The real estate market, like most investment vehicles, always goes in cycles. There are times when the value of properties seems to keep going up and up. There are also times when it seems the value of properties is going down and down. Each of these cycles is affected by economic, social and political factors. The real estate market is an integral part of the society and always reflects the current or immediate trends in the society. The fact remains that no matter the cycle, it is either the buyers or the sellers that would benefit the most. Understanding what to do in each cycle is something every investor should be knowledgeable about.
When demand for properties exceeds the number of properties available for purchase then it is a seller’s market. Sometimes an area begins to attract investors or buyers for various reasons such as a major infrastructural development that are coming up nearby. The interest shown in that area could be slow at first then it suddenly gains momentum to the extent that there are not enough properties to meet the demand. Once this point is reached sellers begin to increase the prices of their properties in order to play on the overwhelming interest shown by investors and maximise their profit. This is a classic pattern of a seller’s market.
There are also times when the economy not only slows down but probably faces some challenging times. The classic pattern in history is when there is a major or series of events that impact on global or national economies negatively resulting in closure of companies and job losses. The ripple effect of these events is that companies re-evaluate their need to invest and governments embark on cost-saving measures. The overall effect is that the amount of money in circulation dwindles and this could lead individuals and corporations into tight economic seasons.
When the economy enters periods of recession or economic slowdown one of the key indicators that there is a problem is in the real estate sector of the economy. When companies are bankrupt the investors or lenders resort to the sale of assets which generally include real estate. When individuals are looking for ways to raise money they usually consider selling assets which generally mean properties. When individuals lose their jobs or their businesses are bankrupt the only way for many to avoid foreclosure on their mortgages is by selling their properties.
The more properties that are available for sale in an economy with less money in circulation, the more it becomes a buyer’s market. Once supply has exceeded demand buyers begin to shop around for bargains since they now have more options .In a buyer’s market, many properties for sale stay longer before receiving any serious offer and during the waiting period more properties with similar or better advantages are also brought to the market for sale. Under such circumstances, sellers that are under pressure for money will usually become more flexible with price thus indirectly forcing other sellers to reconsider their selling price.
In a buyer’s market, you need to adopt a proactive approach to marketing your property. The more you are willing to work within the bounds of reality the better chance you have of selling your property faster than the average turnaround time. Due to the intense competition for less money in circulation, it is best to engage professionals to help you manage the process. Sometimes the big firms may not be the best because many of them are already overwhelmed with property briefs. It may be more pragmatic to give your property to a small or a medium firm who have the drive and passion for succeeding and would like to impress you with their service delivery.
In addition, you should make the best effort to put your property in an attractive state. This is not the best of times to leave a property in a less than average state considering the competition in the market. While I do not encourage you to make a significant investment in the property you should consider the little things that could attract or repel an investor. For instance, when you are selling a residential property most buyers would be interested in the kitchen especially when inspecting with their spouses.
Finally, be reasonable with the price and prompt in your response to offers. This is not a good time to place an inflated price tag on your property because many investors will not even take a second look. Find out what the average price is and stay close to it but be flexible in your negotiation. When you do get reasonable offers be prompt in responding to them since delay could mean a lost transaction. Do not allow your ego to interfere with the reality of the season.
