Many families decide to embark on their homeownership journey to build wealth for the long term. Part of building wealth through real estate is growing your home’s equity. This equity begins from the moment you buy your home and will continue as long as you own the home.
What is a Seller’s Market?
A Seller’s Market is when there is an influx of buyers or a shortage of homes for sale. It is named this because the seller has more power when it comes to negotiation. This can be caused by a variety of factors such as:
• Sudden drop in interest rates
• Instability causing people to hold onto their homes
• Slow to new home price growth
What is a Buyer’s Market?
Inversely, a Buyer’s Market is when there are too many homes for sale and not enough buyers. In this market, the buyer has much more leverage and it can impact how sellers list their homes. Signs of a Buyer’s Market include:
• Decrease in home values
• Sellers offering credits to buyers
• Sellers offering to pay some of the closing costs
• Homes sitting on the market for months at a time
Knowing what kind of market you are in can help understand your strategy. In a Seller’s Market, it is key to prepare yourself.
Getting pre-approved is a great way to prepare yourself before your home search. A pre-approval means that you have been pre-underwritten and just need to find the right property. Knowing that you have been pre-approved will make the seller much more likely to accept your offer.
Get clear with your Realtor®
Getting clear with your Realtor® is critical in a Seller’s Market. Make sure that your Realtor® understands the exact type of home you want from the price range to the number of bathrooms. This will allow you to act fast when the perfect home is found.
Keep in contact with your lender
Your lender will become your best friend during this process. Keep your lender in the loop during your home search. They can update your pre-approval letter and advise you on your options as the market fluctuates.
In a Seller’s Market, it is vital to act quickly. It is not uncommon for homes to sit less than a week before receiving multiple offers. It is important to reserve time to act quickly. Your Realtor® will be communicating with you frequently and it is important to prioritize that communication so that you will not miss out.
Prepare your strategy for a bidding war
Bidding wars are commonplace in a Seller’s Market. Understand what your strategy will be before going into them. Make sure you speak with your spouse and your Realtor® to understand what everyone’s level of comfort is. Doing so ahead of time will allow your Realtor® to negotiate on your behalf and get you the right property for the best possible price.
Need to get pre-approved? Click here and speak with one of our local mortgage consultants today.