How to know if we are in buyer’s market
I am looking to sell my house and I have been told by some that it is a buyer’s market.
Is that true and what does it mean to me? Does it mean that my property will sell for less or not at all?
I have plans I need to make, how long should I expect my property to be on the market?
Dear Planning Ahead,
First of all let’s look at what a buyer’s market really is and the causes of such.
The property sales market is exactly that, a market place where one puts their property up for sale and, as with any market, it is driven by the law of supply and demand.
There are many factors which affect the real estate market, interest rates, availability of financing, employment, investment growth, legislative changes, population and new construction, to name a few.
In a buyer’s market, there are more homes for sale than there are buyers. This could be a result of unemployment, fear of interest rate increases, lack of financing, lack of confidence in their jurisdiction or other factors which make people think twice about moving into a larger home, purchasing a home for the first time or purchasing for investment.
The advantage buyers have in a buyer’s market is that they can take their time and look at all of their options before buying — they have more options simply because there are more sellers.
Overall, home prices may go down in a buyer’s market. When people believe they are in a buyer’s market they can also believe that they don’t have competition (and can maybe end up losing out) or that they can put in a lowball offer or even multiple offers on many properties (not recommended).
They can also believe that they have the upper hand over a vendor or that the vendor is being pressured to sell, which is not always the case.
It is difficult to make a blanket statement about the Bermuda real estate market as there are many segments, with some in high demand and indeed flourishing.
It is worth noting that at Coldwell Banker Bermuda Realty, our list-to-sale ratio is 94 per cent.
This means that agents are suggesting to sellers that they list as close to market price as possible in order to attract interest, showings and offers. I would not recommend submitting offers below 5 per cent of asking price as a point on which to start negotiations.
Realtors are the first to notice whether we are in a buyer’s or a seller’s market. Their business is helping sellers and buyers with their real estate needs and any change in the market affects the advice they give their customers and clients as the market is always moving.
There are a couple of statistical calculations that realtors use, but this is only recordable after the fact.
It’s called the sale-to-list ratio ie, if 60 per cent of all properties listed sell, it is known as a seller’s market.
If the result is 35 per cent or lower, it is known as a buyer’s market. Anything in between is known as a balanced market.
Right now we are seeing plenty of interest and transactions, but not a visible increase in prices. If you are selling, you should listen to your agent’s advice regarding pricing and review of offers made.
Generally speaking, if priced correctly your property should sell within six months, providing there are no hiccups.
There may be segments of the market that may take longer, depending on location and price point, but your agent should be able to provide you with data concerning DOM (days on market) as well as pricing comparisons.
Although price is key in selling property, there are many other facets of a real estate sale that you need to be aware of, and your agent will help you with these.
• Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for nearly 30 years. If you have a question for Heather, please contact her at firstname.lastname@example.org or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate
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