How Can You Identify A Buyer's Market?

Part of being successful in real estate involves reading the market and knowing the difference between a buyer’s market and a seller’s market. In order to drive a profit, you have to understand how to play your cards, and to be able to win the hand, you have to identify exactly what you are being dealt. Is the market on a downturn or an upswing? Depending on the answer, you’ll want to put your chips in different stacks.

The laws of supply and demand drive all sales. In a buyer’s market, there are more homes for sale than purchasers, meaning more supply than demand. There are several criteria that can help you easily identify a buyer’s market.

• A rising inventory of real estate. Check with your real estate agent from time to time and compare the availability listings. If you see a trend over several months or a year of the list lengthening, whether because more houses are on the market or because they are staying on the market longer, this is a good indication of a buyer’s market.
• DOM (days on market). If you look at a list of readily available real estate and notice that homes are regularly staying on the market for more than 90 days and several up to 180 days or more, this is a clear indication that a buyer’s market is emerging.
• Residential development slowdowns. When the market begins to turn and create a buyer’s market, builders realize there is already an overabundance of housing available, meaning new developments are not going to readily bring in hefty sums of money. Therefore, to help slow down the trend and bring prices back up, they will slow down their building and quit increasing produce at a faster rate than demand.

Once you’ve identified a buyer’s market, it’s time to decide how to work it so that you can profit. What you’ll find is that, due to supply surpassing demand, many sellers are willing to let go of their properties for a much lower sum than normal, just to get out from under it. That means you don’t have to purchase the real estate at retail price, allowing you to put it right back on the market and sell the house at retail price (or even below) and turn a profit.

A buyer’s market provides you with the opportunity to pick and choose your investments, with more options available than any other time. The excess of real estate for sale and lack of ready buyers means that you have your pick of the litter. You can be picky and only take the deals that will really make you money quickly.

With the proper training, a buyer’s market is an ideal time to begin your investment venture into real estate, making money the easy way. You don’t have to work any harder to make a lot of money in the market than you do a little, so watch for a turning of the tide like today’s market and get in while you can.