What is a Seller’s Market in Real Estate?
For much of the last decade, the real estate market has been…well, not really in the greatest shape. Home sellers have had to do everything short of staging a three-ring circus in the front yard to attract buyers and throwing in their firstborn child to seal the deal.
Over the course of the past few years, though, there’s been quite the turnaround. To the point where, in many parts of the country, we’re now in what is known as a seller’s market. Realtor.com and a variety of other sources have deemed The Valley of The Sun as the #1 market in the entire country for 2017.
So what, exactly, does “seller’s market” mean?
A seller’s market occurs when the demand for homes outpaces the available supply. One handy way to determine exactly when the market enters the “seller’s phase” is when the ratio of sales to listings hits 55-60 percent, or three sales for five listings. The opposite of a seller’s market is, of course, a buyer’s market, which is characterized by a ratio of fewer than seven sales per every 20 listings (below 35%).
What factors cause a seller’s market?
One major factor in spurring on a seller’s market can be a drop-in interest rates which allows more people to qualify to buy homes, or to afford more expensive homes. Population growth and increased employment opportunities also bring more buyers into the market.
Yet another boost might come from new or expanded government housing assistance programs which allow for special low-interest loans, down payment assistance or tax credits for qualified buyers.
What are some signs of a seller’s market?
In a seller’s market, homes don’t stay listed for too long. Many homes sell in just weeks, while others take days or even hours. Many sellers even find themselves with the enviable problem of mediating a “bidder’s war”, with multiple offers coming in. Not surprisingly, some of these homes even sell for well over the listing price as desperate buyers offer top dollar.
How does a seller take advantage of this market?
The best way to make sure you’re taking full advantage of a seller’s market is to work with realtor such as myself. I will research your home, your neighborhood and the micro-market so that we have a strategy in place to get top dollar for your home. You’ll also need to cultivate some patience – if this is your first time selling a home, you may be tempted to jump at the first offer you get, but hold on just a little. If it’s a true seller’s market, you could well receive a higher offer tomorrow and a better one the day after that.
But what if you’re planning to buy?
If, instead of selling, you’re wanting to buy a home, your first best step, again, is to contact me. I can help you find the right homes, at the right price, as soon as they hit the market, as well homes I refer to as “off-market” which is something unique to North and Co. I will write a competitive offer that will put us in the best position to secure the home you want. Being pre-approved is key to any offer being accepted and I am happy to help with the selection of a lender.
If you can afford it, you can even include an escalation clause with your offer specifying just how much you’re willing to come up with to top any competing offers. Even if you’re not made of money, it can help if you’re willing to be flexible with your move-in date. A seller may be willing to take your offer over another, higher one, if your timetable matches his own.
My approach is to work as a team with my clients whether they are buying or selling, working side by side to get the house that is meant to be their home.