Understanding the Buyer’s Market

if you’ve read the section about the seller’s market than quite simply the buyer’s market is exactly the opposite. In this case it is the buyer who has all the power and the sellers who are in serious competition with each other. Real estate has ups and downs and when there are a lot of sellers in one specific area they are all competing against each other to sell their own home. This type of competition drives the prices of the homes down. If a buyer makes an offer that the seller refuses he or she can simply find a similar property for a better price in the same area.

This is often the case in an area that may not be considered prime real estate. Because the area is less desirable or may be in the process of become less desirable people may start moving out sooner in the hope of getting a decent price for their property while it’s worth something. Many inner cities in the US went through this process and Detroit for example was a city that because so ravaged with crime in the 70’s and 80’s that there came a point where a downtown home had no value. There was nobody interested in buying it and often the last resort was that the owner would simply abandon it.

Ironically many inner cities are become popular and trendy again and have seen a fair amount of development and gentrification in the last decade. If you’re plan is to buy and flip a home than a buyer’s market is just right for you. In this situation you’ll have leverage to bargain with the seller and hopefully bring down their asking price. If you find a property for a good price you may be able to low-ball the offer and then turn around and flip the home for a healthy profit. Keep in mind that you will then become a seller in a buyer’s market so it may be hard to unload your property. But perhaps if you wait or the home you are trying to sell has some special attraction you’ll be able to get your asking price nonetheless.