If you are looking to buy a home this spring, there is a very good chance you will be fighting an uphill battle. That’s because we are in a “seller’s market” where homeowners looking to sell their property typically have the upper hand in negotiations. But what does it actually mean and how can you prepare for it? Here’s a practical definition and a few key points to keep you sane while you search for your dream home.
What is a Seller’s Market?
By definition, a seller’s market is one where the number of homes sold during a period of time is equal or greater than 55% of the number of homes listed during that same time. Said another way, for every 3 homes sold in a given period of time, there are 5 new listings added. If you feel like you need to go back to your high-school statistics class to get a grasp on that, we have you covered. Here is a simple example that should put it all in perspective.
Let’s take a trip to Newtown, USA. This particular town is booming because there are great jobs close by, lots of shopping, restaurants and social life. Plus, there are great parks, schools, hospitals and activities for families. Not that many people want to move away from Newtown, USA these days. As a matter of fact, there were only 10 homes in Newtown, USA listed for sale this month.
After being featured in a few home and community magazines, word has gotten out about how great Newtown, USA is for all types of people and families. This has caused a large number of would-be homebuyers to consider settling down in Newtown, USA. As a matter of fact, 8 homes in Newtown, USA were sold that same month!
In this example, 8 homes were sold when only 10 homes were listed during the month in Newtown, USA. This makes the “sales-to-listing” ratio 80% (well above the 55% needed to establish a “seller’s market”).
(Note: Newtown, USA is a fictional town as far as we know.)
Best Practices in a Seller’s Market
As a would-be homebuyer, you can certainly be at a disadvantage in a seller’s market. A bit of planning and determination can help you through any short-term frustration.
Know your numbers first – While you are not on an episode of Shark Tank, you do need to know what you can afford and stick to it. Getting the best deal on a mortgage loan and working with an experienced mortgage professional will help you put in all in perspective. Using MortgageCS for mortgage shopping means you can easily compare loan terms and get your questions answered before committing to a single lender.
Go for the gold when you find the right property – When demand for property is outpacing the supply, there is no time for low-ball offers. Starting out with your first and best offer can win you the opportunity to purchase the home. Remember that during the home buying process, you’ll have the opportunity to review a home inspection and will have certain “outs” if there are any issues.
Coincidentally, when mortgage loan originators offer you rates and loan programs at MortgageCS, they too will provide their best offer first. This saves you the hassle of any mortgage negotiations and drastically speeds up the mortgage shopping process.
Be ready to act quickly – By the time an open house is over, multiple offers may have been submitted by other real estate agents. Getting “your team” on the same page going into a weekend of open houses or showings ensures you can act when needed.
Stay focused on your end goal – Chances are that you will experience some disappointment during the home shopping process. Remember that you will eventually find the property that best fits your needs and keep your head up as it’s the only way to see where you are going!
In a seller’s market, an experienced Realtor can truly help. Realtors who offer MortgageCS are up on the latest technology and ensure they offer the most advanced tools to their buyers. Ask for access to MortgageCS – or contact us and we’ll direct you to a local Realtor who can help.
About MortgageCS: MortgageCS enables Financial Advisors, Realtors and their clients to compare mortgage offers from top national lenders for free, monitor market rates, and shop with confidence – all without sharing personal contact information. Learn more.