A buyer's market simply means there are more homes for sale than there are buyers which gives buyers an advantage, as they have more choice and can negotiate lower prices.
According to the Seeff Property Group, several factors can impact the selling prices of properties in a buyer's market. Geographic trends for example may mean that some areas are still experiencing a shortage of stock and high buyer demand, but even in these areas buyers will still not overpay.
Properties in desirable locations are also usually still able to sell faster than the rest of the market and achieve slightly higher prices, even in a buyer's market. Buyers are generally willing to pay more for homes in safe and convenient neighbourhoods with good schools and amenities.
When buyers have a choice between properties, they will almost always choose the one that is in the best condition and offers the best value for money. Buyers are more likely to look for price discounts if the property exhibits obvious flaws.
Buyers will compare the prices of the properties they are interested in with those that have recently sold in the area. Sellers should not underestimate the fact that buyers have access to current information on the internet. Overpriced properties will stay on the market for longer and likely sell for less.
Sellers who are motivated to sell are more likely to be willing to be more realistic with their asking price and may be more willing to negotiate their price so that they can conclude a sale. Sellers who need to move are usually more motivated while those who can wait may cling to a high asking price.
The overall economic and market conditions have a direct impact on the selling prices of properties in a buyer's market. If the economy is struggling and interest rates are high, buyers may be more cautious about buying which generally leads to lower selling prices.
In a buyer's market, sellers may need to be prepared to negotiate on price and make concessions. Gerhard van der Linde, MD for Seeff Pretoria East says the highest offer is not always the best offer. If the offer is clean, the buyer’s finances are in order and there are no further restrictive conditions, it is likely a more advantageous offer compared to a higher price with many issues attached.
Sellers who have overpriced may become desperate because it has not sold, and may then be open to lower offers. He says a seller must consider the benefits of accepting the offer on the table versus waiting for another offer that might not be forthcoming.
If the benefit of accepting outweighs the risks of hoping for a higher offer, rather go with the offer. There is always the option of asking the property consultant if the buyer would be open to a counter offer, but there might be risks. If the buyer does not accept, the first offer could then also be off the table.
Tiaan Pretorius, manager for Seeff Centurion says the first offer is usually the best offer, but sellers should ensure they are able to make an informed decision by getting the agent to provide an update on current market conditions and the recent selling prices in the area.