You’ve set up an IRA account — now it’s time to begin choosing investment assets. Real estate is among the most popular investment choices, and understanding the market can help you get more value from your investments. Continue reading for more information on the difference between a buyer’s and seller’s market and what that means for real estate investments with your IRA.
What Is a Buyer’s Market?
In a buyer’s real estate market, more homes are available than potential buyers. This excess supply gives buyers the power to control the market, offering less than the asking price while sometimes asking the seller for closing costs and repairs. A buyer’s market can happen during an economic downturn or in areas with high crime rates or overbuilding.
While this trend is great for buyers who want to strike a bargain, it can pose a challenge for homeowners to sell their properties. Sellers must compete with each other to attract buyers, usually starting by dropping their asking prices and being open to negotiation to keep a buyer interested.
What Is a Seller’s Market?
A seller’s real estate market describes when there are fewer homes than potential buyers. With these conditions, the seller can negotiate higher prices than they could in a buyer’s market while almost always being able to sell. In other words, increased interest will equal willingness to accept the property as it is.
This trend is competitive on the buyer side, as more people attempt to stand out to secure their dream home in their dream area. Increased competition can lead to bidding wars and result in buyers spending more than they would otherwise.
Main Differences Between a Buyer’s and Seller’s Market in Real Estate
To determine which market you are in, consider the following indicators:
- Days homes stay on the market: If houses in your area remain on the market for months, this could mean a buyer’s market. If they sell quickly, it is a seller’s market.
- Average home prices: Homes staying on the market with a price decline can indicate a buyer’s market. Homes selling with rising prices mean a seller’s market.
- Purchased amount vs. asking price: A buyer’s market sees sellers accepting offers lower than the asking prices. A seller’s market means sales above the asking price.
How the Market Affects Real Estate Investments
When choosing real estate properties for investment, you will have more luck in a buyer’s market. Purchasing under these conditions can get you a quality property for less than the asking price, providing a deal to begin investing. When you want to sell your properties, you should do so in a seller’s market, as you can get more out of what you initially paid.
Overall, buying and selling at the correct times can give your self-directed IRA much more substantial benefits.
Invest in Real Estate With Accuplan Benefits Services
Do you want to invest in real estate but need help figuring out where to begin? Accuplan Benefits Services can help. With us, you can rest assured that your self-directed IRA is appropriately maintained to invest in the rental properties you’ve always wanted. Get the most out of your retirement and contact us today!