Unless you have been living under a rock for the last two years, you have probably heard the real estate term “Sellers Market”. Simply put, this means that it can be a great time for Sellers who are wanting to cash out on the equity in their home, or anyone who would like to sell their home for that matter. It is considered a Sellers Market anytime there is an uptick in the sales price of homes, making it easier for Sellers to sell their home for a profit.
The main reason why it is a great time to sell your home right now, in my opinion, is the lack of competition. There were a massive amount of consumers who jumped early in the real estate boom around 2014 and sold their properties. “Hurry and sell before the market crashes!” has been the slogan for the last 6-10 years it seems. But… the market hasn’t crashed yet. And consumers who waited until this point to sell their homes are experiencing benefits, and receiving offers that are above asking price and perhaps some of the highest appraised values the property has ever seen.
Seller’s are literally able to sell the property for, seemingly, whatever price they see fit. There are a drastically reduced amount of homes on the market right now which makes the quantity of offers on homes rise. The more offers a Seller gets, the more likely they are to be over asking price and without contingencies. You could also have a multiple offer situation, which is when the listing agent requests each Buyer to present their highest and best offer for the property. Those offers with a high sales price, and little to no contingencies often win the bid.
And now for the bad news for Sellers: the property that they are selling better be in excellent condition or risk Buyers not making an offer on it. Since there are so few properties listed for sale at the current time, there isn’t much selection. While this creates leverage for Sellers, it also will make the properties whose condition is not “up to par” with the other homes for sale stand out like a sore thumb. With so few homes for sale currently, there are some Buyers out there who are just postponing their home buying plans until the right home comes on the market.
But does a Sellers Market mean that it’s a bad time for Buyer’s right now? Not necessarily…
Interest rates have hovered at an all-time low now for what seems like eternity. This is great news for Buyers who are locking in mortgage rates at around 3%. Freddie Mac reported the lowest interest rate in history of 2.88% for its most popular home loan product (30-year fixed mortgage) early August of 2020. Compare that with mortgage rates in the 1980’s in the 10-17% range, and even as recently as 2010 at somewhere around 5%. The lower the interest rate on mortgages, the more buying power a potential homeowner has by keeping their monthly mortgage payments lower. Simply put, when interest rates are lower then the monthly payment on a mortgage around $200,000 could be about the same as the monthly payment on a $150,000 property when interest rates are higher.
No one can predict how the next ten years of the real estate market will go, but it seems like this Sellers Market has stuck around for quite some time now. At some point, the market is bound to level out and reach an equilibrium. The old saying in economics is “buy low, sell high”. There has never been a better time to sell your home considering the current market.