What is a Seller’s Market?
If you’re thinking of buying or selling a home, it’s important to pay attention to your local housing market to see if your area is currently in a buyer’s or a seller’s market. This can give you an idea of how to approach each process and give you an advantage over other buyers or sellers.
In a seller’s market, the demand for homes exceeds the supply. Based on the basic laws of supply and demand, this gives sellers the upper hand because it means that buyers have fewer houses to choose from. Under these conditions, homes typically sell very quickly, and sellers typically receive multiple offers over asking price.
Here are a few more ways to tell you’re in a seller’s market:
Amount of Available Inventory
Real estate inventory is measured in months. Six months or more of available inventory is considered a lot of inventory, which denotes a buyers’ market. Around two months’ worth of inventory, on the other hand, is considered low inventory, which denotes a seller’s market.
Rising Home Prices
Rising home prices are a key indicator of a seller’s market. When there’s less inventory, the value of available inventory naturally goes up.
Low inventory also causes bidding wars between buyers, with several buyers offering more than the asking price. In a particularly strong seller’s market, the final sales price is at least 10% higher than the asking price.
Average Days on Market
If houses are selling in your neighborhood in less than 10 days on average, you are most likely in a seller’s market.
Selling a Home in a Seller’s Market
In a seller’s market, sellers must compete with each other to attract buyers
by generating interest in their properties. One way to do this is to give your home a fair price. If you set your asking price at or slightly below market value, you’ll attract more potential buyers and likely facilitate a bidding war.
You should also examine the financial strength of each potential buyer. Remember, just because someone makes a high offer doesn’t mean this person is capable of obtaining these funds.
Finally, you should strive for a swift sale, because the longer your home is on the market, the more questionable it will seem to potential buyers.
Buying a Home in a Seller’s Market
When there’s limited inventory and more buyers, time is of the essence. So, if you find your dream home during a seller’s market, you’d be wise to act quickly and make an offer.
On that note, a great way to make your offer more attractive is to get your mortgage pre-approved. This tells the seller there won’t be any issues with your ability to obtain the necessary funding.
You can also show are a serious buyer by making an all-cash offer. Sellers prefer all-cash offers because it means they don’t have to worry about the deal falling through due to financing issues.
Getting your financing in order so it’s accessible when you need it is crucial for buying a home in any market. That’s why it makes sense to start this process now, and The Kern Team can help.
Save yourself a ton of stress and give us a call.
