What low inventory means for sellers
Despite record low interest rates, housing inventory remains at an all time low. We recently covered the pros and cons of this type of market for buyers, so today we’ll uncover what a low inventory market means for sellers.
Housing inventory is staggeringly low— the latest report shows that housing inventory fell 52% in March compared to the same time period in 2020.
In a low inventory market, sellers typically have the upper hand, as there are more buyers searching for homes than homes that are actually on the market. As a result, if your home is priced correctly and well-maintained, expect to receive multiple offers in short time frame.
You’ll want to work with your realtor to carefully choose the right offer for you. Remember, the highest dollar amount offer is not always the best choice. Look at the buyer’s financing, and terms and conditions before making your decision.
Big return on investment
If you’re on the fence about selling, don’t be. Today’s sellers are enjoying a much larger return on their investment, with the latest reports citing homeowners gaining an average of $17,000 in equity during the third quarter of 2020, which is the highest equity gain since the first quarter of 2014.
More equity means more money to put down towards a down payment on your next home.
Supply and demand always dictate prices, and recent data echoes this principle, showing median home prices escalating 16% compared to this same time last year.
This unbalanced market definitely favors sellers, and you can expect your home to be priced to match market demand. Additionally, low inventory leads to bidding wars, which can often drive up home prices even more— all good news for sellers.
More favorable terms
In a buyer’s market where there are more homes than buyers on the market, sellers often have to bend during the negotiation process. On the contrary, in a low inventory market, the negotiation phase often benefits the seller more than the buyer. Sellers can expect buyers to be more inclined to work with them in an effort to have their offer selected.
A word of caution
As a seller in a low inventory market, here’s what you need to look out for:
Pricing your home too high: Yes, the market will always dictate price, but sometimes homeowners can get carried away. Even in a fast-moving market, homes that are too overpriced will just sit, which can be very detrimental. Buyers will expect homes to move fast in this type of market and will wonder what’s wrong with a home that has been on the market too long.
Not staging your home or making necessary repairs: It’s in your best interest to stage your home and take care of any repairs needed before you put it on the market–regardless of inventory levels. Staged homes sell faster and for 20% more than non-staged homes. Don’t leave money on the table!