Trying to Navigate a Seller’s Market as a Buyer? Here Is Your Survival Guide

The 2023 housing market has been considered a seller’s market thanks to high demands for property and not enough inventory to meet these numbers (except for countries like Turkey, which is currently a buyer’s market).

Of course, various types of markets present opportunities for buyers and sellers, but in a seller’s market, the latter has the upper hand. As a buyer, you face some common challenges in a seller’s market, which may make your purchases a bit more complicated than you would have liked. A homebuyer in a typical seller’s market is perpetually in survival mode — it’s like one of those zombie movies where everything you do counts. It can be a rough ride from dealing with high bids and competition for dream listings to literally courting sellers.

That’s why we’ve created a checklist for surviving a seller’s market and getting the best deals in your property search.

• Don’t Get Greedy
• Do Your Research
• Beware Of Fake Listings
• Understand What a Property’s “Real Price” Is
• What About Buying Off-Plan Properties In a Seller’s Market?

Don’t Get Greedy

Even though there just aren’t enough homes and the competition is rife, you’ve got to exercise patience and keep yourself in check. 

As explained earlier, a seller’s market means more buyers than available homes. In this situation, sellers automatically overprice their property; buyers step over each other to outbid the next person, and frustration and confusion reign. As a buyer in such a situation, getting caught up in the excitement and overpaying for property is relatively easy.

But you must remember, above all things, to only buy a property if you are confident you’re getting a good deal.

However, a buyer can be ‘greedy’ in a seller’s market in multiple ways. And that’s in overstating their advantage or hand. Negotiating a real estate deal requires a lot of patience, but the stakes for a seller’s market are quite different. Where you’d naturally have the luxury of spending time on negotiation, the competition in the scenario isn’t going to favour a back-and-forth. In fact, the rule of law here is “if there are multiple offers, there is no negotiating” because the seller will take the best and highest offer they get. 

So, if you come across a property you like and that is actually within your budget, now’s not the time to practise your poker face. You’re not the only buyer, and every opportunity must be taken.

Do Your Research

The term DYOR has become one of the most common terms in general investment. And despite the many jokes around this term, it’s one of the best pieces of advice you can go with, especially in a seller’s market.

There is no need to bore you with the importance of research (you can just read this user’s experience in the now infamous LUNA cryptocurrency downfall of the past year), but doing your own research will help you:

1. Figure out what you want in a property and what absolutely ticks you off. This helps you separate the wheat from the chaff. You’re already facing limited opportunities, so there is no time to waste.
2. What do the last few transactions of properties similar to your preference seem like? This will give you an idea of what prices are actually like and how much negotiation room there is.

Beware Of Fake Listings

You’ve heard the sayings, “Desperate times call for desperate measures”, and “When you're in a desperate situation, you'll do anything to survive.” In a seller’s market, these couldn’t be any truer — because some seek to capitalise on the rush associated with this market condition.

In this case, any offer or listing that seems too good to be true is. While we don’t expect any buyer or investor to fork over cash just at face value, you can’t underestimate what the frustration from a lack of inventory in a seller’s market can do to the buyer’s mind. There will definitely be many fake listings online, so your only defence against these real estate scams is to ensure you contact reputable developers and agents only. Also, be sure to verify the listing price before you make an offer — sometimes the property does exist, but you may be tricked into paying more than it’s actually going for.

You need to beware of another trick or “practice” from real estate dealers regarding fake listings concerning property portals. Sometimes, when sorting prices from lowest to highest, the lowest prices are often created by unscrupulous portals such as clickbait. 

These fake listings aren’t actual properties on sale but are used to collect contact information from interested buyers. The portals then proceed to contact these unsuspecting buyers with offers for different properties (which are often higher). 

It isn’t an outright scam, but it isn’t a straightforward process either. You shouldn’t naturally assume that the lowest listed price represents a property's actual value unless it’s from a trusted source like Housearch’s property search tool.

It’s a play on class psychology. Sellers may generally look at the most expensive listings, while buyers tend to focus on the cheapest ones. But it isn’t always the best approach and can lead you to miss out on great opportunities because you’ve been boxed into the seller’s corner.

As a countermeasure, ask your real estate agent for transaction prices rather than relying solely on the listed prices you see. You'll see no discrepancies if the portal you’re searching on is legit. If it’s not, well, you get the drift. A reputable agent should have access to this information (especially in markets like the UAE), and provide you with exact transaction prices from recent times.

Understand What a Property’s “Real Price” Is

This is more of a mini point than anything else, but it is extremely helpful. You may think that a listing’s price is what the seller is asking for, but the actual price is the value at which it gets sold.

This is a very important keynote when assessing a property's market value, especially if you’re looking to resell or flip. Your best bet? Focus on transaction prices instead. The real price is the one at which the real estate deal is completed.

What About Buying Off-Plan Properties In a Seller’s Market?

Buying off-plan properties in markets like Indonesia or the UAE is a big deal, thanks to the inherent possibilities and prospects. Buying off-plan involves investing in a property that will be ready in the future, often three to four years later, and for these growing markets, it’s a venture with a lot of potential.

Besides the risk associated with this kind of future investment, there’s the challenge of buying off-plan in a seller’s market, where some developers are known to raise prices excessively (desperate times beget greedy folks, right?). You cannot do much about the developers themselves, but caution and thorough consideration should be your best friends.

When considering an off-plan purchase, focusing on the long-term investment aspect would be wise. These properties take quite some time to complete, so you should take great care to understand what the pricing/ payment structure is (how much you’re paying and its frequency) and especially the cost per square foot or metre.

This brings us to another point. Don’t get swayed by a developer’s promise of a lower launch price. It’s not that this is bad; it’s just that many developers compensate for these low prices with smaller square footage. You’re going away thinking you’ve gotten a great deal, only to end up with a smaller property than usual or average. So it’s important to look closely at the ‘fine print', be very selective when choosing an off-plan development, and thoroughly look into a developer’s reputation, past projects, as well as the standards in the area you want to purchase in.

Planning to Flip or Resell Your Off-Plan Property? Hold Your Horses…

Sure, everyone knows the eventual outcome of investing in real estate is to either sell or rent out and receive profits from said property. 

It’s no different with off-plan property, but you need to think twice in this scenario. First off, don’t be in a hurry to quickly flip your property for profit. A lot of people think it’s a straightforward process and they’ll get their money back pronto, but in markets like the Dubai market, most developers have a resale condition — which obliges you to pay a certain amount (usually 30 to 40 percent) of the purchase price to the developer before you can even attempt a resale. In most cases, the property in question isn’t even completed, so you can imagine having to dole out that kind of cash on an uncompleted project.

Not to mention, your buyer needs to receive the No Objection Certificate (NOC), issued by the developer, stating that they have no objections to this new ownership. Seeing as it’s never a straightforward process, you should generally exercise patience when dealing with off-plan investments. You have a better shot at a favourable outcome if you can wait for the completion and appreciation of your property; especially if the projections for the market are that it will remain at a seller’s advantage.

In a Nutshell

There you have it. The seller’s market is structured to put sellers and developers at an advantage, but it doesn’t always have to mean you can’t walk away with a satisfactory deal on both sides (primarily yours). At the core of it all, knowing how much wiggle room you have with negotiations, watching out for fake listings, carrying out thorough research and imbibing patience especially with off-plan properties will take you a long way.

Cover photo: freepik