It’s 8AM, the morning after your listing went active. Five more appointments were just scheduled, and your phone is ringing again. As you race out the door, you answer the phone to hear your Realtor, but this time you’re receiving an offer instead of another appointment request. You wonder how this is possible, when you just listed the night before, and the offer is above your asking price and the buyer has waived appraisal and home inspection contingencies.
A number of questions start to run through your mind…”How did I get such a great offer so quickly with only one showing? Was my asking price too low? Could I get a higher offer if I wait through the end of the day? Should we still host the Open House we scheduled? Am I really taking advantage of this market if I agree to this first offer?”
In a Seller’s Market, inventory is typically lower than the previous months or years, while the buyer demand continues to increase. Sellers listed during this type of market can anticipate to see very short active listing periods, multiple offers with escalation clauses, and contingencies waived. When listing during a seller’s market, the scenario described above can be a fantastic result, but also can create some confusion and concern when sellers wonder if they took full advantage of the seller’s market. Below are just a few short tips to getting you and your listing ready to take advantage of a Seller’s Market.
TIPS TO TAKE ADVANTAGE OF A SELLER’S MARKET
- Pricing Your Home – Pricing your home in a seller’s market is the year to take a chance. If you’ve been watching the market for a couple years really hoping your value would increase by another 2-3%, a seller’s market year is the year to try. Make sure to review the comps with your agent and discuss the pace of the market in your neighborhood. If homes are selling the day of listing or pre-market, this is a good indication to try for a little bit on the higher side of the comps…but be careful if you do list on the higher side and don’t get an offer within a couple days. If you’re listed high and other homes are selling, it might be a sign to re-evaluate your list price.
- Marketing Strategy – There are two factors to developing your market strategy in a seller’s market: sale date, and target sale price. These two factors will help determine when to put your home on the market. If your main objective is to get a specific price point, say you want 3% over the last comp in the neighborhood, then listing early, but not too early in the selling season is a good strategy to beat other listings to market, as the middle of the season will see an increase in listings, and therefore competition between sellers. However, if your goal is to move in June, then listing in March may result in having to move in April or early-May. If the timing of your closing is important, you can still take advantage of the seller’s market, but a heavy focus on pre-marketing will be essential. Work with your agent to take pictures early, develop videos and online marketing campaigns for motivated buyers to seek out your listing. If your strategy is well executed, you’ll get showings and potentially an offer from buyers who are willing to wait for your preferred move out date.
- Understanding Your Competition – Knowing your competition is always important, whether in a seller’s market or not. In a seller’s market, there is a tendency to lean on the fast pace of sales when deciding how much effort we put into making our house stand out from the first day we list. You have even hear someone suggest that you “throw your house on the market, it will definitely sell!” While this may be true in a seller’s market, you may lose the chance to maximize the benefits of this market to sellers. Knowing your competition is key! Make sure your listing descriptions and details are comparable, if not stronger than those of your neighbors. Take the professional photographs, use a professional stager, and do your online marketing to get out and stay in front of the competition.
- Knowing When to Say When – It’s 8am, the day after going on the market, and there is an over list price offer with only a financing contingency in your inbox. Do you take it or do you wait it out to see if there are other offers coming after the 5 more showings that are scheduled for the day? This is a very personal decision that should factor in what we discussed in the second tip (sale date and target sale price). If you’ve got your price and all the details of the contract are good, sellers must ask themselves if it is worth waiting another 24-48 hours in hope of making a few thousand more, or would they rather begin moving towards closing. If the answer is to wait it out, be careful of waiting too long. Delaying a response by 24-48 hours, or hosting an open house after receiving an offer is not uncommon and can create a bidding war; however, it can also risk the original offer walking away. If, and hopefully when, you find yourself in this situation during a seller’s market, work with your agent to weigh the pros and cons of waiting it out for competition and a potentially higher offer, vs accepting a great offer and moving towards closing. Know when to say when!
If you keep in mind these tips when listing during a seller’s market, you’ll be sure that you are taking advantage of everything the market has to offer.