A seller’s market happens when the demand for homes overcomes the supply. Typically, a market becomes a seller’s market when there are three sales for every five listings. The opposite of this is a buyer’s market, which typically has fewer than seven sales for every twenty listings.
What causes a seller’s market?
A major factor that causes a seller’s market is a drop in interest rates. This allows more people to be qualified to buy homes as well as more expensive homes. Other things that factor into a seller’s market are population growth and increased employment opportunities. Finally, when new or expanded government assistance programs, down payment assistance, or tax credits get released, more qualified buyers can enter the market.
What are signs of a seller’s market?
In a seller’s market, homes don’t stay listed for long. Homes can be on the market for weeks, but can also go in days or even hours! Some homes can even spur a bidding war, in which multiple buyers put increasingly higher offers on a home. Additionally, a seller’s market can be characterized by homes selling for well over their listed price.
How to take advantage of the seller’s market as a seller
First things first, work with an experienced realtor. They will let you know how much to price your home and what offers to take seriously. A big factor for success in a seller’s market is patience. You may be tempted to jump on the first offer, but hold out. There’s a very big possibility that a higher offer will come in.
What if you are a buyer in a seller’s market?
Just as a seller, the first step is finding a good realtor. They will be able to help you find the right home at the right price when they hit the market. They will also be able to help you write a competitive offer.
A great way to put yourself in a competitive position in a seller’s market is to get pre-approved. Having a pre-approval so the seller will know that you’re able to back up your offer. Additionally, consider adding an escalation clause, which lets the seller know exactly how much you’re willing to top any other offers. Finally, be flexible with your moving date. If your timeline matches up with a sellers’, they may be more tempted to accept your offer over another.