What is a Sellers’ Market in Real Estate?
In many parts of the country, first-time and entry-level home buyers are finding tight inventories and lots of competition. That’s pretty much the definition of a sellers’ market.
In a sellers’ market, homeowners looking to sell have an inherent advantage. For buyers, a sellers’ market means fighting it out with others for their dream home. Here are tips for both sellers and buyers in competitive markets.
Tips for Sellers
* Disclose and plan ahead
Although sellers can call the shots, the market is less forgiving if you make a mistake. Going “back on market” can mean that you’ll never see the dream deal you had with the first buyer.
So it’s important not to lose that first buyer. If your home has issues, tell your buyer before they discover it on their own. If the roof is old, you have a room that’s not permitted, or you have a small plumbing issue, tell the buyer in advance, so they can factor that into their offer. Buyers are more forgiving of defects if they’re competing with other buyers. But withholding it from them could kill the deal.
* Decide on a plan for handling offers
It may seem obvious to take the offer you get two days after going on the market. But will there be others if you wait? You and your agent should know going in what to expect from the market.
Each town, county and market are different, so there’s no one-size-fits-all solution. In some markets, it makes more sense to wait a week to 10 days, have more showings and review any and all offers at once. In others, you might want to act on the offers as they come.
* Know your competition
A smart seller will hit the open house circuit weeks before going on the market. Once they’re ready to go, they will analyze the “comps”again. The strategic seller will price their home to get the most activity.
Chances are you can’t compete with the similar home down the block with the killer kitchen. But price your home well below it, and a buyer sees value and room for improvement in your kitchen.
Today’s buyers like the herd mentality. If someone else wants your home, it must be desirable and valuable, so they want it, too. Well-priced homes that show well will grab buyers’ immediate attention and will sell faster—and for more money.
Tips for Buyers
* Be prepared to act
The second a desirable new listing alert hits your phone or email, make arrangements to see it. If a home goes on the market Tuesday, you can’t expect it will still be available that weekend. And there’s nothing more disappointing than to learn a great home is no longer available. Which leads me to my next tip…
* Expect to miss out a few times
I always tell buyers that they need to miss out on a few houses to truly appreciate the right home when it comes along.
Initially, you might not offer enough or act fast enough on one or two homes. Missing out motivates you to keep in the market and up the ante. Plus, the more homes you see, the more comfortable you’ll be with the market and how it works. Bottom line: Learn from each missed opportunity.
A Tip for Buyers and Sellers: Be Prepared
In hot markets, both sellers and buyers need to be on their game. Sellers have the advantage because they can plan in advance of going on the market. They have the luxury of being proactive. And they should use that to their advantage.
Buyers need to be reactive and, as such, they need to be prepared to move on a dime. When all is said and done, life goes back to normal. But in the meantime, get ready for a wild ride.