Home buyers and sellers of Guelph real estate who casually (or obsessively!) browse MLS listings have likely noticed one thing: houses don’t last long. It hasn’t been a buyers market for any long period of time for over a decade. Guelph, like many other Southern Ontario cities is going through an extreme sellers market. This has intensified with COVID as many people are fleeing the GTA to Guelph.

But what does a buyer and seller market really mean?

There’s also a balanced market where, well, everything is balanced between buyers and sellers. How do you know which one you’re in?

The simplest definition is supply and demand. Since housing is an open market and not regulated, prices will fluctuate based on market desire. Therefore:

Buyers market: There are more houses available than people to buy them. Prices go down because buyers have choice.

Sellers market: There are more people wanting to buy than available housing options. Prices go up because buyers are fighting for the few options they have.

Balanced market: enough supply to satisfy buyers and sellers. Negotiation is able to happen on both ends and everyone is happy.

Let’s take a look at each market a bit deeper:

Buyer’s Market

A buyer’s market exists when people who want to buy homes have more negotiating power than people selling homes. Buyers have the upper hand and like the fact that they have lots of choices to shop around. They’re able to browse MLS listings of a single house for a month. They can negotiate prices and terms that are suitable to them. If they can’t negotiate a suitable offer on their favourite house, they can just go to the next one!

Since buyers are in control, they can also add conditions to their offer. These conditions could be a financing condition, a home inspection (read: should I get a home inspection) condition, or even a sale of property condition. Buyers have the opportunity to take their time and make sure the property is the best option for them.

Sellers don’t really like a buyers market.

Especially if they really NEED to sell their house. This is because during a buyers market, houses tend to sit on the market longer. This is because buyers have the luxury of time to perform their due diligence via conditions. And, the longer a house sits when a seller needs to sell, the more desperate they become! More desperation equates to lower prices as one seller tries to undercut another.

In a buyers market, a seller really needs their Realtor to work for them. This is why choosing the best Guelph Realtors to market your property is key. From staging to photos and marketing, you need to differentiate yourself in order to sell your home quickly and for the most money. In todays market, they also need to understand where the buyers are coming from and find them. This is why Beth and Ryan are members of the Toronto Real Estate Board (TREB). It’s also the reason you may see multiple MLS listings for a single home- because they’ve listed it in two real estate boards to double the exposure to real estate agents.

Characteristics of a Buyer’s Market

  • Homes sell slowly (in some cases the average days on market could be 30-60)
  • Homes sell at or below list price (could be as low as 85-90%)
  • Home prices are falling and perhaps have reduced prices 1-2 times already if comparable properties are listed
  • Plenty of homes are on the market giving buyers many choices

Strategies for Buyers

Here are a few things that buyers may be considering in a buyers market:

Offer Less Than Asking Price- Why would you pay more than you have to?

Ask the Seller to Make Repairs– You don’t always need a home inspection to know that a home needs a new roof or another major fix. Sellers are more likely to make needed repairs in a buyer’s market unless they’re willing to sell the property as a fixer-upper, knowing that this will limit their pool of potential buyers and probably depress the price.

Take Your Time– what’s the rush? Unless a buyer finds out that they may be competing for a house, sometimes time is the best way to negotiate a better price!

Seller’s Market

In a seller’s market (like Guelph has been in for years), people who want to sell their home have more negotiating power than prospective buyers. MLS listings come and go in 7 days. In a seller’s market, there are fewer homes for sale than buyers. Much of Ontario is experiencing a seller’s market today because there’s a province wide housing shortage. As a result, the median price for a pre-owned home recently hit an all-time high.

Since sellers are in control, they often get multiple offers on their listings. The more competitive it gets, the more buyers attempt to improve their offer. Of course, offering more money is the main tactic. However, not having ANY conditions is required in order to be competitive. Unlike a buyers market, a sellers market moves very quickly. Buyers have little time to get their finances in order and often forego a home inspection.

Buyers really hate a sellers market.

Especially if they really NEED to buy a house. During a sellers market, houses go to the highest bidder and you have no idea what any details of the other offers are. It becomes a very emotional roller coaster that could go on for a long time in an extreme sellers market before the buyers get a home.

In a sellers market, a buyer really needs their Realtor to keep them focused, organized and aggressive. Buyers need their real estate agent to have a pulse on what things have been selling for, which is hard for a less active Realtor to do. Your Realtor needs to know all the details of MLS listings that buyers don’t see: comparables, offer dates, closing dates, the ability to do a pre-offer home inspection, ability to check on outstanding permits and more. A good Realtor will bulldoze the way for you to make a competitive, clean offer to the seller.

Characteristics of a Seller’s Market

  • Homes sell quickly- usually a seller will be holding offers. Read: what is holding offers?
  • Homes sell at or above list price- Guelph saw a peak of 11% over asking on average in 2021. Its now about 5%
  • Home prices are rising- GTA buyers willing to pay more, because Guelph is now the cheapest city in the GTA
  • Few homes are on the market- anything under 75 in Guelph is dire

Strategies for Sellers

List Your Home at Market Value– Even though homes tend to sell for more money in a seller’s market, it still helps to price your home fairly. If you set your asking price at or slightly below fair market value, you’re likely to attract more interested buyers.

Some sellers choose to list their homes for slightly less than the assessed value in order to encourage a bidding war. If you price your home too high, buyers will simply walk away or wait.

Know How to Choose the Best Offer– Sellers are often so focused on choosing the highest offer that they fail to examine the financial strength of each buyer. Just because a buyer says they will pay a certain amount for your home doesn’t mean they will actually be able to obtain those funds. Lenders will not allow buyers to borrow more than the assessed value of your home. Read: what is a home appraisal

The last thing you want is to accept an unrealistic offer and be forced to put your home back on the market when the deal falls through. The longer your home is on the market, the more questionable it will seem to buyers, and the more power they will have when negotiating.

Be Aware of conditions– There is more to consider about an offer than just the offer price. Sellers must look out for conditions the buyers have put into the offer. These could be inspection, mortgage, sale of their home, etc. All these conditions enable the buyer to back out of the sale if any of the conditions are not met.

Bonus: Clear the way for clean offers

The best Guelph real estate agents know how to set up a process that enables their seller clients to get the best offers on offer day. It’s part communication and part negotiation, but the idea is that much of the pre-negotiation is done before the offers even come in. It saves wasting time later by asking for a copy of a deposit with the buyers offer, asking about the buyer and their finances in advance and so much more.

Most of this can be accomplished with detailed MLS listings by your Realtor, as long as the client has the information available.

Balanced Market

In a balanced market neither the seller nor the buyer have a significant advantage. The supply of houses is equal to demand from buyers. This type of market is optimal for both parties. Buyers are able to purchase houses at market value while seller’s receive market value their homes. Both parties are happy as no party is getting the short end of the deal!

Buying and selling a house can be a daunting task and you need the guidance of a professional real estate agent to guide you. Even if you just want advice, don’t be afraid to ask us!