Selling Your Home in a Seller's Market
Selling a home in a seller's market is far different from selling a home in a buyer's market. If you are lucky enough to be experiencing a seller's market in your area, it is indeed a fabulous time to sell. Not only will your days on market likely be fewer, but you might also receive multiple offers—potentially driving up the sales price.
Drivers of High Demand
It's generally a good idea to take advantage of pent-up demand because it's the demand that drives competition. A larger number of people who are looking to buy a home should increase the odds you'll make more money on the sale.
Some homes, especially those referred to as unique and difficult to sell in any real estate market, will generally stand a better chance of selling in a seller's market as well.
Additionally, in some seller's markets, the number of homes for sale might be few and far between. If there is not much to choose from, the nicest homes will attract the most attention. But the ugly homes will sell, too—simply because there aren't very many options.
Another driver of high demand can be low interest rates on mortgages. In 2020, which was earmarked by the COVID-19 pandemic, interest rates dropped to historic lows. A report by Genworth, a mortgage insurance provider, found that the number of first-time homebuyers increased by 14% when compared to the year before.
Ways to Attract Multiple Offers in a Seller's Market
Some people may think all you have to do is stick a sign in the yard and let the market take care of the rest. It might be easier to sell in a seller's market, but it takes a lot more to sell a home than hanging a sign out front. It requires a strategy.
Prepare the Home for Sale
Preparing your home for sale may or may not involve home staging, but it absolutely includes cleaning the home from top to bottom. Buyers will overlook small defects in a seller's market because there are not enough homes to choose from.
Your home will sell faster with new carpeting if the existing carpeting is worn—but generally, bad carpeting will not stop an interested buyer in a seller's market. However, you may want to limit carpeting to the bedroom areas and consider a hardwood look elsewhere.
Go on the Market on Friday
Friday is generally the best day of the week for home selling. A good strategy is to set listings to "go live" on Thursday night at midnight so buyers will discover them among the new listings when they get up Friday morning. Be sure all photos are color-corrected and perfected to make the online presentation sizzle.
Don't forget to upload a virtual tour if the home lends itself to one, and release digital ads to Facebook and other websites.
People tend to want what they think they can't have. Don't allow tours of your home at all hours of the day—restrict the hours and the days. This will force some buyers to tour when other buyers are also present, which can spark a competitive nature.
Lower the Sales Price
If you set the price just a hair under market value, this will attract more buyers. It also will leave some wiggle room for buyers to begin bidding over the asking price. It isn't necessary, but it is a strategy that works well in some markets.
Do Not Set a Time for Offer Presentation
If you let buyers know that you will review all offers on a certain day at a certain time, you will lose some buyers. Buyers do not want to wait around to find out if their offer will be accepted.
There is also a large pool of buyers who will say they do not want to be involved in multiple offers. By the time they find out, it's too late—they're already involved somewhere else.
Review Seller's Market Offers
After all the offers are received, make notes on each offer so you can easily compare them. Don't look only at the price offered, but other factors as well, such as:
- The amount of the earnest money deposit
- Whether the offer is all cash—or if financed, the proposed type of financing
- Amount of down payment
- Waiver of standard buyer inspections or contingencies
- Seller costs, including possible proposal to pay the buyer's closing costs
- Unusual requests or allowances
Some buyers will try the strategy of playing to your emotions as the seller: sending photographs of themselves, often including their children or pets. They may write you a letter, talking about why they want to buy the home and sharing some personal information.
If you receive personal letters, read through them to find out whether they are real letters or if they are copied from the internet.
Accepting an Offer
After you've had a chance to digest this information, you have a few choices as the seller. You can:
- Accept the offer you like the best
- Issue a counteroffer to one buyer or more than one buyer
- Ask all buyers to resubmit their highest and best offers
- Adjust the sales price and look for more offers
Usually, a seller can find an acceptable offer among the initial offers made. It is not always the highest offer, but if it is financed, it is the offer the seller believes is sufficient to meet the buyer's lender's appraised value.
If the home does not appraise at the price offered, it generally doesn't matter how much more the buyer offered. Financing won't cover it, and not every buyer is willing to bridge a shortfall in an appraisal and pay a lot more than market value.