What Is a Stratified Market? Everything You Need to Know as a Buyer or Seller

March 5, 2020

What is a stratified market?

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Buying or selling a house this year? Then you’re probably trying to wrap your head around all the real estate jargon. No doubt you’ve heard of a buyer’s market and a seller’s market. (A buyer’s market benefits buyers, and a seller’s market benefits sellers.) But have you heard of a stratified market?

Don’t worry—this is one of those terms that, while not immediately obvious, sounds a lot more complicated than it is. In fact, a stratified market means a city or town that isn’t categorized as just a buyer’s market or seller’s market—it can show differing levels of supply and demand in different areas based on price range.

Because variables make all the difference in a stratified market, there are a few key things you should know about navigating one and making it work for you. Here’s what you need to know about buying or selling a home in a stratified market.

What is a stratified market?

Identifying a market as stratified is a helpful organization tool for real estate agents.

“Certain parts of a city can vary drastically in home values, types of homes, and whether folks are moving in or out,” says luxury real estate agent Jamie Safier of Douglas Elliman. “A good example would be when an unusually large amount of wealthy buyers begin picking up [$1 million-plus] homes, creating a seller’s market, and at the same time, more modest homes under $500,000 experience sluggish sales, which would be a buyer’s market.”

This would be considered a stratified market because both of these things are happening in the same metro area at the same time. Knowing this information isn’t just helpful for real estate agents; it can also improve your chances of getting the best deal on a home purchase or on the sale of your current one.

What you need to know as a buyer in a stratified market

Whether you’re a buyer or seller, getting the most out of a stratified market is all about understanding which segment you fall into.

“A buyer can make more efficient use of their time by understanding what neighborhoods and areas of the city will have the home types and sizes that they are interested in and can afford,” says Matt Fuller, co-founder of  Jackson Fuller Real Estate. Buyers should focus on these areas, he says, to more fully understand things like pricing dynamics and available inventory.

“When deciding on offer strategy and price, make sure you’re comparing your potential home to the right type of properties in the relevant neighborhoods,” he says.

What you need to know as a seller in a stratified market

As a seller, you’ll similarly want to look at what segment of the market your home falls in, since this can help you and your real estate agent come up with the best pricing strategy.

“Make sure you’re basing your asking price on homes that are similar in location, size, condition, and finishes, and of the same property type,” says Fuller. “In my market, homes that are underpriced will be corrected by the market within a short time frame, while overpriced homes will languish before inevitably having their price cut or being withdrawn.”

Understanding the patterns and trends of your current real estate market will help you and your agent come up with an effective marketing strategy, and ultimately help you sell your home at the top of its value.

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