Article Courtesy of Keeping Current Matters/The KCM Blog
The housing market keeps sailing along. The only headwind that could take it off course is the lack of inventory for sale. The National Association of Realtors (NAR) reports that there were 410,000
fewer single-family homes for sale this March than in March of 2020.
The key to continued success in the residential housing market is for
more listings to come on the market. However, many homeowners are
concerned that selling their homes could be challenging for several reasons.
Recently, Homes.com released the findings of a survey
that identified these concerns, as well as what it will take for
homeowners to feel comfortable selling their houses. Here are the four
major homeowner concerns and a quick explanation of what’s actually
happening in the housing market today.
1. Homeowners don’t know if they’ll be able to secure their next home before selling.
In negotiations, leverage
is the power that one side may have to influence the other side while
moving closer to their negotiating position. A party’s leverage is based
on the ability to award benefits or eliminate costs on the other side.
In today’s market, buyers have compelling reasons to purchase a home now:
- To own a home of their own
- To buy before prices continue to appreciate
- To secure a mortgage at a historically low rate, while they last
These buyer needs give the seller tremendous leverage.
Most already realize this leverage enables the homeowner to sell at a
good price. However, this leverage may also be used to negotiate time to
find their next home. The homeowner could sell their home to the buyer
at today’s price, which will enable the purchaser to take advantage of
current mortgage rates. In return, the buyer might lease the house back
to the seller for a pre-determined length of time while the seller finds
a new home or has one built.
This gives the buyer what they want while also giving the seller what they need. It’s a true win-win negotiation.
2. Homeowners don’t know if their current home will sell for the asking price or top market price.
This is the perfect time to maximize profits while selling a house. NAR just released a study showing that bidding wars are at an all-time high.
The study reveals that when comparing the first quarter of last year to
the first quarter of this year, the number of offers on homes for sale
doubled from an average of 2.4 to 4.8 offers.
Whenever there’s a bidding war, the price of the item for sale escalates. Bloomberg recently reported:
“For the first time ever, the average U.S. home is selling for above its list price.”
If a seller is looking for a top-dollar sale, there’s no better time to sell than right now.
3. Homeowners don’t know if they will get an offer without their home requiring work or updates.
Again, leverage is the greatest strength a seller has in this market.
Due to the lack of homes for sale, many buyers are more willing to take
on home improvement projects themselves in order to get the home
they’re after.
A recent post on whether or not to renovate before selling notes:
“It may be wise to let future homeowners remodel the
bathroom or the kitchen to make design decisions that are best for their
specific taste and lifestyle. As a seller, your dollars and time might
be better spent working on small cosmetic updates, like refreshing some
paint and power washing the exterior. Instead of over-investing in your
home with upgrades that the buyers may change anyway, work with a real
estate professional to determine the key projects that will maximize
your listing, without overdoing it.”
If a seller is worried about doing work or updates on their home,
they must realize that today’s historically low inventory likely renders
these projects less critical to the sale of the house.
4. Homeowners don’t know if they can have a quick closing process.
When speed is important, there are two points sellers should look at:
- The time it takes to find a buyer for the home
- The time it takes to close the transaction
In the latest Existing Home Sales Report, NAR explains:
“Properties typically remained on the market for 18
days in March, down from 20 days in February and from 29 days in March
2020. Eighty-three percent of the homes sold in March 2021 were on the
market for less than a month.”
Eighteen days is fast, and it’s a new record. Here are the days the average house is on the market in each state:
Regarding the time it will take to close the transaction, all-cash sales accounted for 23% of all home purchase transactions in March. All-cash sales can usually be closed in thirty days.
If a mortgage is necessary, the most recent Origination Insight Report from Ellie Mae shows:
“Time to close all loans decreased in March. The
average time to close a purchase fell to 51 days, down from 53 the month
prior.”
If you’re looking for a quick closing process, there’s never been a
market in which the two-step process (finding a buyer and closing the
deal) has taken less time.
Bottom Line
Selling your house can be daunting, especially in a fast-paced
market. However, the fact that we’re in such a strong sellers’ market
clearly eliminates many common concerns. Contact a real estate
professional today to learn more about the opportunities for homeowners
who are ready to sell.
