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What is a Seller’s Market?

Everybody has heard the saying “it’s a seller’s market,” but what does that truly mean for people looking to buy or sell a home? In real estate, a seller’s market simply means that there are more interested buyers than there are sellers or available properties on the market. This results in high demand and low supply, putting sellers at an advantage. Here, the Baltimore-based real estate team at the New Home Team of Maryland walks through the signals and causes of a seller’s market as well as what to consider as a buyer in a seller’s market.

Signals of a Seller’s Market

There is no singular cause of a seller’s market. An influx of buyers to a particular area can create an advantage for sellers, while a decrease in the number of homes in the desired area can create the same situation. Additionally, it is possible for both of those scenarios to occur simultaneously. 

Here are some common characteristics of a seller’s market:

  1. Homes selling quickly – If you start noticing that home listings are only on the market for a couple of days, it is generally because of high competition on the side of the buyer, meaning it is a seller’s market.
  2. Homes selling above asking price – In a neutral market, the asking price is generally close to what a buyer would pay to get their offer accepted and, relatedly, what a home will likely appraise for. In a seller’s market, it is not uncommon for buyers to have to pay above the asking price and above the appraised value due to the competition created by multiple buyers.
  3. Bidding wars between home buyers – As mentioned above, high competition on the side of the buyer can result in bidding wars that inflate the prices of homes—a sure sign of a seller’s market. 

Overall, when sellers are in control, buyers do more than they typically would to secure a property. Buyers are more likely to submit offers quickly without contingencies or negotiating other common aspects of a real estate transaction, such as repairs. Meanwhile, sellers are in a position to be pickier about the offers they accept.

An extreme seller’s market, where sellers are able to command prices that are dramatically inflated, can lead to a housing “bubble” that can “pop.” This happens when supply realigns with demand, causing a rapid dip in total home sales and average home prices. However, this sort of realignment requires a massive influx of supply.

Tips for Buyers in a Seller’s Market

Searching for a home in a seller’s market is no easy task. It can often be an exhausting process that leaves you disappointed many times before you have an offer accepted. To increase your chances of securing your dream home in a competitive market consider these tips.

  • Get Pre-Approved – This helps show sellers that you are serious about buying a home and have taken steps to prove that you are ready to buy.
  • Be Ready to Make an Offer Quickly – With homes not lasting more than a couple of days on the market, it is important to be ready to make an offer quickly, especially if you think you’ve found the perfect home. You don’t want to let other buyers get involved or beat you to the offer.
  • Offer Competitive Terms – Even in a seller’s market, pricing isn’t always everything. You can make a lower offer stand out by offering better terms such as no contingencies or covering closing costs.
  • Be Patient – Perhaps the most important tip we can give you is to be patient and remain objective. It is easy to get frustrated by getting outbid or having sellers accept other offers. However, if you let yourself get impatient, you could find yourself wanting to make offers on homes that you don’t actually want just to secure something and get the process over with. Buying a home that doesn’t fit your needs, or has more problems than you originally thought, can have terrible consequences. Remember to do your due diligence and only make offers on homes that you are positive that you want and can financially support. 

Learn More from the Real Estate Team at the New Home Team of Maryland

Our team of experienced real estate professionals is dedicated to helping you secure the home of your dreams in a way that makes the most sense for your situation. Regardless of market conditions, we will be able to provide you with recommendations that provide the best outcome for you or your family. To learn more tips for navigating current real estate trends, visit our blog.

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