When the demand outpaces available supply, a seller's market occurs.
Several conditions may arise to create a seller's market. They can occur both broadly (a city becomes a relocation hotspot for new jobs and growth) or highly localized (a new school creates increased desirability for the surrounding neighborhoods). The common theme in both cases is that the locality's current housing supply proves inadequate.
Over the past decade, seller's markets have become more commonplace. In much of the country, and specifically in the East Bay, home listings and new home construction have been unable to keep up with housing demand.
Typical in this type of market, sellers often hold the most negotiating power. But it's not always as simple as high demand equaling high sales price. For both buyers and sellers, let's explore the best way to navigate a seller's market.
Admittedly, a seller's market does not present ideal conditions in which to buy a home. Aside from rising prices, these markets can prove hyper-competitive.
You're also required to process a lot of data in a short period of time. Often, you'll find yourself making life-altering decisions quicker than you'd normally like.
To stay ahead of a feverish market, know exactly what you want from your home before you start your search. This includes accepting the compromises you're willing (or unwilling) to make.
Second, seek loan preapproval. With a preapproval in hand, you'll have an advantage over competing buyers without it. Even if the latter make slightly higher offers, your preapproval makes your offer equally attractive and signals to a seller you're ready to buy and can close on the deal in a more timely manner. (Note that prequalification helps, too, but preapproval indicates you're a very serious buyer who, effectively, has a loan in hand.)
Next, be flexible. Realize that seller's markets offer buyers a relatively weak negotiating position. Avoid demands that might make your situation even less tenable—concessions, contingencies, or certain repair requirements. Again, lay out what's important to you and the circumstances under which you're willing to lose a property to more accommodating buyers.
Finally, it's essential to be patient. It's quite common for even the most well-prepared buyers to miss on a home or two before solidifying a deal. Avoid getting caught in bidding wars that drive prices well beyond what you're comfortable paying.
Your goal should be to find a home you love that fits your needs but to do so without regretting the purchase later on.
For the one listing a home, a seller's market requires slightly less contemplation. After all, in most instances, the market dynamics are well in your favor. However, there are a couple of points to keep in mind to maximize the sale of your home.
First, prep your home for sale. Even a seller's market doesn't automatically translate to "list it, and they will come." Your home still must be clean and presentable with minor touch-ups and repairs completed.
Your goal is to generate interest in and traffic to your home and produce viable offers.
Make sure you also price your home competitively. Seller's markets are not carte blanche to list however high you deem fit. Price too high, and savvy buyers who understand the market's dynamics will steer clear. Price too low, and you run the risk of leaving considerable dollars on the table.
It may seem counterintuitive, but pricing just below your asking or market comps can make your home seem like a steal. You'll quickly create a bidding war for the right to purchase it.
Lastly, review all offers carefully. Recognize that simply because a bid is higher doesn't mean it's better.
A preapproved buyer that comes in $10,000 under your highest bid (yet still at or above asking) is far more attractive than that high bid who hasn't even prequalified. Even in hot markets, you don't want your home listing to languish too long. Otherwise, buyers may perceive the home itself as problematic (for example, an unsold listing in a time when everything in sight is selling fast is a huge red flag).
Consider who's making the offer and the context in which it's being made. If you're getting everything you want from it, you'll risk more by not closing the deal.
Whether you're interested in Dublin homes for sale or seeking more information on San Ramon real estate, contact Sarina Dhanoa & Associates today. Allow our expertise and years of experience to be your guide to the best of the East Bay.