What should you do in a real estate seller's market?
For most people, their home is one of the biggest purchases they will ever make. Selling your property requires serious consideration, and when it comes time to sell it’s vital to get the best possible return on your investment.
Sometimes the decision to sell your house can’t wait, but if you can hold off until the right time it could make a big difference to how quickly your house sells and how much you get for it. Waiting for a seller’s market can help make the process of selling your house easier and more financially beneficial.
Here are some tips on how to identify a seller’s market and what that means for your property.
Defining a Seller’s Market
In basic terms, a seller’s market is when house prices are increasing, and a buyer’s market is when house prices are decreasing.
During a buyer’s market there are likely to be fewer people looking at houses, meaning the buyers have more choice and can expect to pay less for a property. A buyer’s market will generally be evident in the large number of properties that are available.
Other indicators are lower attendance at open homes, homes sitting on the market for longer, and a lower success rate for auctioned properties.
In a seller’s market, the opposite is true. Higher numbers of potential buyers are looking at a smaller pool of properties, which means they need to be more competitive to get the property they are after. This gives buyers less time to think about a purchase or otherwise they may lose it to a more decisive prospective buyer.
A seller’s market means buyers are likely to pay more than usual to secure their home, with it not uncommon in a strong seller’s market for a property to sell even higher than its listed price.
A Flexible Definition
Generally speaking, property markets aren’t strictly just for buyers or sellers. In reality, the market is a lot more complex. A single city is likely to have suburbs that are more in-demand than others, for example, which creates different zones that might be more favourable to either buyers or sellers.
The market can also change relatively quickly, and sometimes without much warning. People holding on to their property for too long in a rising seller’s market can find that prices begin to fall again before they are able to offload their home, and those who sell too early could find themselves missing out on getting top dollar for their property.
Even professional analysts can find these fluctuations hard to predict. The best way to take advantage of the market is to have a good idea of whether your area is currently most beneficial to buyers or sellers, what a reasonable price might be, and how long you are willing and able to wait.
Let’s look at some factors that might influence whether you are in a seller’s market.
Supply and Demand
If there is a higher demand for houses than the supply is able to meet, then the market will be favourable for sellers. In most areas, this trend is often hard to predict.
However, some areas, such as Hobart in Tasmania, are pretty consistently favourable to sellers. All regions will have some suburbs that are consistently in demand, which aren’t as susceptible to market fluctuations.
In these areas the demand for housing is greater than the supply, which means buyers have to compete to have a chance of purchasing a property. That means prices go up, properties spend less time on the market and sometimes sell for higher than their reserve.
All around the country, supply and demand will fluctuate in each area – although some areas experience less change than others. Other factors that might mean the supply can’t keep up with demand are good schooling zones, access to public transport and shopping, and suburb developments.
Many locations around Australia are experiencing a housing shortage, so having property in these areas can be a bonus for sellers.
The interest rates set by the reserve bank can change whether the property market favours buyers or sellers. A lower interest rate reduces the repayments on a mortgage, making it more affordable and allowing people to borrow more. That tends to mean an increase in the number of buyers, which is good for people who want to sell their home.
Current interest rates have been trending downwards, but there is always the possibility of a short-term spike in interest rates. Australia has avoided an increase for a while but the trend can’t continue downwards forever.
For now, while mortgages are more affordable, the resulting increase in buyers should mean that sellers have an easier time finding a buyer at a favourable price. That being said, with so much variation and unpredictability it’s important to look at your individual circumstances.
Taking Advantage of a Seller’s Market
If you notice that the number of houses for sale in your area have decreased, they don’t stay on the market for long and the prices look good – you’re probably in a seller’s market. If you’re thinking of selling your home it’s a good time to talk with a real estate agent.
There are plenty of reasons why you might not be able to wait, and just because the market isn’t timed perfectly doesn’t mean you can’t get a good price for your home. After all, it only takes one buyer!
In any market, there are plenty of tricks to help make your house as appealing as possible to potential buyers. A good real estate agent is very important first step. Someone who is familiar with your area, knows the market and can get your house in front of buyers will go a long way towards getting a good price for your property as quickly as possible.
However, if you can take advantage of a seller’s market you should. Selling in a seller’s market should mean increased buyer interest, quicker turnover time and higher prices. With the right timing, you can get the highest return and the lowest amount of stress when you decide to sell your home.
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