In my last commentary I posed the question "Who is in control in the current market?" I then described the characteristics typically found in a seller's market and in this commentary I will describe the characteristics typically found in a buyer's market.
A buyer's market is typically characterized by the following:
1) An abundance of homes for sale, giving buyers greater options
2) A limited number of interested, qualified, and active homebuyers
In this case, the dynamics of supply and demand puts the buyer in charge because there are a lot of home sellers competing for a limited number of homebuyers.
3) Multiple offers on a home for sale is either very rare or non-existent
4) Homes tend to sell for less than the asking or list price
5) Homes tend to sit on the market for an extended period of time
6) The buyer tends to dictate the terms of the real estate purchase contract
6a) Sellers will entertain any and all offers, whether FHA, VA, or conventional
6b) Seller credits to cover the buyer's closing costs are very common
6c) Sellers will entertain contingent offers, which are offers contingent on the buyer finding a buyer for their own home
6d) Time frames for appraisal and loan approval contingencies are typically extended beyond the contractual 17 days or not removed until closing, although a seller can still cancel the transaction and keep the buyer's deposit
6e) Earnest money deposits can be minimal
6f) Contractual deadlines become more of a guideline or target than a hard fast rule
6g) The extension of contractual deadlines, if necessary, tend to be granted without penalty
7) Requests for repairs can be both lengthy and costly to the seller
While this list is meant to be exhaustive, it certainly doesn't cover every circumstance that constitutes a buyer's market. In the next commentary I will describe characteristics of a new player in the real estate market. One that is changing the dynamics of the market and frustrating a lot of people in the process.
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