The lowdown on buyers' and sellers' markets
Category News
The terms "buyers' market" and "sellers' market" are commonly used in conversations about real estate. By understanding them, you can make the best possible decisions when buying and selling property. With his wealth of knowledge and experience, Herschel Jawitz, CEO of Jawitz Properties, breaks down these terms and highlights what you need to know.
Characteristics of a buyers' market
In a nutshell, a buyers' market is created by an oversupply of properties for sale in an area relative to the demand from buyers. "Key signs of a buyers' market are easy to read," explains Jawitz. "If there are more 'for sale' signs than 'sold' signs in an area, and properties tend to stay on the market for a long period of time, then a buyers' market is in effect." Jawitz also identifies that a buyer's market is often characterised by buyers who have no fear of loss and a widening gap between asking prices and final selling prices.
Selling property in a buyers' market
The fact that your area is currently a buyers' market may not change the fact that, for whatever reason, you want or need to sell your property. In a buyers' market, buyers are not paying premium prices, and a larger proportion of sellers will not get their asking price. As a result, the seller's property often tends to sit on the market for a long period of time and may even sell for less than the property is actually worth. Jawitz stresses the importance of listening to the advice of your Jawitz #RealPartner and not inflating the price of your property. "At the right price in any market, every property will sell," states Jawitz. "If your property isn't attracting offers within a relatively short time from the date of listing, the message from buyers is clear. It's no different to the share market - if buyers don't see value in the price of a share or a property, they won't make an offer."
Jawitz offers guidance in that the key to making an informed decision about whether to sell or not is when there is an offer on the table. "To get a buyer to make an offer may mean you have to adjust your asking price more than once, but at least you can make a decision to sell based on what the market is prepared to pay rather than what it isn't."
Jawitz adds that if you are buying and selling in a buyers' market, you may make less on your sale, but might also have to spend less on your next purchase. "What you lose on the swings, you may be able to make up on the roundabouts," he explains, "especially if you are buying up in terms of price."
Characteristics of a sellers' market
As the name implies, a sellers' market is essentially the opposite of a buyers' market. In this scenario, the demand for property exceeds the supply of properties for sale. "Tell-tale signs of a sellers' market include properties selling quickly and listings selling at or even above the asking price," explains Jawitz. "In this scenario, the competition between buyers is strong, and properties for sale typically attract multiple offers." A sellers' market is an environment in which the rate of property price growth will accelerate faster than in a buyers' market.
Buying property in a sellers' market
Jawitz advises people buying in a sellers' market to buy with caution. "Buying in a sellers' market doesn't mean you should rush and buy the first property you see," he explains. "You still need to do your research in terms of area, price and value, and work with a #RealPartner to meet your real estate goals." With that said, Jawitz stresses that when you do see a property that you want to put in an offer on, you will need to act decisively. "Put in a fair and competitive offer," he advises. "The newer the listing is, the closer your offer will need to be to the asking price to convince the seller that it's not worth waiting for a better offer. While no one wants to go in with their best offer first, you may not get a chance to increase your offer if there are other offers in play."
From a buyers' market to a sellers' market
South Africa is currently a buyers' market, and Jawitz explains the factors that would have to come into play to transform the landscape into a sellers' market. "For starters, consumer confidence would need to improve," he explains. "The second factor is financial stability, which is linked to the economy, the job market, interest rates and the ability to secure home loans. We are currently starting to see some of these factors developing in the market."
Lastly, Jawitz notes that it is possible for there to be a "middle ground" between buyers' and sellers' markets, in which there is a greater balance between supply and demand. "A middle ground market means that property prices are at fair value for both buyers and sellers," he explains.
Whether you're in a buyers' or sellers' market, it's always advantageous to have the assistance and advice of an industry expert. The Jawitz Properties team is highly experienced at helping clients buy and sell property in every corner of South Africa and with 52 years of experience in every type of market. Contact us for more information.
Author: Jawitz Properties
