Wednesday, February 25, 2015

What are Buyer, Seller, and Neutral Markets?

Looking for a new home, or looking to sell your home? Thinking of investing in real estate? In any one of these scenarios, the buyer, seller, or investor has to consider the trends in the real estate market. Certain trends define what kind of market is currently in play, and whether it's favorable to buy, sell, or invest.

There are three types of markets referred to in real estate: a "buyer's market," a "seller's market," and a "neutral market," each defined by the state of supply and demand.

In a buyer's market, there are more properties for sale than there are buyers or investors looking to purchase. A buyer's market is the best time to snap up a home, seeing as that sellers will more likely price their property at competitively affordable figures, or accept offers lower than their asking price. As a buyer, you also have more options to choose from and less competition to worry about. With regard to sellers, a buyer's market is a "cold market."

A seller's market is the opposite, defined by more buyers than there are properties for sale. Because there is less supply and high demand, sellers will typically raise their asking price. Properties sell much quicker, and for this reason, it's also referred to as a "hot market."

A "neutral market" or equal market, on the other hand, refers to a balanced number of buyers and sellers. You can usually tell whether the market is neutral by comparing how much properties have sold in the past two to three months to the prices of properties currently pending sale. These recently-sold properties will noticeably fall within the same price range as the properties up on the market. Neutral markets are ideal for investors who want to purchase and flip properties for profit in short order. 


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