Every available property has its own asking price. You might be wondering if that price is fair and reasonable when taken in the entire context of the property sector. Obviously, many factors merge to affect and influence the asking price of a home. Thus, before you make offers to buy any home that is up for sale, you should understand the property market as a whole.
An asking price is an indication of the present status of the overall or local property market. It is taken as a reflection of how homes with similar size and features in the same area have been sold recently. It is a logical practice for every home seller to balance a possible highest price for the property and a price that would be reasonable enough to effectively attract prospects and competitive offers.
Many homes that are up for sale in the market are still not properly priced. You would eventually realise that some are overpriced while others may seem to be underpriced. There are a handful of factors that influence any asking price for a home. You should begin by understanding three basic market condition types.
Seller’s market : As a home buyer, you should understand that a seller’s market is not the best time to purchase any property. This is because as the name implies, home sellers have the greater control and power when there is a seller’s market. Seller’s market is attained when there is greater demand compared to supply.
There could be more prospective homebuyers who are aiming to find and buy homes than there are available properties in a particular location. Thus, as the basic law of supply and demand has it, prices tend to go up as buyers compete aggressively with each other. Do not be surprised to realise that most homes have higher asking prices during a seller’s market. If you keep on bargaining during a seller’s market, you are about to lose your opportunity to purchase a specific property.
Buyer’s market : The market tends to slow down when there is a buyer’s market. This market type is characterised by a greater supply compared to demand. There could be an obvious influx or glut of homes that are up for sale. Because there are too many properties available, you as a buyer could take more opportunities to consider many other homes for acquisition. Thus, buyers have the greater power and potential to demand and seek for better buys.
A buyer’s market is basically for opportunistic investors. Many homebuyers and investors wait a long time for a buyer’s market to set in. When it happens, they immediately swoon to enjoy a bargain feast. No buyer could say no to the prospect of being able to buy properties at comparatively lower prices.
The balanced market : Between a seller’s and buyer’s markets is a balanced market. Logically, there is balance when demand and supply are in equilibrium. That means the number of sellers is just proportionate to the number of buyers. The balanced market could get a little tricky. Control and negotiation power could favor either the seller or the buyer.
As a buyer, understand that you could find asking prices as more stable when there is a balanced property market. You could mount an offer that is at the higher or at the lower end of the asking price range. The consolation is that you could choose from a wide selection of available homes for sale. There could be intense and aggressive competition when vying for any available property.