A real estate agent will help you with metrics to differentiate between each type of market.  Please keep in mind, not all real estate agents are created equal, but if they are actively doing real estate in that region, they should know the current state of the local real estate market.  They will get this information per quarter from the local board of Realtors.  A real estate agent pays to have access to the MLS, which gives them access to all of these metrics real time.  So, let’s go get into the details of what determines a Sellers Market versus Buyers Market.

  • Sellers Market – If the Days on Market (DOM) is less than 90 days, the active inventory on the MLS is less than 6 months, and more than 3% appreciation in that area, you have a Sellers Market.  I want to define the term inventory for you.  The inventory metric represents the amount of active properties listed on the MLS versus the number of buyers buying up this inventory at any given snap shot of time.  Just think of it this way, when there is an increase in demand, supply will drop and prices will increase.  It is all just another example of supply and demand.
  • Buyers Market –   If the Days on Market (DOM) is more than 90 days, the active inventory on the MLS is more than 6 months, and less than 3% appreciation in that area, you have a Buyers Market.  I want to define the term inventory for you.  The inventory metric represents the amount of active properties listed on the MLS versus the number of buyers buying up this inventory at any given snap shot of time.  Just think of it this way, when there is a decrease in demand, supply will increase and prices will decrease.  It is all just another example of supply and demand.

Now, I want to take this a step further and define the types of properties that a Rehabber would need to look for, in order for their aggressive offer to get accepted in each type of real estate market.  In a Sellers Market, a Rehabber will want to focus on Distressed Sellers & Distressed Properties.  If a Rehabber wants to get their ( Example: 70% ARV – repairs) offer accepted in a fast moving market, they need to focus on sellers who need to sell quickly and properties that have condition issues that will hinder this property from qualifying for FHA or VA financing.  Whereas in a Buyers Market, A Rehabber will want to focus on Distressed Sellers OR Distressed Properties.  Did you notice the difference between the two?  In a competitive real estate market (Sellers Market), you need to be that much more exact and focused on the right properties, in the right market, and offer the right offer.

December 31, 2016 / by / in , , ,

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