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The Buyer's Market
In a buyer's market, with more homes available for sale than qualified buyers to purchase them, buyers have the opportunity to get more for their money. Buyers will see that they'll be able to afford either a larger home in a better neighborhood or one with more amenities, such as a three-car garage or a gourmet kitchen.
Sellers are usually desperate for buyers in a buyer's market, so homebuyers can take the time to shop around and think about what they've seen before writing an offer.
In a buyer's market, the pressure is on the seller to come up with strategies to make his or her home look better than competing homes. To expedite a sale, the home must be priced well, and be appealing inside and out. The seller might have to paint, clean, do minor kitchen or bathroom work, add a family room, deck, fix the roof, replace windows and carpeting, add siding, or refinish a basement.
Once a buyer is interested, the seller might have to accept less than he or she hoped for, plus toss in personal items like a refrigerator, washer and dryer, lawn furniture, lawnmower and other lawn equipment.
In a buyer's market, a homebuyer might ask the seller to finance the home (or take back a second loan), pick up discount points or other loan or closing fees, or even buy down the loan.
The Seller's Market
In a seller's market, there aren't enough homes to satisfy every homebuyer. Prices are usually sky high because of the dearth of inventory. Homebuyers typically make a fast offer - often for more than the list price - or risk losing the home to a more agile homebuyer.
There isn't much room to negotiate in a seller's market. In fact, buyers may have to make extraordinary concessions to the seller, such as agreeing to the seller's closing date, offering to waive the financing, inspection and attorney contingencies, and even allow the seller to remove fixtures from the house.
Obviously, buyers would rather buy in a buyer's market and sellers would rather sell in a seller's market, but, typically, we can't control when we're going to make the big move. |
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Negotiating is based on supply and demand, but there are strategies that can help:
 Work the deal through ahead of time. Whether you're a buyer or seller, know the price you're looking for before the negotiating starts.
Act fast. In a hot buyer's market, you'll need to move quickly to secure the home you want. In a seller's market, sellers who dawdle may lose out because competition is fierce.
Be upfront about what you want to do. While the whole negotiating process is a game, you're better off being honest and upfront about what you will and won't do as a buyer or a seller. The other party in the transaction should appreciate your honesty.
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