What Is a Seller’s Market?
What is a seller’s market? Simply put, it's a market where there are more home buyers than sellers. Based on basic laws of supply and demand, this means sellers have the upper hand: They will likely sell their place quickly, perhaps for over asking price, with a minimum of fuss or push back from buyers.
Meanwhile, home buyers in seller's markets face a tough road: Due to increased competition, they'll have to act fast, bid high, and generally bend over backwards to woo sellers into accepting their offer over the many that may be at their disposal.
So here's what buyers need to know about seller's markets—and how to survive them.
What is a seller's market—and where are they?
Right now, the bulk of the U.S. housing market is a seller's market. Home prices are rising in the 20 largest U.S. cities, and inventory is tight, meaning that there just aren't enough homes to go around.
'Even though the number of homes being built has been growing over the past 10 years, it hasn’t kept pace with population growth.' Another difficulty in meeting this pent-up demand is that construction costs are continuing to skyrocket.
Where are the hottest seller's markets?
The main metric used when evaluating housing markets is home price appreciation. 'The greater imbalance of supply and demand, the faster you’ll see price appreciation.'
Here are the factors that often fuel seller's markets:
Are you in a seller's market? How to tell
Home buyers and sellers can evaluate whether they're in a buyer's or seller's market by analyzing a few key variables:
Buying a house in a seller's market
To compete against other buyers in a seller's market, you need to be prepared. First and foremost, you’ll need a mortgage pre-approval letter before you start shopping, so that a seller knows you can put your money where your mouth is.
You may also have to waive some contingencies to edge out other buyers—or widen your search to an up-and-coming neighborhood with less demand.
Other ways to make your offer more attractive include increasing the amount of earnest money that you'll put into the escrow deposit, adding an escalation clause, writing a personal letter to the seller and, of course, offering above list price. Here's more advice for home buyers on how to survive a seller's market.
“There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn,”
Are you ready Buy or Sell? The decision to Sell or buy is a personal one that depends on your financial situation, future plans and lifestyle. If you’re interested on a wealth of information to help you get started visit Precision Realty & Assoc. LL or if you prefer a more personal touch, reach out to a us, CALL 801-809-9866 today.
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