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Seller's Market vs. Buyer's Market

Aug. 10, 2011
2 mins
A young couple hold hands and listen to a mortgage broker

Selling your Home: Seller's Market vs. Buyer's Market

Understanding the Housing Market

Ever wondered who decides how much a house is worth and how they do it? The market is influenced by a number of factors, all contributing to the final asking price. Some of the factors include:

  • Tempo of the market – that is, the speed at which homes are currently selling on the market
  • Confidence in the economy – prices tend to go up when confidence is high
  • Competition within the market – a packed market tends to lead to lower prices
  • Financial Institutions – a professional appraiser will determine its lending value
  • Insurance Companies – a broker will calculate its replacement value
  • The buyer & the seller – ultimately, buyers and sellers decide the final purchase price, which in turn influences the market

Seller's Market vs. Buyer's Market

Instability in the market scares people – sometimes right out of moving. A better understanding of the market will help you choose the best time to sell.

Cycles in the market are strongly influenced by the economy. The economy can create both a shortage and a surplus of housing. In a seller’s market, many buyers are competing for a limited number of houses. Prices on houses tend to be higher in a seller’s market. Conversely, in a buyer’s market, there are plenty of houses to choose from. This surplus of housing can slow rising prices, and even cause price reductions.

Knowing the market is an important factor when selling your home. Be sure to research the current market, or hire a real estate professional who understands its complexities.

Buy First, or Sell First?

This is one of the biggest stresses for sellers. Unless you time both the purchase and sale perfectly, you could end up in one of two scenarios: living in a motel temporarily or paying two mortgages at the same time. Neither sounds overly appealing, does it? Here are a few things you can do to avoid this dilemma:  

  • Make it ‘conditional’ that your offer to purchase stands only if your current home sells. In a ‘hot market,’ the seller could reject your offer for a more suitable one.
  • If you receive an offer, negotiate the closing date until the sale of your home is complete. Again, this could result in a withdrawal of the offer if it does not work with the potential buyer’s schedule.

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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