Three Signs the Real Estate Market is Changing

For the past few years, the United States— including Vermont— has been in a seller’s market. Sellers have been fortunate to sell in such advantageous market conditions. Homes are spending fewer days on the market and an average 35% of homes were sold above listing price. But, the market is changing, slowly shifting away from this hyper-competitive landscape. 

Let’s dive into the three indicators we’re noticing that the market is changing, and learn how you can use this information to your advantage as a buyer, seller, or both.

1. Buyers don’t necessarily need to waive inspection to win a home.

In this seller’s market, many buyers waive their inspections to be the most appealing offer among their competitors. Waiving the inspection makes your offer most attractive to sellers because the risk of negative inspection findings is eliminated. That said, waiving inspection comes with many risks. The purpose of an inspection is to protect your household physically and financially— many health and safety issues can come up during home inspections, and you can avoid overpaying for a home that needs more maintenance than originally anticipated. The choice to waive inspections puts buyers in a tough spot because they want their offer to be competitive but feel scared about the unknowns.

In this shifting market, many buyers are returning back to requesting inspections, and sellers are more likely to accept offers whether they do or don’t include an inspection. 

2. Buyers are increasingly able to negotiate the purchase of the home contingent on their current property.

Over the past few years, many buyers have found themselves in difficult situations where they either have to buy a home before selling their current one or sell their home first, leaving them often temporarily living with family, friends, in hotels, or short-term rentals. Sellers were often more likely to accept offers without contingencies because they have a lower potential to delay closing, lead to renegotiation, or the closing to fall through. Choosing these offers would put sellers at a disadvantage.

With this changing market, buyers have more buying power. Sellers are more likely to now accept contingencies, and buyers are able to make offers without the risk of owning two properties simultaneously. Buyers are now less likely to waive important contingencies to remain competitive, and their offers are more likely to be considered among competing buyers. This shift gives buyers more control over the purchasing process, allowing them to make more informed decisions and secure better terms. 

3. Buyers have more say in what the closing timeline looks like. 

An abundance of competing buyers gave sellers the opportunity to decide what the closing timeline looked like. Buyers had to agree with this timeline if they wanted to stay competitive in the bidding war. Sellers prioritize a faster closing timeline because the more time a listing spends on the market, the less desirable it is for buyers. On the other hand, buyers may prefer a slower closing timeline to give themselves more time to sell their current home. In the seller’s market, buyers had to conform to the wants of the sellers.

Buyers now have more purchasing power and more say in what the closing timeline looks like, able to prioritize their needs through negotiation with the seller. This shift in the market dynamic allows buyers to request longer closing periods if needed, perhaps to align with the sale of their current property or to secure financing without feeling rushed. Sellers, now facing less competition for their properties, may be more willing to accommodate these requests to secure a sale. This flexibility can lead to more balanced and mutually beneficial transactions, where both parties' needs are considered.

As the real estate market shifts, buyers and sellers must adapt to new dynamics. Buyers are now starting to have more leverage, with the ability to include inspections, negotiate contingencies, and influence closing timelines. While the market may no longer heavily favor sellers, it's moving towards a more balanced state where both parties can find common ground. Many buyers are concerned about high mortgage rates, but we often remind our clients that when the rates come down, they can refinance their mortgages.