Buying a Home in a Sellers' Market
The 2016 Spring and Summer home purchasing season will look dramatically different than previous years. Over a decade has passed since the Louisville Metro area has experienced a sellers’ market. This dialog will help buyers in preparing an offer that a seller may accept; and hopefully avoid situations in which sellers are insulted by offers from buyers with unrealistically high expectations.
What is a sellers’ market?
A sellers real estate market represents conditions in which inventory is low, and demand from buyers is high. Simply put, there are more buyers than houses to purchase. Conversely, this is different than a buyers’ market, in which inventory is high and demand from buyers is very low (too many homes on the market).
Remember your high school economics classes? This is the basic principle of supply and demand.
The critical difference between buyers' and sellers' markets lies in bargaining power. In a seller's market, the seller has more negotiating power due to low supply, while the opposite is true in a buyer's economy. During a seller's market, it's unlikely that buyers will find homes below list price or with concessions such as damage repair or closing costs paid by the seller. In short, most of the factors affecting the housing market swing in...