Understanding a Buyers Market

Understanding a buyers’ market
This is fundamental in your ability to make vast amounts of Property cash right now and in certain ‘pockets’ of time in the future. The definition of a buyers’ market is:
‘A market that is more in favour of buyers because there are more sellers than buyers in the market. Buyers control price because of a lack of liquidity and competition.’

Lack of liquidity
Currently lending is a lot more difficult than it used to be. Banks are not lending to each other as easily they are lending at higher rates and there is a lack of trust and confidence between financial institutions.
Therefore most buyers have stopped buying. Fear and uncertainty are paralysing. Most people would rather wait than act. Rabbit in the headlights

Now because of this, a lot of banks aren’t liquid [no cash]; banks that don’t have high street branches and don’t have a lot of cash from savers who deposit cash. Not all banks are like your high street varieties: Barclays, Nationwide, Royal Bank of Scotland, The Halifax and so on who have many high street branches, many savers and depositors, and are very ‘liquid.’
Many of the lenders [mortgage companies] that are relevant for you don’t have high street branches and rely on lending money to you that’s been loaned to them by other banks [with liquidity]. This has really reduced the lending in the market and the statistics back this up. According to the CML [Council of mortgage lenders] lending in the market is down almost 40% on last year.

If the banks are lending to each other, they are at such a high rate that this just gets passed on to the investor and owner occupier.

The statistics and the press also suggest that there are just not many people who can obtain finance:

Sharp increase in Property prices
An additional factor that has implications on people’s ability to buy is the huge surge of growth since 2001 over and above the natural, average growth curve.
Property prices up until 2007 have been very high and because of that your average person, Joe or Jo; your first time buyer or owner-occupier, cannot afford [even if they could get lending] to buy Property. They have been out-priced in the market so that reduces another large percentage of the buying market.

You’re not actually left with that many people after this!

To have a ‘balanced market’ you need to have as many buyers as sellers. But when you’re in a buyers’ market there are more sellers because there are more people who want to get out, liquidate, sell up or cash in [or take a loss to prevent a bigger loss] this time because they’re worried.

But wait a second; there are so few buyers out there who will buy their house. At the moment it’s the same if you’re trying to sell anything. That gives the buyer the advantage and ‘negotiation power.’

The deals & discounts now available are incredible if you are lucky enough to obtain lending or find suitable creative finance in the current climate.