Selling in the seller’s market, what you should know

What is a seller’s market?

The real estate market is identified as a seller’s market when the housing demand exceeds supply. In other words, there are many interested buyers, but the real estate inventory is low. Since there are less homes on the market, sellers have an advantage of being in charge and choosing the highest offers.

Because of this advantage, homes sell like hot cakes. Buyers compete and create a scenario called a bidding war. Buyers are ready to pay higher prices than they normally would on a house with same qualities. Sellers take this into consideration and can raise their asking prices, which leads to the selling price going much higher after a bidding war.

Less properties, too many buyers; everyone wants to get their hands on the same property. In this scenario, many times buyers have much less room to be exploratory and barely any power to negotiate.

What is the difference between a seller’s market and a buyer’s market?

The real estate market is identified as a seller’s market when there are more buyers in the market than the available houses to fulfill the quota. This makes sellers the ones being in charge, setting the terms and choosing the right buyer from several different offers. A buyer’s market as the name suggests is vice versa from the sellers’ market. The number of homes is surplus, and the number of buyers is too small.

Here is what you should know if you are planning to sell or invest in a residential property.

Since sellers must compete to attract buyers in a seller’s market, it is helpful to know how to increase interest in your property.

First things first, preparing your property.

Make sure your property looks good, presentable enough for the amount you’re asking. Fix it up with small repairs if needed and declutter everywhere.

Pricing your property correctly

Homes tend to sell for more than the asking price in the seller’s market, but that does not necessarily mean you can price your property at an exaggerated price. Get an evaluation, speak to a realtor, discuss the pros and cons and price it fairly to get interest from the right buyers.

Pricing your property too low or too high can backfire and create unnecessary delays even when all the odds are in your favor, so price it enough to get interested buyers to start bidding.

Picking the right offer

Speak to your real estate broker and learn what you should look for in a suitable buyer for your property. Just because there is a bidding war and a buyer is ready to pay much higher than your asking price, does not guarantee that they will be able to acquire the house. Several factors come in to play such as the lender’s policies, mortgage approval, other financial and technical factors.

Once an offer falls through, your home can end up back on the market. The longer it stays in the market, it becomes questionable in the eyes of the buyers, and they get an added benefit of negotiating the price with you.

Hire a professional

Buyers and sellers are on separate sides of the fence when it comes to home sales. And yet, they share the same ultimate goal. They want a sale.

Both sides can benefit significantly from hiring a real estate broker to assist them, but their reasons can be different.

Here are a few things that you, as a seller, might want to consider when thinking about hiring a real estate professional:

You might be far out of your element when it comes to reviewing and understanding the multiple documents and laws involved in a real estate deal. Your realtor will be far more familiar with all this paperwork than you are.

If you’re thinking that hiring someone to represent you will cost you an unnecessary amount of money, remember this: some mistakes or omissions in these documents can cost you as much as that commission you were trying to avoid paying. It’s your broker’s job to get you the best possible price for your home.

Real estate brokers are trained to negotiate effectively; if only from experience. They know what normally works and what does not. Most have tried-and-true techniques of their own. And, most importantly, they have no emotional stake in the outcome that can cloud their thinking.

Henry Ford once said that it proves that you’re smarter than they are when you hire people who are smarter than you. The trick is to recognize when you need help and to find the right person.

Make sure the buyer has a mortgage pre-approval

For buyers requiring financing, make sure you ask for a certificate of pre-approval of loan. Getting a pre-approval certificate is crucial, it requires the buyers’ finances and credit history verification.

Stay on the lookout for contingencies

Always be on the lookout for offers that include stipulations, like mortgage contingencies, home sale contingencies, appraisal contingencies and inspection contingencies, enable buyers to back out of sales contracts if certain conditions aren’t met.

If you are planning on selling a property, contact me to discuss how you can get the best outcome.