When the real estate industry is said to be in a buyer’s market, generally home prices are lower, homes stay on the market longer, the amount of money for mortgages is down, and fewer new homes are being built. A buyer’s market is also referred to as an economic correction period because it follows a period of time when home prices rise much faster than salaries and the real estate market is said to be overheated.
In a buyer’s market, those wanting to purchase a home are not rushed into putting money down to hold the first home they see. Because homes are on the market longer, the buyer has time to really compare what is available and find that perfect home. In a buyer’s market the seller must place an appropriate price on the home or the home will remain on the market for a long period of time. For buyers, there is more negotiation available on home prices and the potential of getting a real financial deal from an anxious seller.
Besides price negotiations, a buyer in this market can put more contingencies on his or her offer to purchase, such as financing, which provides that the seller pay some of the fees. Financing in a buyer’s market can be difficult because during that time there is less money available for mortgages. For a potential buyer the problems in obtaining a mortgage can be lessened by having a clean or improving credit report and a larger down payment.
Because the real estate market is cyclical, following a buyer’s market will be a seller’s market. The fun comes in trying to determine how long each will last.