When attempting to gauge the real estate market, it’s important to understand the motivation behind buyers and sellers. Everyday new properties get listed, though not all for the same reasons.
At the same time, new prospectors and home buyers start shopping, though their intentions will differ as well.
These variables affect the asking and selling prices for homes, and should be considered if you’re in the market to buy or sell a piece of property.
This group of sellers will list their property for sale quite frequently, often keeping it on the market for an extended period of time at an above-market price in the hopes of landing a nice profit. These “unmotivated sellers” have no sense of urgency as they have no need to sell the property, so negotiation will be difficult. You may have heard of Zillow’s “Make Me Move” feature, which is basically a cute came for will-sell sellers.
A must-sell seller, on the other hand, is quite the opposite. These “motivated sellers” have a strong sense of urgency, and will often list their property at or below market prices. There is also a greater likelihood that these types of sellers will accept an offer below the listing price. They have to move for one reason or another, so they won’t want to waste any time getting the job done.
This group of buyers consists of speculators and investors who don’t need to buy property, but are willing to do so if the price is right. They are known as bargain hunters, and often seek out “must-sell sellers,” knowing they’ll get the best bang for their buck. This group will likely make offers below market price.
A must-buy buyer will typically pay market price or higher for a listed property because of their strong intent to own. Usually these types of buyers either need a particular type of property or have simply become emotionally attached to purchasing a specific property. If they encounter a “will-sell seller,” chances are the asking price will be above market.
Here’s a bonus category that came along as a result of the ongoing housing crisis. So-called “sidelined sellers” are homeowners who are waiting out the storm before listing their property. Their hope is that home prices will bottom, and then begin to rise, making a sale more attractive. The fear is that they may all list their properties at the same time, putting even more downward pressure on home prices.