Simply put – there aren’t enough homes for sale in a hot market. When demand has outstripped supply and buyers are struggling to find suitable properties, the market becomes very competitive. If the majority of available homes sell faster than two months, the market is considered “hot.”
If you’re a home seller in a desirable area, you probably feel like you have it made. Prices are high and real estate agents are getting used to seeing bidding wars. Some believe selling a home quickly in this market is a given. While this is true to some extent, sellers still need to price strategically and promote properly.
Hot market pricing tactics
Slightly lower than market price is a common tactic. Have several open houses over the course of a weekend, and make the offer deadline early the following week.
This pulls in interested buyers who are willing to bid against each other. Often these buyers will be willing to reduce or remove contingencies in their offer. Sellers using this tactic successfully can maximize their price and possibly get to dictate closing terms.
Fair market value is another successful strategy that has the benefit of stating exactly what the home is worth and how much you’re expecting. This strategy can also result in multiple offers and allows the seller favorable terms for closing.
The last tactic is deliberately pricing above market value. This approach could backfire as your home could languish on the market and become stale. Despite the drawbacks, this strategy may make sense if you aren’t pressed to sell.
Seller turned buyer
Are you prepared if your house sells extremely fast? Some astute sellers find their new house before they put their current house on the market. The same seller’s market that makes selling your house easy could work against you if you’re competing with all those other buyers when hunting for your next home.
One way to solve this problem would be to have a backup plan such as alternative housing. Another option is to consider is a lease-back. If your buyer agrees to this plan, you can rent your house back from the new owners during the lease-back period while you house hunt.
The lease-back saves you having to move twice, and gives you the equity you need to make strong offers. Usually a buyer would probably not agree but in a hot market, you may have the clout to pull it off.
Your best friend -your agent
As a seller who’s about to turn into a buyer, your agent is your finest asset in a difficult market. That’s why it’s vital to pick the right real estate agent. This is where having a professional with plenty of area experience is particularly important.
Unless you have someone you know and trust it’s best to interview a number of agents that have a deep familiarity with the local market. You can start by asking the following questions:
- Number of successful closings in the last year
- How will the property be marketed?
- How is their commission calculated?
- What services do they provide – staging, professional photography, etc.
- Average days properties are on the market
You should come away with the impression that the agent not only wants your business but wants to help you make the best choices for your situation.
Between finding a great agent to represent you, getting your pricing right and steering through selling and buying, the real estate industry in a hot market is challenging. Sellers need to come to the market prepared. Yes, selling your home may be a snap, but there plenty of other issues that must be taken into consideration.
Professional know-how and market research will help identify where any risks are and allow you to prepare accordingly.