If you're thinking of buying or selling an investment property, it's important to understand the state of the market. Have you heard the term "seller's market?" Whether you're new to investing in real estate or you've been navigating this passive income stream for a while, it's critical to know how a seller's market can impact your real estate portfolio.
Keep reading to learn a little "real estate investing 101" about this type of market and if you should buy or sell investment properties!
What Is a Seller's Market?
A seller's market happens when the number of buyers exceeds the number of homes for sale. This means that buyers have fewer residential properties to choose from, leading to less competition among sellers.
These market conditions may inspire bidding wars amongst buyers, driving up the sale price and giving the seller more negotiating power. For a new real estate investor, breaking into real estate investments and finding a good deal on a first property can be challenging.
However, as with most investment strategies, markets fluctuate! Therefore, a seller's market now can mean that a buyer's market could be just around the corner.
Be Prepared to Move Quickly for the Best Deals
In a seller's market, buyers may need to be prepared to move quickly when they find a real estate investment they're interested in. Because of the low supply of properties, seasoned investors know that building real estate portfolios means they can't afford to wait to put in an offer on a property that fits their criteria.
Real estate investors may also need to be willing to pay more than they had initially budgeted for their purchase. Before finalizing a deal in a seller's market, make sure you run the numbers. Whether you're flipping a house or investing in a rental property, make sure you can generate enough income to offset the higher purchase price of the home.
It's a Good Time to Sell
So what does a seller's market mean if it's time to sell your recently fix-and-flip project? If you're selling a property in a seller's market, you may be able to negotiate a higher sales price than you would in a buyer's market. There's also a good chance the property will sell quickly when there is low inventory and high demand.
If you've waited to sell a property until the market shifted in favor of sellers, work with your real estate agent to list the property at the best price to avoid losing revenue on the sale.
What Is the Difference Between a Buyer's Market and Seller's Market?
While it might seem like investing in real estate is all about timing the market, there are some key differences between a buyer's market and a seller's market.
In a buyer's market, there are more homes on the market than there are buyers. This means that buyers have more negotiating power when it comes to the price and terms of the sale. In this type of market, sellers may need to be more flexible with their asking prices to attract buyers. However, a buyer's market can be an excellent time to build your real estate business and buy more investment properties.
If you opt for a buy-and-hold strategy with rental properties, use a market in favor of buyers to add more homes to your portfolio. You'll experience fewer bidding wars and lower prices than when markets favor sellers.
However, you might also deal with lower rent prices when the demand for housing is low. As with a seller's market, be sure to run the numbers and consult your real estate investing team experts to make sure you buy good properties at great deals for long-term success!
Use the Right Resource to Track Market Conditions (and Find Good Deals)
How can property investors stay on top of market conditions and know when it's best to buy vs. sell? Using the right resource can give you the insights you need to make smart real estate investing decisions!
No matter the state of the market, Privy delivers the best deals from your preferred markets directly to your inbox. Whether you only invest locally or you're diversifying through long-distance real estate investing, our algorithm scours the MLS in markets throughout the country to find investments that match your criteria.
We also send critical investor insights based on what other buyers and sellers are doing in the market! This information helps investors know when to move quickly, so they don't miss a deal and how much they should offer to start a potential purchase.
Navigate the Real Estate Market With Privy!
We hope this bit of "real estate investing 101" has been helpful! Whether it's a buyer's vs. a seller's market, get the expert information you need to build a successful real estate portfolio. Investors that choose the Privy Advantage gain access to daily market information that guides them to the best deals! Learn more about how our platform works when reaching out to chat with our team.
Download our free ebook, "How to Invest In Real Estate: A Guide!" for expert tips for success!