In real estate, a seller's market occurs when there are more interested buyers than there are homes for sale. Simply put, demand exceeds supply. This can occur for various reasons, including as a result of low interest rates, growth in the local job market, and development limits due to regulations or supply chain shortages. Markets that see homes selling quickly, properties consistently selling above asking price, and bidding wars between interested buyers are likely experiencing a seller's market. As the demand for homes has increased dramatically over the past two years and inventory has stayed at record lows, a seller's market has occurred across the U.S. Below are some tips for both buyers and sellers on navigating the current market:Verify your mortgage eligibility (Oct 2nd, 2022)
Tips for sellers:
- Ensure your home is ready for market. Clean, organize, and make any necessary repairs. This could help ensure that you receive more offers and higher bids.
- List your home at market price. Even though homes tend to sell for more in seller's markets, it's best to list at or slightly below fair market value to attract more buyers and allow offers to increase the price.
- Carefully assess offers. Review all offers before accepting. While many sellers are tempted to choose the highest offer, the financial strength of buyers should also be taken into consideration.
- Look out for contingences. Some offers may include contingencies regarding home sale, inspection, appraisal, and more. Be sure to take these clauses into consideration as they could cause the deal to fall through if the contingencies aren't met.
Tips for buyers:
- Act quickly! When you find a home you love, it would be in your best interest to act fast. Being pre-approved for your mortgage before looking will allow you to make an offer as soon as you find the right home.
- Keep the market in mind. As you prepare to make an offer on a home, keep in mind the competitiveness of the current market and understand that it is likely not the time to try to push contingencies or special requests.
- Be patient. You may place several offers and lose out on homes before you find the one! Sometimes, buyers will become frustrated and end up offering more than a home is worth in a bidding war. Be patient and trust your real estate agent to guide you through the process.
- Don't settle for homes you don't love. Buyers can end up making offers on homes they don't love because they are tired of searching. Remember that purchasing a home is a large commitment and you should wait until you find one you truly love.
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