A buyer’s market simply means there are more homes for sale than there are buyers which gives buyers an advantage, as they have more choice and can negotiate lower prices.
According to theProperty Group there are a number of factors which can impact the selling prices of properties in a buyer’s market. Geographic trends for example may mean that some areas are still experiencing a shortage of stock and high buyer demand, but even in these areas buyers will still not overpay.
Properties in desirable locations are also usually still able to sell faster than the rest of the market and achieve slightly higher prices, even in a buyer’s market. Buyers are generally willing to pay more for homes in safe and convenient neighbourhoods with good schools and amenities.
When buyers have a choice between properties, they will almost always choose the one which is in the best condition and offers the best value for money. Buyers are more likely to look for price discounts if the property exhibits obvious flaws.
Buyers will compare the prices of the properties they are interested in with those which have recently sold in the area. Sellers should not underestimate the fact that buyers have access to current information on the internet. Overpriced properties will stay on the market for longer and likely sell for less.
Sellers who are motivated to sell are more likely to be willing to be more realistic with their asking price and may be more willing to negotiate their price so that they can conclude a sale. Sellers who need to move are usually more motivated while those who can wait, may cling to a high asking price.
The overall economic and market conditions have a direct impact on the selling prices of properties in a buyer’s market. If the economy is struggling and interest rates are high, buyers may be more cautious about buying which generally leads to lower selling prices.
In a buyer’s market, sellers may need to be prepared to negotiate on price and make concessions. Gerhard van der Linde, MD forsays the highest offer is not always the best offer. If the offer is clean, the buyer’s finances are in order and there are no further restrictive conditions, it is likely a more advantageous offer compared to a higher price with many issues attached.
Sellers who have overpriced may become desperate because it has not sold, and may then be open to lower offers. He says a seller must consider the benefits of accepting the offer on the table versus waiting for another offer which might not be forthcoming.
If the benefit of accepting outweighs the risks of hoping for a higher offer, rather go with the offer. There is always the option of asking the property consultant if the buyer would be open to a counter offer, but there might be risks. If the buyer does not accept, the first offer could then also be off the table.
Tiaan Pretorius, manager for Seeff Centurion says the first offer is usually the best offer, but sellers should ensure they are able to make an informed decision by getting the agent to provide an update on current market conditions and the recent selling prices in the area.
Cobus Odendaal, CEO of Lew Geffen Sotheby’s Internationalin and Randburg, previously shared in an article published in July shares that whilst it’s tempting to hold out for a better offer, it is crucial to not lose out on a good deal and to balance expectations with market realities and also individual circumstances.
Odendaal says that over and above consulting with your property professional, that the following should be taken into consideration when deliberating about whether to accept or reject an offer:
Research the Market
To gauge the value of your home, start by researching the local real estate market. Look at recent sales of comparable properties in your area to get an idea of the average selling price. Consider factors such as location, size, condition, and amenities to make accurate comparisons. This information will serve as a benchmark when evaluating offers.
Evaluate Buyer Motivation
Consider the motivation of the buyer when assessing an offer. If a buyer is genuinely interested in your property and has made a competitive offer, it may indicate that they are willing to pay a fair price.
Conversely, if an offer seems low or comes with multiple contingencies, it may indicate a less serious buyer or someone looking for a bargain. Assessing the buyer’s motivation can help you gauge the likelihood of receiving better offers in the future.
Factor in Market Conditions
Take into account the current market conditions when evaluating an offer. In a seller’s market with high demand and low inventory, you may have more negotiating power and the potential for multiple offers and holding out for a better offer could be a viable option.
In a buyer’s market with increased supply and slower sales, it may be more challenging to secure higher offers quickly. Understanding the broader market conditions can inform your decision-making process.
Consider Time on the Market
The length of time your property has been on the market can influence your decision to hold out for a better offer.
If your home has been listed for a considerable period without receiving significant interest or offers, it may be a sign that the initial asking price was too high. In such cases, you may need to re-evaluate your expectations and consider accepting a reasonable offer to avoid further delays and potential price reductions.
Analyse the Terms and Conditions
Assess not only the price offered but also the terms and conditions outlined in the offer. Look beyond the Rand amount and consider factors such as financing contingencies, inspection contingencies and proposed closing timelines.
An offer with simple or favourable terms may compensate for a slightly lower price.
Evaluate Buyer Financial Strength
For instance, a cash offer or a buyer with a strong pre-approval from a reputable lender can provide more confidence in their ability to close the deal.
Offers from financially secure buyers may be more favourable, potentially warranting greater consideration even if the offer price is slightly lower.
“While it’s important to consider these factors, trust your instincts and negotiate when you believe it is in your best interest,” concludes Odendaal.
“With a thorough assessment and strategic decision-making, you can ensure you are making an informed choice and potentially secure a better offer for your home – or not lose out on what’s already a good deal.”