Currently we are in a “seller’s market”. If you’ve thought about buying or selling a home recently, perhaps you’ve heard this term, but what does it mean to you? For buyer’s and seller’s, its meaning can be very important and here’s why.
So, you’ve decided it’s time to move. Maybe you want to upsize, downsize, you’ve changed jobs and the commute is too long and you want something shorter. Whatever your reason, you’ve lucked out on timing if it’s a seller’s market. Why?
Well first of all, there is very low inventory in a seller’s market. There are more qualified buyer’s looking for a home than there are homes. When this is the case you have advantages that you wouldn’t have in a buyer’s market, such as:
Getting more for your house in less time
With so many qualified buyers, you’re likely going to have more than one buyer interested in your home at any give time. They’re already looking and if they have been educated and prepared well by their realtor then they already know that once they find a home that checks the boxes, they need to move quickly to claim it. If your home is in decent shape and you’ve done the necessary due diligence to make it “show ready” then you should have no problem finding interested buyers quickly. You also have the ability to charge top dollar for your home. Now, this doesn’t mean that you can go against the market value of your home. If the comparable homes in your area are selling for between $200,000 and $215,000, don’t expect to get $300,000 for yours just because it’s a seller’s market. You can however expect to gain the most for your home without having to negotiate extensively.
Another part to this is that with more buyer’s interested in your home, there is the possibility of a bidding war. With low inventory and a high number of qualified buyers, you’re likely to have more than one interested party. If this is the case then there is the possibility that the interested parties may try to outbid one another in order to land their dream home. Obviously, every house and every circumstance are different and there are multiple factors that go into any sale or lack thereof. Make sure that you have a knowledgeable realtor who understands the current market and doesn’t just tell you what you want to hear to get you to list with them. It is possible to overprice in a seller’s market and it is possible to under-incentivize buyers. It is also possible to under market a home in a seller’s market. The buyer’s need to be able to find your home. A qualified realtor will be sure to take care of these things for you.
Less out of pocket expenses for you
In a buyer’s market there are more houses available than there are qualified buyers this means more competition. When this is the case, it is important that sellers make sure their homes are at their absolute best. Structurally and aesthetically, they may want to add upgrades to appliances, fixtures, and make sure that any and all repairs are done so that the house is “move-in-ready” and appeals to as many buyers as possible.
Whether it is a buyer’s or seller’s market, I would never suggest that you leave your home in disrepair. You may be able to negotiate that the buyer pays for some things though, such as carpet replacement or the homebuyer’s warranty. You also may be able to have them cover the closing costs. All of this means less out of pocket expenses for you as the seller. This may be useful especially if you find that you are selling one home to buy another, which leads to what it means to buy in a seller’s market.
It’s a jungle out there! Okay, but really. If you’re a buyer in a seller’s market you can absolutely still check the boxes. It just may take a little longer and involve a little more out of pocket cash on your end than you were hoping. My wife bought her first home during a buyer’s market and was really surprised when I informed her recently that buyers were being expected to pay closing costs sometimes (not always) in the current market.
If you’re a buyer in a seller’s market, low inventory means that you need to be prepared to buy as soon as you find a home that’s suitable for you. Does it mean that you should settle? NO. Does it mean that you may want to adjust your expectations? Possibly, that depends on what your expectations are.
In order to jump on a home, you need to be sure that you’re financially prepared. This means talking with an experienced lender. Someone who can prequalify you, help you with repairing any credit issues that you may be facing and give you a bill of good health to give to the future seller who’s home you’ll be making an offer on which will ensure that they know you are able to afford their home and that you qualify to get a loan for it. If you’re not prequalified and you find the home you want, you’ll be doing yourself a disservice, because the likelihood that the home will still be there once you get your ducks in a row is extremely low.
Once you are prequalified through a lender, you’re ready to look for homes. Make sure that you know what your must haves are, your wants and what you’re willing to live without. Are you willing to replace the carpets somewhere as soon as you move in if they’re not exactly what you had hoped for? Are you willing to overlook outdated cabinets in the kitchen that you could change out down the road? Do you want a home warranty? It is possible that the seller may be willing to pay for this, especially if they don’t have any other offers, it’s certainly worth asking for, but it would be prudent to be prepared to front the cash for this if it turns out that they refuse.
You don’t necessarily need to have a big down payment (3.5% in some cases). However, having some money set aside for expenses during the closing process or for upgrades after will help ensure that you outshine the competition of buyers around you so that you can land the house you really want.
Also, it is imperative to make sure that you are working with a realtor. This person is going to be the one going to battle on your behalf when it comes to negotiating the purchase of your home. They’re also going to be able to stay ahead of the game and alert you to what is coming on the market as it happens so that you can move quickly.
Whether you’re a buyer or a seller, the market is what it is. It will turn eventually. For sellers it’s an excellent time to sell. For buyer’s it doesn’t make it a bad time to buy; It just means a little more strategy and preparation. No matter the market, buying is still cheaper than renting. (See info-graph)
If you’re interested in buying or selling a home you can get a free copy of my buyers guide and sellers guide via these links:
Use the Contact Me form if you’re interested in getting in touch with a qualified lender. Or, if you would like to chat about buying or selling your home. I also provide comprehensive Comparative Market Analysis services to give you an idea of what the current worth of your home is. You can find that HERE.