The difference between a seller’s and a buyer’s market
Last updated on September 6, 2024
When it comes time to buy or sell a property, buyers and sellers wonder if they’re in a seller’s market or a buyer’s market. The answer provides a good indication of how to proceed with their real estate project.
The trend in a given market segment or geographical area is based on supply and demand.
Contents:
- A buyer's market
- The causes
- The consequences
- Tips for buying property in the real estate context
- A seller's market
- The causes
- The consequences
- Tips for selling your property in a real estate context
- Taking advantage of multiple offers and managing overbids
- A balanced market
- FAQ
A buyer’s market
The causes
Generally speaking, a buyer’s market is favourable to people looking to buy a home. The number of properties for sale (supply) is high compared to the number of potential buyers (demand). This gives buyers a larger inventory to choose from.
The consequences
The fewer potential buyers there are, the longer it tends to take to sell a property. Prices are also driven down because of the higher competition between sellers. To increase their chances of selling quickly, sellers must offer a product that rivals others on the market, at a price that is attractive to potential buyers.
Tips for buying property in the real estate context
To sell effectively in a buyer's market, it's crucial to set a competitive price by researching the prices of similar properties. Make sure your home is immaculate and consider cosmetic improvements. Highlight its features with high-quality photos and a virtual tour. Be flexible on sales terms and use effective marketing, including social networks and real estate websites. Invest in home staging to present your home at its best, and respond quickly to buyer requests.
A seller’s market
The causes
The opposite is true in a seller’s market. The number of properties for sale (supply) is low compared to the number of potential buyers (demand). For this reason, it is likely that several buyers will be interested in the same properties. This phenomenon can create a real estate bubble, causing prices to shoot up.
The consequences
In a seller's market, buyers have to make competitive offers and have less bargaining power. Properties sell faster, and sellers can impose strict conditions. Competition can also lead to auctions, further raising prices.
The Montréal area is the perfect example of a market that has been very lively since 2018. Are you aware of the significant advantages of selling commission-free in a fast-moving market? The amount sellers save on the commission can be put toward a larger down payment on their next home.
Tips for selling your property in the real estate context
To sell a property in a seller's market, start by setting a competitive price to attract interest and generate multiple offers. Be flexible on sales terms, such as closing dates, and use a variety of marketing channels to maximize visibility. Finally, carefully evaluate offers, not only on price, but also on terms and soundness of financing.
Take advantage of multiple bids and manage outbidding
To take advantage of multiple offers and manage overbids when selling a property, a seller can follow these steps:
- Set a deadline for offers Encourage potential buyers to submit their offers by a specific deadline. This creates a sense of urgency and allows offers to be compared at the same time.
- Inform buyers of multiple bids Let interested buyers know that there are multiple bids. This may encourage some to improve their proposals to stand out from the crowd.
- Evaluate all offers Examine each offer in detail, not only in terms of price, but also with regard to financing conditions, closing deadlines and contingencies. The strongest, most reliable bids often win priority.
- Make counter-offers If an initial offer is close to what you're looking for but not quite satisfactory, you can make a counter-offer to adjust the terms and potentially get a better deal.
- Keep in touch Keep in touch with potential buyers throughout the process. This can encourage them to improve their offers and shows that you're committed to the sale.
- Be transparent Be honest about the multiple offer situation. Transparency can help maintain interest and avoid misunderstandings.
- Maintain flexibility If you receive several competitive offers, be prepared to make adjustments in terms or conditions to maximize benefits.
By following these strategies, you can make the most of multiple offers and optimize the results of your sale.
A balanced market
In Quebec, the real estate market tends to be balanced in most areas. This means that there are 8 to 10 sellers for every buyer, as per the Canadian Mortgage and Housing Corporation (CMHC).
According to Joanie Fontaine, an economist at JLR Land Title Solutions, the robust economy and population growth in 2018 has led the real estate market to grow in most Quebec regions (article available in French only).
FAQ
What's the difference between a buyers' market and a sellers' market?
A buyer's market is characterized by excess supply over demand, pushing prices down and giving buyers greater bargaining power. A sellers' market, on the other hand, is characterized by demand outstripping supply, driving up prices and giving sellers more power to set sales conditions.
Will the real estate market be more buyer- or seller-friendly in 2024?
In 2024, if interest rates remain high and housing supply is limited, the market will probably be more favorable to sellers. Conversely, a drop in rates or an increase in supply could balance the market and give buyers an edge.
Looking to sell a property? Our team of customer service advisors, sales representatives, real estate coaches, appraisers and notaries is located throughout Quebec. With DuProprio, you have access to the visibility and support you need to succeed in your sales project! Learn more about our services by watching our short video or by calling us at 1-866-387-7677.
