What’s a Seller’s Market?
What is a seller’s market? If you spend any time in the real estate space, whether you need to sell a home or buy a new construction home, you will hear talk about being in a buyer or seller’s market. Your real estate agent will advise you based on current housing market conditions to give you the best deal. Many factors influence the local market, such as buyer demand, interest rates, supply of homes, housing prices, and other market trends. When you’re in a seller’s market, what can you expect?
Seller’s Market Definition
A seller’s market occurs when the average real estate transaction favors the seller. The seller can often get asking price or above when they list their home. Here are some other typical conditions:
- There is high demand and plenty of interested buyers.
- Homeowners often don’t have to give seller concessions (like paying closing costs) to sell their homes.
- There are fewer available homes, which increases homebuyer competition.
- Because of the low number of homes, sellers can take the highest offer.
- Home prices are higher due to increased bidding wars.
- Home sales happen more quickly, with properties spending less time on the market.
Overall, in a seller’s market, the homeowner gets to call most of the shots when listing their home. They don’t have to do as much pre-sale prep and don’t need to fix as many things (or anything at all) after a home inspection.
Is it a buyer’s or seller’s market in 2023?
Many people want to know whether it is a buyer’s or seller’s market in 2023. Unfortunately, there is no straight answer. Some experts still call this market a seller’s market, while others call it a buyer’s market, while others others call it a blend of both.
One of the most recent insights about this comes from Bankrate, which calls our current market “tepid/lukewarm” and can go in multiple directions based on whether we enter a recession or not.
So, in short, you can call this summer’s market a seller’s market with some atypical drawbacks for sellers. Conditions are less favorable for sellers compared to 2022, when it was a definite seller’s market. Currently, there are elements of a buyer’s market mixed in a soft seller’s market.
This year, elevated interest rates are pricing out a lot of would-be first-time homebuyers since home loans are more expensive compared to last year. While higher interest rates usually mean cheaper listings, home values have actually remained steady or only slightly decreased due to the ongoing inventory shortage.
People who previously bought homes with low interest rates are less likely to budge and list their home for sale. People are also far less likely to refinance. Sellers are finding that they now have to bring a more pristine product to the table compared to 2022 to sell a home.
Selling a Home in A Seller’s Market
Now that we have been able to define a seller’s market, we can discuss some tips and tricks to sell in today’s “soft/lukewarm seller’s market.” Since a seller’s market typically occurs when there is low inventory, qualified buyers are still likely to be motivated when they see a home within their price range on the market.
Sellers can take this to their advantage by listing high and still exercising a degree of leverage in repairs- but less than in 2022. They also have the privilege of not caving into aggressive price drops unless there is something extremely wrong with the house. For instance, you may not need to spend thousands on landscaping, but the buyer should expect a roof credit or a new HVAC for their elevated mortgage payment to be worth it.
Buying a Home in a Seller’s Market
Buying a home in a seller’s market isn’t easy, but in a situation when high interest rates are pricing out many would-be buyers, being a buyer with a mortgage preapproval in your hand makes you an asset. While you know that there aren’t as many homes on the market, there are not as many buyers.
Use this to your advantage and get as much as you can out of the deal. If the right home isn’t popping up, know you can also buy a new construction dream home and get some exciting incentives like lower interest rates from a builder’s preferred lender or excellent builder incentives – plus a brand new house with nothing old or broken in it.
Buyer’s Market vs. Seller’s Market
Right now, characteristics of a traditional buyer’s market are contending with the remnants of a seller’s market. In 2023, no party has the clear upper hand. This is a historic market where inflation, high interest rates, and inventory shortages meet perplexing high market values in spite of the Fed’s attempt to cool things down.
While we’re not in the age of fervent cash offers and over-offering, sustained high interest rates and high sale prices are making buyers feel entitled to perfection, prompting sellers to feel the need to please every qualified buyer. These days, a buyer with a good credit score and the ability to pay a down payment is rarer than last year. Keeping this in mind will help all parties adjust their open market buying and selling strategies to strike a fair balance for all.
Knowing What is a Seller’s Market Is Helpful
Knowing what a seller’s market is can help you understand why real estate agents can recommend one strategy years prior, then totally pivot their approach to buying or selling homes in a different market. Being flexible and adjusting strategies according to market conditions is a sign of being an experienced real estate agent.
If you need to list your home for sale this year, don’t let the labels “buyer’s market” or “seller’s market” stress you out. No matter what, the market will lean toward one or the other, and agents have continued to help people like you buy and sell homes under any market condition or season. When you list your home with Marketplace Homes, we will use the expertise of several teams to market, promote, and sell your home. To find out more about this expert-based approach, contact us today.
Summary: A seller’s market is a real estate market in which sellers have the upper hand. There is a low inventory of homes and a higher amount of motivated buyers, which enables sellers to get a more advantageous outcome in a real estate transaction. This article explains the advantages and drawbacks of a seller’s market and what a buyer can typically get in this kind of market.