Collectively, 2020 has been a rollercoaster for industries and economies across the world. Although not immune to volatility, the housing industry has fared better than a considerable amount of industries. The long-term ramifications of the COVID-19 pandemic remain unknown, but there are already several prevailing trends in the marketplace.
One of these dominating trends is a market strongly favoring sellers. Depending on your goals, this leaning can be either an advantage or a disadvantage. However, no matter what side you fall on, it’s important to know exactly a seller’s market entails.
What is a seller’s market?
Before diving further, it’s vital to understand how a market swings in favor of sellers. Simply put, it’s a market with high demand coupled with low inventory or, in real estate lingo, when there are more prospective buyers than sellers. The market’s current inclination is not entirely unexpected as sellers were already favored before the pandemic’s arrival. However, the combination of potential sellers, afraid to show their homes or even move, and prospective buyers, spurred into action due to record-low interest rates, brewed the perfect storm.
What does a seller’s market mean for a seller?
Obviously, a seller’s market is very ideal if you’re looking to sell. If your home is put on the market during this advantageous climate, be aware that a sale might happen quicker than anticipated. Before putting up the For-Sale sign, ensure there is a plan in place for backup accommodations if your new place isn’t quite move-in ready.
What does a seller’s market mean for a buyer?
To be successful in a seller’s market, buyers must be agile, ready to act quickly and come with realistic expectations. In the past, buyers commonly shopped slightly over or at the very top of their budget with the expectation of negotiating a lower price. However, in this market, sellers are expecting to get at least their asking price and probably above. If buyers are offering above asking price, that likely means a bidding war is occurring with an opposing buyer.
What does it take to be successful in a bidding war?
Most sellers dream of having two hopeful buyers compete for ownership by incrementally trying to outbid each other. In real estate transactions, especially a bidding war, cash is king. For a seller, an all-cash offer eliminates the most common reason sales fall through – financing issues. If an all-cash offer is unrealistic, there is another way to stand out amongst the competition – tapping into the seller’s emotions. For most owners, selling is an extremely emotional decision and they want to ensure the home is left in good hands. An emerging trend seen in bidding wars is hopeful buyers writing a letter to the current owners in the hopes of inspiring a connection. If you choose to write a letter, make it personal, highlight your favorite parts of the home and keep it positive.
No matter who the market favors, an experienced mortgage expert is the key to a smooth process. To learn more about our home loan solutions, contact a PrimeLending home loan expert today.