Are you a home buyer in a seller’s market?
Or maybe you’re a home seller in a buyer’s market?
If you fall into either category, you might be feeling a bit nervous about your residential real estate future.
You could wait it out until the situation you’re in is reversed, which it inevitably will be although you can’t know when. Or you could try some tried-and-true strategies that tilt the odds in your favor for an acceptable outcome.
First of all, it helps to know the true market factors surrounding the home you’re considering buying or selling. It’s easy to say the Southern California real estate market is currently a seller’s market. But is it really? It is in some areas. But just a few miles away, homes are staying on the market for months instead of weeks–often because the seller isn’t pricing it right.
The best way to find out, of course, is to work with a professional real estate agent. He or she is trained to recognize the characteristics of a given neighborhood, city, or ZIP code.
Here are a few ways to tell if an area is truly a seller’s market, according to realtor.com:
Look through listings for your area. If the majority of homes have been on the market for more than six months, it’s not a seller’s market. But if most of the homes in your price range don’t appear to be staying on the market too long, you could be looking to buy in a seller’s market.
If that is the case, you probably feel like the competition will be tough–and you’d be right. The supply of homes is low, demand is high, and sellers are in control. Here’s what you can do:
You must make house-hunting a priority–not just something you fit in here and there on the weekends if you have nothing better to do. Treat house-hunting as if you were job hunting. Scour listings regularly, and if someone calls about a viewing, head in at their earliest convenience—not your own—and follow up promptly if you feel it’s a fit.
In hot markets, talk is cheap. To be taken seriously, to show up with hard evidence proof line a mortgage pre-approval letter, plus a “proof of funds” form from your bank showing you have enough to cover the down payment. That way, the seller knows you are serious.
Usually, when homebuyers make an offer, they do so only with contingencies. For example, they’ll buy the home if the inspection goes well or if they can obtain financing. But in a seller’s market, you might find it expedient to drop one or two of these contingencies to stand out to sellers, who generally prefer as few obstacles as possible on the way to closing.
In a typical home-selling situation, buyers make an offer below the seller’s asking price, then negotiate upward. But in a seller’s market, there’s often little to no room for price negotiations. In fact, if there are multiple bids, you could end up paying well over the asking price. So don’t waste time lowballing a seller. Always try put in an aggressive offer, but don’t overextend yourself financially.
In seller’s markets, it’s not unusual to feel outpriced in your favorite neighborhood. So consider scouting elsewhere, like in an up-and-coming neighborhood nearby.
When there are more sellers than buyers, you’re in a buyer’s market. It’s less common in the current Southern California housing market, but still the situation in some areas. Here are some tips to help your home get sold vs. the competition.
Buyers in these markets don’t necessarily have lots of cash. If your potential buyer can’t come up with the full amount you were asking, offer to pay for some of their closing costs instead of slashing your price. Or, pay their moving costs to get them motivated to close the transaction.
When buyers are in the driver’s seat, they might insist that you make a ton of repairs. If you want the sale badly, do what they ask. But it’s better to “pay” for the repairs by lowering your home’s price rather than doing the repairs yourself. It’s better to outline the needed work with estimates, lower the price, and have the buyer deal with the contractor after the sale.
Buyers in a buyer’s market might take their time because there are more homes for them to check out. Or, they might have misgivings about the house or the neighborhood. If so, consider taking a vacation and let them stay in the house a few nights. Use Airbnb to keep it all safe and legal. Or, throw a block party and invite the buyers.
Not getting any offers? Cut your price strategically to attract a fresh set of eyes. And though it might feel less painful to lower the listing in small increments, you’re better off just taking a chunk out of it all at once to catch people’s attention. It might seem like you’re taking a big hit, but a home that sells faster can actually save some money, including for costs such as insurance, repairs, upkeep, utilities, and lawn care.
When dealing with a possible buyer, try to keep the negotiations going. In a buyer’s market, only walk away from deals that are obviously a lowball. Keeping talks open means a better chance of closing the deal, so continue to negotiate until you reach a deal or an impasse.