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12° Nicosia,
19 September, 2020
 
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Buyer’s market and herd immunity

Andreas Andreou

Andreas Andreou

The most unhappy property buyers are the ones who believe that the real estate market is a Buyer’s Market and discover that in the end the market is anything but a buyer’s market.

The term “buyer’s market” refers to a situation where there is an abundance of properties on the market but fewer buyers. This is when buyers are the centre of attention and have the upper hand in negotiations with sellers. Under such conditions, prospective buyers make humiliatingly low offers and tell you “look, sir, take it or leave it…”

In a seller’s market we see the opposite. It’s the situation where there are many buyers and few properties on offer, with sellers having an advantage in their bargaining power. Under these conditions, sellers have full control over the pricing game and they usually get the asking price. If they don’t manage to sell to Buyer X, they will sell to Buyer Y.

It is more difficult for a buyer to know he or she is in a Buyer’s Market than it is for a seller to know that he or she is not in a seller’s market. This has to do with the general characteristics of the two groups: buyer and seller.

The average seller is in the real estate market typically for much longer than the average buyer. If sellers are also land developers, then they have a much more extensive experience in gauging interest and a lot more familiarity with the market to evaluate in actual terms whether it is going up, stabilizing, or going down.

So it is a lot more unlikely that a seller would be in for a surprise, unless of course something unforeseen happens that could not have been predicted, or maybe he or she is a person who does not pay attention to things or does not know how to properly evaluate information. Don’t be shocked by this, there are also callow and adventitious types among us.

So the market situation will tend to be more clear and more quickly understood by most sellers, who can assess more easily if conditions are favourable to them or not

If the seller is a private individual, then making a profit from a sale will usually require some research on his or her part. This would entail such things as looking at what kind of transactions are being made, trying to get consultation on going prices for the property, doing their own evaluation, and then putting the property on the market. The probability of achieving favorable terms is greater than getting into a gloomy situation provided that, of course, he or she is not under time pressure from whatever might be the reason for selling in the first place.

So the market situation will tend to be more clear and more quickly understood by most sellers, who can assess more easily if conditions are favourable to them or not.

In the buyer group there is a subcategory which includes people who are usually comfortable financially and have a hard time deciding to buy property. They may show occasional interest here and there but they usually sit on cash, waiting for the perfect deal among many sales offers until they spot the perfect (lowest) price.

Nothing wrong with that, after all, nobody’s perfect. Besides, nowadays conditions have been created that encourage such ideas and behaviours. We have on the one hand the fact that banks have acquired thousands of properties, which by the way will be sold. We have the economic forecasts that say that the economy is not doing well, especially due to the recent lockdown and the obliteration of the summer tourist season this year.

We have an unstable Erdogan threatening with hot incidents. All these things create a picture of non-positive developments.

And yet, for reasons that may require a deeper or even psychological analysis, we don’t have a "buyer’s market," resulting to these folks feeling disappointed. Could it be that the banks have taken over thousands of properties but at the same time they were “the wrong properties" so that these folks can’t find what they want?

Of course we have said there is no such thing as wrong properties, but there are wrong prices. Could this have something to with the role of banks today and not simply the fact that if I am looking to buy a house and the bank has thousands of plots, this ends up not helping me?

On the other hand, have we all long ago perhaps capitalised on the risks posed by Turkey and what’s happening today and tomorrow is just part of everyday life?

And finally, did we get herd immunity in the end and any danger, pandemic or otherwise, is thought to be just a storm that will pass?

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