After all, many market commentators are currently describing the Australian real estate market as a sellers’ market – arguably a fabulous time to sell your home or investment property.
Not only will your days in the market likely be fewer, it also means you can get multiple offers, which can potentially increase the selling price of your property.
Don’t know what a seller’s market means? Do not worry. Read this article to find out what it means to be in a seller’s market and how you can take advantage of it.
What is a sellers market?
Basically, a seller’s market is created when demand exceeds supply. In a seller’s market, properties take less time to sell and buyers have to compete for a property.
In Australia, the unprecedented seller’s market is driven by record levels of demand from buyers exceeding the number of properties available on the market. The country’s historically low interest rates have also prompted many Australian buyers to enter the market, far outstripping the available inventory of properties for sale.
Due to the shortage of supply, many buyers are forced to join bidding wars. During bidding wars, buyers will make competing bids and raise the price, usually above what the seller originally asked for.
Competitive market conditions often cause buyers to spend more than they would on a property. Therefore, sellers have the opportunity to increase their asking prices. Additionally, the increased interest means buyers have almost no power to negotiate properties and are more willing to pay for a property as is.
And while this is good news for sellers, you will still need to be strategic if you want to sell your property for the highest possible price.
How to spot if your local market is a seller’s market
Here are some signs to look out for to know if you are in a seller’s market:
- Properties sell for high prices.
- The sale prices are higher than the listing prices – in some cases significantly higher than the listing price.
- The percentage of successful sales and auction closeout rates are above average.
- The general economy is showing strong signs of growth.
- The number of properties on the market is low compared to previous months or years.
- Low and falling days of properties on the market.
- Vendors in the area usually don’t offer any incentives or discounts.
Tips for selling your property in a seller’s market
You might be thinking that all you have to do is stick a sign in the yard or list your property online and let the market take care of the rest.
While it may be easier to sell in a seller’s market, there are things you can do to make sure you’re getting the best price for your property.
1. Keep your price fair.
We understand that with homebuyers willing to pay just about anything to get a piece of the real estate pie, it makes sense to raise your selling price above the average market value of your property. .
However, most real estate experts would advise you to keep your price competitive. Setting your selling price at or slightly below fair market value can encourage multiple exposures and you are likely to attract more interested buyers. If you receive multiple bids, a bidding war can ensue, which can cause the asking price to increase.
2. Prepare your property for sale.
Remember that in a sellers market, buyers are desperate for a property and are often willing to ignore cosmetic flaws and are even willing to pay a hefty repair bill. A seller in a hot market has a better chance of selling a home “as is” without having to make major updates.
Before deciding to make any major fixes to the property prior to listing, it is recommended that you have a discussion with your real estate agent to assess comparable properties in your neighborhood. If you end up overcapitalizing on your renovations and repairs, you risk losing more money than you can make with the sale.
If you want to get multiple offers on your property right after you put it up for sale, home staging is probably the best way to do this. In a seller’s market, buyers need to act quickly and are motivated by first impressions and emotions.
There is no better way to make someone fall in love with your home than to stage it. Giving your property a “wow” factor will make it stand out from the rest of the bunch and give it an even better edge over any other homes that might be on the market at the same time.
If you can’t afford to stage, at the bare minimum, the property should be decluttering and thoroughly cleaned from top to bottom in preparation for screenings.
3. Prepare for several offers.
You need to have a game plan ready in case buyers argue over your property. If you receive a lot of offers, review each offer with your agent to determine which one is best for you.
Sellers are often so focused on choosing the highest bid that they fail to consider the financial strength of every buyer. However, the higher dollar amount does not always win.
Once all the offers are received, take notes on each offer so that they are easier to compare. Don’t just focus on the price offered, but also other factors, such as:
- The amount of the money deposit.
- Whether the offer is entirely cash – or, if funded, the type of funding offered.
- Deposit amount.
- Waiver of standard buyer inspections or contingencies.
- Seller costs, including possible proposal to cover closing costs by the buyer.
- Unusual requests or allowances.
For example, a buyer may be willing to pay significantly more than your asking price, but include several contingencies in their offer, such as closing cost assistance. On the other hand, another buyer may offer a little less than the asking price, but not asking for anything more or trying to negotiate for something else.
4. Ensure pre-approval.
Don’t be blinded by unrealistic offers. After all, all that glitters is not gold. Just because a buyer says they’ll pay a certain amount for your home doesn’t mean they’ll be able to get those funds. Remember that lenders will not allow buyers to borrow more than the estimated value of your home.
The last thing you want is to take an unrealistic offer and be forced to put your house back on the market when the deal fails. For all buyers who need financing, make sure they have been pre-approved for a loan.
Pre-approval requires that buyers’ finances and credit history be checked, making it much more likely that they can ultimately get a loan for a specific amount of money. Meanwhile, prequalification is just an estimate of buyers’ finances.
5. Be aware of the contingencies.
Be on the lookout for offers that include contingencies. Offers with stipulations, such as mortgage contingencies, home sale contingencies, appraisal contingencies, and inspection contingencies, allow buyers to opt out of sales contracts if certain conditions are not met.
A real estate agent is a licensed professional licensed to act as a representative of buyers or sellers in a real estate transaction.