Do you ever wonder how people like Donald Trump make such amazing Real Estate deals? Do they have a crystal ball? Is there a tried and true way to time the market? While even “The Donald” will probably agree that it is actually impossible to time the real estate market, there are some simple techniques you can follow, helping ensure you are most likely to find the sweet spot and profit the most, by “buying low and selling high”

The market is the market, is the market, right?

In reality, the Real Estate market can be a tricky thing. There are many shades in the middle, but at the end of the day, the marketplace you are looking to time will fall into one of three categories:

1) Buyer’s market

2) Seller’s Market

3) Neutral Market

What is a Buyers Market?

Simply put, a buyers market is where there are more available homes for sale than there are buyers looking to buy those homes. As a result, purchase prices on homes in that type of market tend to be lower. Many analysts will suggest that a marketplace is experiencing a buyers market if the total available inventory on the market cannot be depleted in less than six (6) months.

What is a Seller’s Market?

Conversely, when your marketplace is experiencing a sellers market, there are more buyers looking to purchase homes than there are actual homes on the market.

In these types of markets, homes generally experience multiple offers and are sold for over asking price. Additionally, if the market is super tight, you may even see “as –is” sales of homes.

What is a “Neutral Market”?

Lastly, as I am sure you can guess, a neutral market occurs when you have equal numbers of buyers on the market, as homes on the market. Analysts would consider a market a neutral market if the available home inventory is right around 4 months.

Buying in a Buyer's Market

If you are buying a home in a buyers market, you are in the perfect market conditions. There really is no better timing. Now of course if you also have to sell a home to buy a new one, that probably won’t be the case. For those of you though that are in this primo position, you can look forward to taking advantage of these great benefits:

1) Home prices are lower. By definition, there are lots of homes on the market and this means there is risk in listing too high, or not accepting lower offers. If the seller walks away from a potential deal, there is no guarantee that another buyer will come through the door and make an offer.

2) Along those lines, you can also negotiate some of the terms of the purchase to work in your favor as well.

3) If you do need to sell your home, unlike the craziness of a seller’s market, you are more likely to get the seller of the home you put the offer on to accept a contingent sale (meaning your purchase is contingent on you selling your existing home).

Buying in a Seller's Market

Buying in a seller’s market on the other hand is a little more tricky. While it’s not impossible, it is important to consider the following things:

1) You are going to put lots of offers in. Multiple offers on listings and sale prices over asking price are very normal in seller’s markets.

2) You cannot likely negotiate the purchase details with the sellers. They are in the driver’s seat and for the most part, they call the shots.

3) You’re not likely to get a seller to agree to a contingent offer. In that respect, you are better off to sell your home first, try to get a long close and some rent back months, and then look to put offers on homes.

Selling in a Buyer's Market

So what about selling? If a seller does not need to sell, there really is no logical reason to put a home on the market in a buyer's market. Specifically because of:

1) Offers below asking WILL come in. Buyers will feel like you are selling because you have to. Also, if you don’t accept their offer, there are plenty of other homes on the market they can look at.

2) Buyers are going to negotiate the terms of the sale with you. Because of this, you better be ready to give a little, in order to get the deal done.

3) If your home isn’t in perfect working order, you can bet that a buyer is going to require you fix all those little things in the home that aren’t quite right, before they release contingencies.

Selling in a Seller's Market

This obviously is the best possible time to be a home seller. Home sellers have all the advantages in a seller’s market:

1) You can demand higher sale prices. After all, there is no inventory. It’s the whole concept of supply and demand.

2) You don’t have to “play ball” and negotiate on terms with buyers, for the most part.

3) You don’t have to worry about a contingent sale, because if a buyer has to sell their place, you can, with clear conscience, decline their offer, knowing that there are many more coming your way.

When it comes to timing the market, there truly isn’t a crystal ball. Hopefully these tips helped you though and when you do decide to buy or sell, you will be in the optimal position.

 If you have questions, need advice, or just want to get a second opinion, contact us anytime. We’re always here to help.