Working with a real estate broker is important when buying a home for multiple reasons. Some reasons are pretty obvious, others not so much. A real estate broker can help you find homes that match what you want. A good broker will spend time with you to really understand what you are looking for and what you need. A broker acting as your agent represents you and your best interests. Your broker can help with many aspects of buying a home, including:
- Writing the terms of the contract to buy your new home.
- Negotiating price, terms, dates, and issues with the seller and their broker.
- Helping you find and select a good lender.
- Working with a home inspector to make sure you learn about any problems with the home, and negotiating which the seller will address before closing.
- Coordinating closing details with the title company to help your home buying experience go smoothly.
- Helping to resolve problems that can come up when buying a home.
Buyer’s Market vs. Seller’s Market
Whether you are buying or selling a home, it’s important to know if it’s a buyer’s market or a seller’s market. (Or sometimes, it’s a little of both.)
A buyer’s market favors buyers. In a buyer’s market there are too many properties on the market for the number of buyers. Homes take longer to sell and frequently sell for less than the asking price. If you are buying a house, a buyer’s market is great for you, since you’ll have many homes to select from, many will be in good condition, and you’ll be able to buy your new home for a great price. As a buyer in a buyer’s market you’ll be in a better position to negotiate on price and terms. Sellers are more likely to fix issues turned up with the inspection. On the other hand, if you are selling your house in a buyer’s market, it’s even more important for your home to be in good condition and priced right.
A seller’s market is just the opposite: too many buyers and not enough sellers. With more buyers than sellers, properties tend to sell quickly and prices rise. If you are selling a house, it’s great to be in a seller’s market, for it will be easier to sell your home quickly for a good price. On the other hand, if you are trying to buy a home in a seller’s market, it can be frustrating to watch prices rise and to have other people outbid you for the home you want.
A balanced market is when there’s a good balance between the number of buyers and the number of homes on the market.
Over time, as the economy and interest rates change, a buyer’s market changes into a seller’s market, and then back again. We had a very strong seller’s market in 2021 and the first half of 2022. As I write this in the spring of 2023, it’s still a seller’s market in Denver, but it’s moving toward a more balanced market. Nice homes in good areas are still selling fairly quickly. Some homes are still receiving multiple offers, although there are far fewer multiple offer situations than in 2021 and early 2022. Today’s seller’s market won’t become a buyer’s market overnight, but if you aren’t tracking key indicators during the transition, you won’t see the change coming. Key indicators to watch are interest rates, the national and local economy, unemployment in the area, building permits, home sales, loan defaults, and foreclosure sales. Together these key factors point to the real estate market’s overall direction.
Most real estate professionals consider a balanced real estate market to be one in which most homes take four to six months to sell. If the inventory of homes for sale exceeds six months of sales, then the market is swinging into a buyer’s market. If inventory falls below four months, it is becoming a seller’s market.
The Market is Seasonal
The market for homes changes significantly with the seasons. The strongest time of the year is generally from March through July. Both buyers and sellers, especially families with children in school, prefer to move in the warmer summer months. Let’s face it: it can be a real hassle to move in the cold, snowy winter months! Many buyers start looking in early spring; June is usually the month with the most closings. The market starts slowing a bit in July and August, usually reaching a low point in November and December.
The winter months can be a buyer’s market because most buyers aren’t looking to move at this time of the year, and there are fewer buyers. However, there are usually fewer homes on the market as well. Spring and summer is usually a good time to sell, since that’s when most buyers are looking for their new home.
It seems there’s always an exception to every rule, right? Because of Covid 19, 2020 was an exception. Home sales in 2020 were unusually slow in April, May, June, and July. Sales picked up later in the year and remained strong throughout the rest of 2020, largely because of the pent-up demand caused by the slow first half of the year.