From The Tribune staff reports
“The best time to buy a home is always five years ago,” said jazz musician, Ray Brown. But we need to know how to buy and sell in today’s market. The latest buzz word on the street is “seller’s market.” What does this mean for buyers and sellers?
A seller’s market is a term used in real estate, indicating that there are more home buyers in the market than there are sellers. It’s a matter of supply and demand. When demand is higher than the current supply, home prices will increase, which benefits sellers.
If you have been considering selling your home, a seller’s market is a fantastic time to have your home listed. There is a high opportunity to secure a sale price that is higher than your listing price, or at least more than your bottom line, which is the lowest price you’d be willing to accept for your home.
Seller’s markets generally occur when the economy has been good and there is low inventory available in the area. In the midst of a seller’s market, the lack of inventory often leads to multiple buyers interested in a single property, resulting in bidding wars. Buyers have very little room to negotiate price because home demands are high. When this occurs, prices steadily increase.
In a seller’s market, home buying competition is fierce. There will be more buyers making above list price offers, non-contingent contracts, and buyers are less likely to ask sellers for major repairs or closing costs. If you’re buying a home in a seller’s market, be aware that the seller has the advantage.
As a buyer, there are a few things to consider as you prepare your offer in a seller’s market. The most important is time is of the essence. This means there is not a lot of time to waste. While one buyer is playing mental ping pong on the pros and cons of a home, multiple other families are sending offers on that same home.
Mentally prepare yourself that you will most likely need to offer more than the amount the seller is asking. A larger earnest money deposit might look very attractive to a seller weighing multiple offers. Be ready with your pre-approval. If your pre-approval letter is from an out-of-area broker or lender, get a local pre-approval instead. A local broker can make a huge difference when it comes down to those last-minute details in a transaction.
Whether you are in a position to sell or in need of a new home, Mike and Brandie Brown and the Josh Vernon Group are watching the market closely. They will consider the current market and work closely with you to make the best strategy that will result in a win for your family.