Last Updated on May 17, 2023 by Bob Filipczak
A sellers market is a situation in which the housing demand exceeds the number of homes available for sale. While that’s the simple definition, there is nothing simple about getting the best price for your home in a seller’s market. This kind of market creates an environment in which home sellers have the upper hand, as they can set higher prices and receive multiple offers on their properties. If you’re considering selling your home in a seller’s market, there are some important things to keep in mind.
Is it a sellers market right now? The answer: yes. It has been a sellers market since before the pandemic and all economic and demographic indicators show that demand will outstrip supply for the next few years. If you are a seller, here are some factors that should help you decide whether to sell your house now and enter this sellers market.
Factors that Fuel a Sellers Market
Supply and demand is a nice simple equation, but the factors that create that situation are a bit more nuanced. Here are some factors to help you think about selling:
- Limited Inventory of Homes for Sale – Currently inventory is quite low and has been for years. Predictions that inventory would bounce back did not come true.
- High Demand from Buyers – Buyers are currently hesitant (see the next point) but there are still a lot more of them than there are homes on the market.
- Low Interest Rates – This is the fly in the ointment for real estate. Last year in 2022, higher mortgage rates increased at an unprecedented rate, cooling off the market and giving buyers second (and third) thoughts.
- Strong Economy and Job Market – Currently the job market is very strong but the economy is getting kicked in the head by inflation.
- Lack of New Home Construction – Contractors, despite the low inventory, are not building new homes at anywhere near the historical average. High interest rates and inflation have made builders take a step back.
How to Tell if You’re in a Sellers Market
If you want to see an example of a full-blown sellers market, look at the real estate world between 2018 and 2022. Here are some factors to look for when making decisions about selling your home.
- Homes are selling quickly, often within days or even hours.
- Multiple offers are being made on homes.
- Buyers are paying more than the asking price for homes.
- There are fewer homes available for sale than there are buyers looking to purchase.
To find how out much demand there is, your local real estate market conditions may give you a better indicator than the national averages.
Questions to Ask About a Seller’s Market
This is probably a good time to recommend that you work with a licensed real estate agent, because they can help you find good answers in a sellers market. One thing, in particular, that your agent can provide is a comparative market analysis (CMA) that will answer many of these questions.
- What are the current home prices in your area?
- What’s the length of time for homes staying on the market before being sold?
- How many offers are sellers receiving on their homes?
- Are buyers paying more than the asking price for homes?
One of our local real estate specialists can help you better understand your market conditions. Sign up today to speak with our local real estate specialist. There’s no obligation.
Finding the Right Price Range When You’re in a Sellers Market
Your comparative market analysis will help you look at recent home sales in your area to get an idea of the current market value for your home. Your agent may also recommend working with a professional appraiser to determine your home’s listing price.
Markets, especially local area markets, can be fluid. Be willing to adjust your asking price based on local conditions and feedback from prospective buyers.
If you overprice your home, it can turn off potential buyers and prolong the selling process. No one wants to negotiate with sellers who are unrealistic about the value of their home.
How to Find the Right Agent for a Seller’s Market
An experienced real estate agent will be able to help you manage the balancing act of getting the most from your sale and being realistic.
- Some agents will be called a “listing agent” which means they specialize in helping sellers.
- Ask for referrals from friends, family members, or colleagues.
- Check online reviews and ratings of potential agents.
- Interview multiple agents to find one who understands your needs and goals.
Your listing can make all the difference when you are selling your house. Having the right listing in the right database to get it in front of the right people is essential. Your agent will post your listing, but you can help them by providing great information about your home.
- Make sure your home is listed online and in multiple listing services (MLS).
- Consider hiring a professional photographer or videographer to showcase your home.
- Provide detailed descriptions of your home and its features.
- Highlight any recent upgrades or renovations.
Currently new listings, as well as real estate inventory, are at levels much lower than historical averages. If you are thinking about selling, you will have less competition and get better results.
How to Outshine the Competition in a Seller’s Market
Even though there is a lot of demand out there right now, you are still competing against other sellers. Consequently it’s a good idea to put your best foot forward to land the best potential buyers. Here are some tips that may seem obvious, but in the flurry of activity that happens when you start to sell your home, it’s easy to forget to:
- Make sure your home is clean and well-maintained.
- Stage your home to make it more attractive to buyers.
- Provide a pre-listing inspection report to potential buyers.
Negotiation Tips in a Sellers Market
Negotiating offers, and making counter offers, is part of the selling process. Your real estate agent is a professional negotiator, so rely on them heavily.
- Be realistic about your asking price–don’t expect to get the kinds of offers that were happening during the recent housing boom (e.g. $100 K over asking price).
- Know your bottom line and stick to it.
- Be willing to negotiate on other terms, such as the closing date or contingencies. In the current housing market, you probably won’t have to make many seller concessions.
- Stay calm and professional during negotiations.
How to Handle a Bidding War if You’re Selling Your Home
Having multiple buyers bidding on your home is the ideal situation if you want to get the best price possible. It can be very exciting, and there may be multiple rounds of bidding. In all the excitement remember to:
- Set a deadline for offers to be submitted.
- Consider all offers carefully, not just the highest one.
- Don’t be afraid to counteroffer.
- Keep communication open and transparent with all potential buyers.
A sellers market can be a great opportunity for homeowners to sell their homes quickly and for a higher sale price, but it’s important to understand the dynamics of the type of market and work with a knowledgeable agent to navigate the process successfully. By keeping these tips in mind, you can make informed decisions and increase your chances of a successful sale.
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