A seller’s market exists when the demand for property exceeds supply. Simply put, there are very many interested buyers, but the real estate inventory is low. This puts the sellers at an advantage because there are fewer homes available in the market, causing buyers to somehow scramble for the few existing ones. Such is the current market in Southern California where homes are flying off the shelves over asking price.
In a seller’s market, buyers must compete with each other to assume the ownership of property. Properties sell faster than they would in a buyer’s market or in an equilibrium condition.
Such market conditions usually make buyers willing to spend more money than they otherwise would in order to have a competitive advantage over other buyers. Sellers have the liberty to increase prices, and buyers have a reduced negotiating power and are willing to accept the property as it is.
Do you want to make a killer sale in a seller’s market? Check out these tips for handling the bidding war and making the most out of this exclusive real estate market condition.
Prepare Your Home for Sale
Even though buyers do not have so many options, this is a step in the home-selling process you do not want to skip. You must give buyers a good impression of their next home.
Preparing it involves cleaning both the interior and exterior sections. Buyers are likely to overlook small defects. Therefore, you need to only worry about minor repairs instead of extensive renovations.
The preparation process should be as less costly as possible, and very simple. You do not necessarily have to stage your home in a seller’s market.
Make Sure To Hire a Good Real Estate Agent
A real estate agent is more experienced at marketing and selling real estate at very competitive prices. The right agent can help you strike the best deal and find the most suitable buyer.
A good real estate agent will help you leverage your property and get the best deal when negotiating with potential buyers.
A seller’s market attracts pent-up demand. This means that the market will work for you. However, knowing how to properly utilize this market means that you will need to hire a real estate agent that knows exactly what to do to get the best deal for your home.
Slightly Lower the Sales Price
You probably had an appraisal of your home to set the sale price, right? Now set your listing price just a hair strand below the market value and watch potential buyers rush to your property.
Once multiple buyers start making purchase offers, a bidding war will begin. Buyers will start bidding over the asking price as they compete against one another’s bid. This strategy works well in some real estate markets. If properly executed, this strategy will make you reap from the sale of your home.
Carefully Consider the Offers
You will receive so many offers. It is even more important to carefully review offers in a seller’s market. Do not focus so much on choosing the highest offer that you fail to examine each buyer’s financial strength.
For instance, if a buyer will be borrowing to make the purchase, lenders are not likely not to allow them to borrow more than the assessed value of the home. You would want to check whether they would be able to increase their downpayment to cover the difference should they be the successful buyer.
Carefully review each bid to determine which one is the best fit. For instance, a buyer may make the highest bid but include several contingencies such as repair works and closing cost assistance.
This may end up being the lowest bid, all factors considered. If you are not competent enough to handle this review process, you may need the assistance of a real estate agent or an expert in matters of finance.
Sell Your Difficult-To Sell Home
Some homes are typically very difficult to sell in a buyer’s market or under normal market conditions. They include unique pieces of real estate such as older homes.
If anyone was to be interested in them in a normal real estate market, they would offer very little. These properties stand a better chance of selling at more competitive prices in a seller’s market.
In a seller’s market, the number of homes that are up for sale is considerably low. Buyers do not have much to choose from. The best homes for sale will still attract the most attention, but the older homes and fixer-uppers will sell too because buyers do not have so many options at their disposal.
Limit The Tours
Restrict the number of hours a day or days a week when potential buyers can make tours of your home. Do not allow tours at all times, whenever one wants to pop in.
This may sound ridiculous, but it is a psychological game that actually works. People tend to have a stronger desire for something that’s not too available; something they think they probably can’t have.
On the flip side, it increases the possibility of buyers touring when other potential buyers are also present. This can lead to bidding wars and getting more for your home than you originally intended.
Final Thought
A seller’s market favors home sellers because the demand is higher than the supply of real estate. It does not mean that your home will automatically sell at competitive prices just because the market is conducive to a sale. You still have to prepare your home for the sale. Make sure it is clean and ready for viewing. This is also the best time to effectively market and sell your unique home. Buyers who miss out on the nice homes are likely to purchase them. Since you will be receiving so many offers, carefully consider all the bids to determine which best serves your interests.