It has been a long time since we have had a consistent and strong seller’s market. So, here is a little primer on how to deal with it.
First, what makes it a seller’s market, you ask. Aren’t we still in a troubled economy, you wonder.
A seller’s market is generally considered to be when there is less than 5-6 months of resale housing inventory for sale. This means, if nothing else comes on the market, it would take 5 to 6 months to sell the existing inventory of resale homes. Anything higher is a buyer’s market and anything lower is a seller’s market.
Well, as of April 30th, we have about 2.1 months of resale housing inventory in the greater Vancouver area and about 3.1 months of inventory in Portland. Yes, Vancouver is a slightly stronger seller’s market than Portland. Get over it.
Anecdotally, I can tell you it is a seller’s market because any halfway decent listing is getting multiple offers. Houses that would have sold for under $150,000 last fall are now selling for well over $150,000.
Are you a buyer looking for a deal? That ship has sailed. So, what can you do to deal with the new normal?
Move Quickly. You have to be flexible with your time and go out to see promising new listings the day they hit the market. The best listings are selling in one or two days.
Bid High. You are probably going to have to go over the listing price if you really want it. When there are multiple offers in the first couple of days on the market, why would a seller take a low offer?
Cover Your Own Closing Costs. Asking the seller to cover your closing costs or buy you a home warranty directly affects their net proceeds. Also, coming in with a purchase price that is a little higher than list price, but still asking for closing costs is not competitive.
Plan Ahead for Inspections. If you try to get competitive with a shorter inspection period, you better make sure your preferred inspectors are available. Call them ahead of making an offer to secure the time. Many inspectors are currently booked 10-14 days out right now.
Look Elsewhere. You may have to expand your search criteria somewhat. Or, you may have to look at lower-priced listings where you can be competitive. But, be aware that those lower-priced listings are getting more offers than others.
Don’t Forget Appraisals. Even though you may have to go high to get the house you want, don’t forget that the house still needs to be appraised. If you come in too high and the appraisal comes in low, you may find yourself in a tight situation. It will be time to renegotiate or start over (and remember, you can’t get those inspection fees back). So, be careful on this front.
Be Clever. Including a nice letter to the seller with your competitive offer could give you an edge. But, make it personal and specific to the property. Make the seller feel good about selling to you.
In this tight market, I’ve helped buyers out in competitive situations. One recent client beat out 20 other offers. Another beat out higher offers with a very thoughtful letter to the seller. These are just some basic common-sense tips. I have additional strategies up my sleeve, but I’m not going to give away all of my secrets!
“But, I’m a seller. What about me?” you ask. You still want to make your property shine so you can get those multiple offers. But, really, after that rollercoaster market of the last 6 years, it might be time to relax just a little and enjoy the ride. Be slightly aggressive on price, but don’t get greedy. Overpriced homes still sit on the market for a longer time.
If you would like assistance in this rapidly changing market, contact me so we can talk about your housing goals and the right strategy to meet them.