If you have been anywhere near the real estate market in the past few years, you have heard about the rebound currently in progress. Depending on which part of the country you are in, you may have started seeing a shift from a buyer’s market to a seller’s market. What this means for sellers, is that after five years of catering to every cash buyer or strong mortgage applicant that came along, they now have some room to negotiate. The market has not rebounded to the point where you can name your price, but with increased demand, you may just create a bidding war.
A seller’s market simply means that demand has started to exceed supply. Subsequently, these conditions also benefit landlords. With this, sellers have the ability to raise prices because they know there is enough interest to meet that price. This gives sellers more freedom to pick and choose between multiple offers. Instead of looking at the strongest offer or the one most likely to close, they can now look at the highest price and decide from a position of strength.
While the byproduct of being in a seller’s market is being able to sell for the highest price, there are other benefits as well. Instead of listing high and waiting for one offer to come in, you can now list at or below market value and wait for multiple buyers to bid amongst themselves. This also allows properties to sell much quicker, not only because mortgage turn times are quicker, but properties are no longer sitting on the market for months collecting dust.
Price will always be important, but with multiple similar offers, you again have the ability to say no to some of the outlandish buyer demands that were being thrown around just a few months ago. You don’t have to give in on credit demands or inspection items. You can look for real offers with higher amounts of earnest money deposit down. With previous offers where there was one buyer, and you had to do everything possible to meet their demands, sellers were stuck. Multiple offers gives them the upper hand.
The flip-side of being in a seller’s market is that you will run into these same problems when it comes time for you to acquire property. In order to get property to sell, you have to acquire it from somewhere or someone. The same rules apply in reverse when you are looking for property, but the difference is that you should be able to sell fairly quickly if you get the right property.
Don’t make the mistake in thinking that just because demand is high that you can put a bad product on the market. Most buyers have waited a long time to buy and they are not going to accept just any terms on any property at any price. You still have to be mindful of the quality of work you put out. We are nowhere near the 2003 market, where any new house on the market was gone in a matter of days. The recovery is happening, but it is still slow and even in hot markets buyers do still have other options.
In order to take advantage of your market, you have to know which way it is going. Keep an eye on local sales and monitor what is currently on the market. It may not make sense for you to sell now if there are a substantial amount of new houses set to come on the market. Taking advantage of the market is about timing and opportunity. If you are in a seller’s market, maximize your asset by selling at the right time and for the highest amount.