What is the difference? – Councilor Forbes
Is this a sell market or a buy market? While inventory and demand may not be at the forefront when considering buying or selling a home for the first time, it’s important to understand what’s going on in your local real estate market. This knowledge will help you develop a strategy for getting the best price, whether you are buying or selling.
What is a seller’s market?
A seller’s market exists when people who want to sell their homes have more negotiating power than potential buyers. In a seller’s market, there are fewer houses for sale than there are buyers. Much of the United States today has a seller’s market because there is a housing shortage. As a result, the median price of a used home recently hit an all-time high.
4 strategies for buyers
Being a home buyer in a seller’s market can be exciting, but it can also be a source of anxiety. You need to go into the process knowing exactly what type of home you want and how much you can spend so that you can jump in on the right deal as soon as it arises.
1. Prepare for the bidding war
Suppose you are not the only buyer to bid on the property you are interested in. Initially choose a firm upper price limit based on the value of the house and what you can afford. There is no point in being the winning bidder if the house is too low for your financing to be approved.
An exception where paying too much in a bidding war can make sense if you are paying all the cash for a dream home that you plan to live in for a long time and can afford to incur a loss if you have to sell in a cooler market.
2. Get pre-approved for a mortgage loan
When you’re fighting for the same home with multiple buyers, you can set yourself apart by demonstrating that you are financially able to sell your offer. A mortgage pre-approval a lender who has looked at your finances can achieve this. Some lenders even offer pre-subscription, which can further strengthen your offer with the promise to close quickly.
3. Act quickly
Houses don’t stay on the market for long in a seller’s market. Sometimes houses receive offers on the day they register. Sometimes agents show homes that are coming on the market before they are actually listed. You need to stay on top of new announcements and be prepared to make quick decisions.
4. Keep your offer simple
It can be tempting to forgo contingencies to get your offer accepted in a seller’s market. However, this represents a major risk. Don’t give up funding contingency, inspection contingency or assessment contingency. Keep your offer simple by only including these essential contingencies and offering a standard 30-45 day closing period.
3 strategies for sellers
Do home sellers even need a seller’s market strategy? It seems like you can sell any property in any condition when there is not enough inventory and buyers are lining up at sellers’ doors.
Nonetheless, if you want to get the best price for your home, here are a few things to consider.
1. List your home at market value
You may want to list your home low to incite a bidding war or to showcase it because you know the market is hot. However, listing your home for market value may be your best bet. Buyers can be put off by overpriced homes, and mortgage applications are turned down when an appraisal can’t support an ambitious bid price.
Also, listing your home at market value doesn’t mean you don’t stand a chance of selling it for more – again, based on the appraisal – if enough buyers are interested in your home.
2. Know how to choose the best deal
The deal that sounds the best and the deal that will close on time and with minimal hassle are not necessarily the same deal. The best deal is probably the one with the strongest finances, which means it’s either fully cash with proof of funds, or a pre-approved buyer with documented financing, even if it’s not the highest bid.
3. Get your next house lined up
In a hot market, there’s a good chance your house will sell within days. If it’s a cash offer, it could close in a week or two. If it’s a regular supply with some unforeseen events, it can take 30-45 days – not much time yet to find a new place to live when stocks are low.
What is a buyer’s market?
A buyer’s market is when people who want to buy homes have more bargaining power than people who sell homes. In a buyer’s market, there are more homes for sale than potential buyers. An economic downturn, a large employer leaving the area, high crime rates and overdevelopment are all potential causes of a buyer’s market.
3 strategies for buyers
In a buyer’s market, you can use your power to negotiate a better deal. Here are some strategies to try.
1. Offer a price lower than the asking price
When the seller knows that you have many home buying options, they may be willing to reduce the price they will accept to complete the transaction. How badly do you want the house? The answer to this question should guide your trading philosophy.
Think about what you would pay for the house if you had no idea what the going price is. If you would only be happy with the house with a big discount, it doesn’t hurt to make a lowball offer. If this is your dream home and you would happily pay for the above listing, you might want to play it safe and submit an offer at or slightly below what the seller is asking for.
2. Ask for vendor concessions
In addition to offering (or instead of) offering less than the asking price, you can ask the seller to pay all or part of your closing costs. Other possibilities include asking the seller to be flexible with the closing date, asking the seller to include the appliances in the price or asking the seller to throw out the entire dining room, furniture from patio and grill.
Don’t hesitate to ask for what you want: it’s a common practice: almost half of sellers made a concession to the buyer from July 2019 to June 2020, according to the National Association of Real Estate Agents.
3. Ask the seller to make repairs
You don’t always need a home inspection know that a house needs a new roof or other major repair. Sellers are more likely to make necessary repairs in a buyer’s market unless they are willing to sell the property as a repairman, knowing that this will limit their pool of potential buyers and likely lower the price. price.
However, since most buyers need financing and the lender will require the house to be in reasonable condition (unless the buyer gets a loan). rehabilitation loan), the seller may have little choice but to consolidate his property. If you wait until the home inspection is complete to request repairs, you can use the inspector’s findings to support your claim.
3 strategies for sellers
If you need to sell your home in a buyer’s market for business, financial, or personal reasons, you don’t have to let buyers walk you. Here is how to manage a disadvantageous market.
1. Showcase your home’s competitive advantage
Before listing your home, see what else is on the market within your asking price range. What does your home offer that buyers will find more attractive? Even in a condominium or suburb, some locations and models will be more attractive to some buyers than to others. Maybe you have a convenient first floor unit or a quiet top floor unit, a home with convenient freeway access, or a yard that’s perfect for dog owners.
You don’t have a competitive advantage? Create one. Help buyers feel like they’ll get a fresh start if they choose your home. Pack your belongings and have your home professionally furnished (as much as you can while you still live there). Have the interior and exterior painted in modern and attractive colors. Hire a handyman to finish all those nagging projects you’ve never been on.
2. Concessions budget
Many sellers need to clear a certain price for their home in order to pay off the mortgage, advance payment on their next home and cover closing costs and moving costs. But if you’re in a market where buyers are likely to seek help with closing costs or repairs, plan ahead. Find out how you can afford to offer this sweetener if buyers ask for it. You may be able to get a better deal on your next mortgage or finance your own closing costs.
3. Do a pre-inspection
One way to make your home more attractive to potential buyers is to hire an inspector yourself to identify issues you should fix before listing. This additional step will theoretically allow your home to navigate through the Evaluation and inspection process once you have an interested buyer.
If the inspection reveals issues that you don’t want to fix or can’t afford to fix, you can either lower the asking price or offer the seller a repair credit at close to deal with the outstanding issues.
Buyer’s market or seller’s market? 4 ways to say it
You don’t have to be a real estate expert to know if this is a buyer’s or a seller’s market. By keeping an eye out for current and recently sold listings, it’s usually easy to tell.
Characteristics of the buying market
- Houses are selling slowly
- Houses sell for current price or below
- House prices fall
- Many houses are on the market
Characteristics of a seller’s market
- Houses sell out quickly
- Houses sell for current price or above
- House prices are rising
- Few houses are on the market