What Is a Sellers Market And How Does That Impact Wholesaling Real Estate?

One of the biggest drivers of demand in real estate is supply. It's simple economics. If you decrease the supply, then demand increases. However, the reverse is also true; if you increase the supply, the demand decreases.

A seller's market means there are more buyers than houses, which results in an increase in demand and increased pricing.

On the flip side, when the housing supply increases to a point where there are more houses available than there are buyers, this can cause a Buyers market. Since there is more supply, there is less demand, and if there is less demand, then the pricing will be lower. Make sense? So you might be asking at this point, are we in a Sellers Market or Buyers Market?  

Are We In a Sellers Market or Buyers Market?

Right now we are in a heavy seller's market. There was an article posted on Fortune.com that said:

On Friday, Zillow reported that U.S. housing inventory sank to 729,000 home listings in February. That's down 25% from February 2021, and a decrease of 48% since February 2020. It also marks the fifth consecutive month of declining inventory.

So, with declining inventory, is it possible to wholesale real estate in this market? Absolutely! I believe there is a HUGE opportunity for wholesalers and real estate investors alike to do very well in this market. For example, the average wholesale fee from the last four properties we have sold has been $24,000!

With inventory at an all-time low when you have a property under contract, you become a seller, and the law of supply and demand begins to work in your favor. The goal in this market is to become a seller as often as possible.

Wholesaling In a Sellers Market VS. a Buyers Market: Main Differences Explained

During a Sellers Market you might notice:

  • Sellers become less flexible on asking prices (this is why marketing to the RIGHT sellers becomes critically important, but more on that in a minute)
  • Increased competition
  • ​Sellers have multiple offers to choose from
  • ​Marketing costs increase

During a Buyer's Market you might notice:

  • Sellers are flexible on asking prices
  • Decreased competition
  • ​Sellers have fewer offers to choose from
  • ​Marketing costs decrease

Both of these types of markets have a tremendous opportunity and the key is to not listen to the naysayers and just focus on what you need to do to get to your first or next deal.

Focus On Solving The Seller's Problem - Not Yours

Regardless of how bad you want a property, you can never let that show through to the seller or let it drive you in a negotiation. When the focus is on you, even for a moment, the focus is off the seller and you could potentially miss an important detail that would have otherwise led you to solve the seller's problem. If you find the conversation with a seller is starting to revolve around what you want, then quickly recalibrate by asking the Seller a question about them.

For example:

"Mrs. Seller, if you do sell to me or anyone else, then what would selling this house allow you to do?"

"Mrs. Seller, if I could solve________ for you, then how would that make you feel?"

"Mrs. Seller, if you never had to deal with ________ again, then how would that make you feel?"

"Mrs. Seller, if you could wake up tomorrow and never have to worry about _______again, how would that make you feel?"

See? None of the above questions are centered around "getting the deal" or the investor; all questions are revolving around solving the seller's problem. Always remember, there are no deals without solutions!

Many negotiations fail when investors solely focus on "getting the deal" or winning a price war. If you would like to learn"How to Get More Offers Accepted In a Sellers Market", then check out another post I did recently on the same topic.

Dial In Your Marketing - Target The RIGHT Sellers

Remember this: motivation exists in all markets - you just have to find it. As long as there will be foreclosures, people getting relocated for work, family members unexpectedly inheriting houses, and people losing their jobs or getting sick, there will always be motivation. If you are making offers and none are getting accepted, it's usually due to two reasons. Either you are targeting the wrong types of sellers or not positioning yourself to solve the actual seller's problem.

You don't want to send marketing to the sellers that don't have any motivation to sell and ask for the sun, moon, and stars. You want to get in front of the sellers that have a real problem and where you can be the solution!

To Your Success,

- Chris Logan

P.S. What if I told you there was a way not only to find all the motivated sellers you could ever want, but they weren't on any list? Nearly all of them want to sell at a total discount, and the best part is you can get access to these houses for FREE? Sound too good to be true? I'll reveal exactly how to do this in my latest online web class, Instant Deal Secrets. Go ahead and register now by clicking HERE. You will be glad you did!

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