Depending on the community you are buying or selling in, the real estate market may be competitive and moving faster than you might expect. While the market varies, there are three clear signs to look for that indicate a seller’s market:
- Houses are selling for more than asking price
- Most homes sell quickly (essentially, home inventory doesn’t hang around)
- It is becoming common for there to be multiple offers on any given home
Is it a Seller’s Market Now?
Home sellers are seeing multiple offers on their home in many of today’s markets. This means more than one buyer is placing an offer on the property, and often they must look to outbid each other if they really want the home. It’s an indication that, in simple terms, inventory is more limited than demand dictates.
What it Means for Buyers and Sellers
As a buyer, this does not mean that the perfect home for you is not on the market; it simply means you need to be well prepared to buy when you find “the one.”
As a seller, it does not mean you should overprice your house, convinced that numerous buyers will be at your door with their checkbooks. It simply means you might get more than one offer and you should be willing to consider the strength of each - not just the dollar amount – when you are deciding which to accept.
Here are a few tips.
Sellers – How to Navigate Multiple Offers:
- If you’re dreaming of a quick sale, listen to your Realtor regarding the current market value when pricing the home. You are actually more likely to get multiple offers if you price your house correctly than if you over price it. Buyers may be willing to pay more than asking price, but they want it to be their move and based on other buyers also placing bids. Most buyers will run from any bidding war if they think you already overpriced the house.
- Look at each offer carefully. Not all are created equal. Just because someone offers a few thousand more doesn’t mean their offer is the one to pick. Things like being prequalified and the type of loan can affect how solid that offer is. Another thing to weigh is if one buyer has to sell their home before you can close, versus a buyer who can close in 30 days. Let your real estate agent advise which is really the best offer.
Buyers – Be Prepared for Multiple Offers:
- Visit a mortgage professional and get your financing secured. It’s best to start that process before you start looking at homes. In a competitive market, agents may not even show homes to buyers who don’t have a mortgage preapproval.
- Treat house hunting seriously. Make house hunting a priority—not just something you do on weekends and only if you have nothing else planned. A home could hit the market on a Monday and have an offer on it the next day, or even that night. So go see new listings ASAP!
- Don’t try to low-ball. In a seller’s market, there is little to no room for price negotiations, nor is there time. A seller will choose another buyer’s reasonable or solid offer before even giving a low-ball offer a second look.
- Be willing to look outside your first-choice neighborhoods. In seller’s markets, it’s not unusual to end up finding great options in some of the outskirt areas of the communities that fit your needs. Compromise is often necessary.
Entering a bidding war as a buyer or navigating multiple offers as a seller can add a bit of stress to the equation. Remember, it can be done successfully with the help of a qualified real estate agent to advise you along the way.