The asking prices of most homes typically reflect the current state of the market and mirror the prices for which similar homes in the area have recently sold for. When determining your buying strategy with respect to any offers, you must establish a clear understanding between your budget limits (keeping in mind all the additional costs of buying a home) and the realities in the marketplace that ultimately dictate the pricing home sellers can expect for any property you are interested in.
Existing market dynamics are always the primary factor in determining a property’s value, regardless of the other attributes of a home or property. Here are the 3 types of market conditions to keep in mind and understand how they may affect your home search and purchase.
A seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply, meaning the number of buyers exceeds the number of homes available on the market. As a result, these homes usually sell very quickly and there are often multiple offers. As a buyer, you need to consider that many homes will sell above the asking price in this situation. Typically you have less room to negotiate and are likely going to encounter competing offers. Though most buyers want to get a home for the lowest price possible, a low-price strategy in this scenario is risks being taken seriously.
A buyer’s market is a slower market. This type of market occurs when supply is greater than demand. Properties are more likely to stay on the market for a longer period of time receiving fewer offers. This is a delicate market given competition is higher and buyers know they have options. Prices are under significant pressure and tend to be lower as a result of the increased supply. As a buyer, you have more selection and leverage in terms of negotiating a lower price.
Balanced market means supply equals demand, that the number of homes on the market roughly equal to the number of buyers. When a market is balanced, buying (and selling) tend to be more predictable in nature. Prices stabilize and homes will sell within a reasonable period of time.
Keep in mind, as a Professional Realtor I am trained to provide you with all the relevant information about the market, helping you make the most informed decision possible. I will guide you through the market insights and facts and will keep you up-to-date with the any changes that could affect your strategy. These are critical skills you can expect from me to ensure you are getting the best advice and the best representation.
Other factors that influence market value are:
The proximity of the home to amenities such as schools, parks, public transportation and shopping districts will affect its status on the market. Additionally, the quality of neighbourhood planning and future plans for development will influence a home’s current market value as well.
The age, size, layout, style and quality of construction of the building will all affect a property’s market value. So will the size, shape, privacy and landscaping of the yard.
Condition of the Home:
This includes the general condition of the home’s main systems such as the furnace, central air, electrical system, etc. The appearance and condition of the fixtures, the floor plan and its curb appeal matter too.
Examine the selling and asking prices of similar homes in the neighbourhood. Ask your Realtor to prepare you a general market analysis of the neighbourhood you’re interested in so that you can determine a range of value for a particular property. A market analysis will provide you with a broader overview and give you a snapshot of what other similar properties have been selling for in that area.
Think about factors like the strength of the local economy, employment realities, interest rates, consumer confidence, etc. These all factor into our decision making and most certainly have an impact on the world of residential real estate.