How Market Conditions Affect a Buyer’s Negotiation Strategy

Every residential real estate transaction is negotiable in varying degrees relative to the local housing market conditions. While it is true that the homeowner sets the asking price, it is the home buyer that truly determines the home’s value. Why? Because a home is only worth what a ready, willing and financially able buyer will pay for it. Keeping in mind the goals of the seller and buyer are adverse – seller wants the highest price and the buyer wants the lowest price – they nonetheless must find the common ground of mutual agreement to close a deal. The negotiation strategy for a buyer might differ based on market conditions. Here’s how.

How Market Conditions Affect a Buyer’s Negotiation Strategy

Market conditions are a reflection of supply and demand. They are measured by the “sell through rate” – the number of months of housing inventory available if sold at the current rate of sale and the spread between list price vs. sale price. Here is what we typically expect as market conditions change.

Inventory (Housing Supply) is the Biggest Influence on Negotiation Strategy

Recognizing the fluid nature of the Austin real estate market as reflected by the differential between list price and actual sale price, and the fluctuation in the volume of inventory for sale can greatly aid a home buyer in determining an effective negotiation strategy.

As the inventory of homes for sale in Austin increases

• The difference between list price/sale price increases.
• Sellers are forced to make larger price concessions to attract a buyer.

As the inventory of homes for sale in Austin decreases

• Buyers are forced to pay at or above the list price to acquire the home.
• Buyers must strengthen their offer to compete with growing competition between other buyers.

Buying a Home Can Be Competitive – Understand the Market, Competition and Seller

When buying a home, understanding the competition’s weaknesses and strengths as well as your weaknesses and strengths is the key to a successful negotiation. Knowing what the other party really needs and what you really need is the key to building the bridge to a closed transaction.

Hire an Experienced Buyer’s Agent Who Knows the Ins and Outs of the Real Estate Market

Our team of experienced buyers’ agents can help build that bridge. We can show you what is happening in the market of the neighborhood you are considering. The key to creating an effective negotiation strategy is understanding the local market – and that goes further than understanding a global view of the market in all of Austin. We know what’s for sale, which homes sold and why. We have our fingers on and in the market. Make sure your buyer’s agent does too.

Understand the Housing Market and Create a More Effective Negotiation Strategy

Buyers can make better, more informed business decisions by understanding what is happening in the housing market. We’ll help you gather and analyze the data, so we can help you use the market forces in your favor.

Considering Buying a Home in Austin?

We have a combined 60+ years of experience helping buyers negotiate the best deals on the right homes for them. We’ve worked in all types of markets from strong seller’s markets to strong buyer’s markets and can help you craft the most effective negotiation strategy. Check out our Austin Home Buyers page to learn more about our team. Then, call us at (512) 827-8323, email us at info@11OaksRealty.com or fill out our Buyer Survey to get started with the home buying process.