With all of the talk that has recently been taking place about the real estate market, you may be wondering if now is the time to buy.  After all, everyone knows that the biggest real estate investment credo is to “buy low and sell high.”  But, how can you tell if now is really the best time to buy?

The reality is that there are no guaranteed when it comes to timing the real estate market.  At the same time, there are a few indicators to watch for that will help you determine when is the right time to buy and when is the best time to sell.  Here are a few steps to follow when making this determination.

Step #1:  Identify the State of the Current Market

In order to determine whether or not now is the right time to buy real estate, you first need to determine the state of the current market.  In general, there are three basic types of markets.  These include:

  • Buyer’s Market
  • Seller’s Market
  • Neutral Market

As the name implies, a buyer’s market exists when there are more houses available for purchase than there are buyers.  As a result, not every home that is on the market will sell and the prices of available homes may drop.  In a seller’s market, on the other hand, there are more buyers than inventory.  This means nearly every home on the market will sell. With a neutral market, the number of available homes and the number of buyers is balanced.  This usually results in affordable interest rates and there are no conditions favoring either buyers or sellers.

Step #2:  Make a Purchase

If you have determined that it is currently a buyer’s market, it is time to make a purchase. This is because purchasing real estate in a buyer’s market offers a number of benefits.  These include:

  • You can purchase the property at a lower price
  • You can command certain concessions, such as having the seller pay the closing cost or pay for special reports such as roof certifications and pest inspections
  • Sellers are more likely to extend closing deadlines, agree to early possession and go along with other transaction terms
  • Sellers are more likely to agree to update home systems and to make repairs before closing the deal
  • Sellers are more likely to accept a contingent offer, which is one that is dependent upon the sell of your existing home, if you desire

Step #3:  Sell for a Profit

If you have determined that it is a seller’s market, it may be time for you to sell your real estate for a handsome profit.  When you sell your property in a seller’s market, you can take advantage of the following benefits:

  • You can demand top price for your property
  • You can entertain multiple offers and agree to the one that is most favorable
  • You will be less likely to need to make concessions to the buyer or to need to make repairs and updates, all of which could cut significantly into your profits
  • You are less likely to have to agree to a contingent sell
  • You can control the transaction because you don’t have to “settle” for the best price

It really is that simple to make a profit in the world of real estate.  The secret is keeping an eye on the real estate market and determining whether or not the current market environment is favorable for buying or selling.  Then, move forward and enjoy the profits you can make!

About the Author:

Eric Bramlett is the broker and co-owner of One Source Realty, a boutique Austin real estate company.  Eric currently manages his agents and works with select buyers and sellers.  Eric manages his Austin condo guide as well as his Austin real estate blog.