Identifying Seller’s Market in the Real Estate Industry

The term “seller’s market” is thrown around often. What does it mean when industry insiders say it’s a “seller’s market?” What is “hot market” and what it means for you? Whether you’re a buyer or a seller, knowing whether the current market is a seller market or a a buyer’s market is extremely important in making decisions.

Identifying Seller’s Market in the Real Estate Industry

Demands and Supply Law

The economic law of demand and supply is the main important indicator of whether the current market temperature is “hot” or “cold”. When demand is higher compared to the existing inventory, then it’s safe to say that it’s currently a seller’s market.

Inventory is Low

When the number of inventory or supply is lower compared to the previous months or years, it may translate to higher demands. The low inventory may also be a result of a higher number of closed deals compared to the previous months or years. Competition is going to be more tough for homebuyers to compete during the time supply is low.

Median Sale Prices Fluctuations

When the median sale prices increase, it means that the hot market has been going on for a while now. It would normally be an ideal time for property owners to sell their homes. Median sale prices rise can be compared to the previous 3 – 6 months of property sales. A rise that would be considered significant depends on an assortment of factors such as locations. A decline in price is much the same.

Days on Market Indicator

When the indicator of Days on Market (DOM). Make sure to take notice of the DOM in the Multiple Listing Services (MLS) you’re visiting. However, it is known that the DOM of a property listing can be misleading at times. There are property owners who do the practice of re-listing their properties. Home owners know that the DOM matters to buyers, and therefore, sometimes they take down a listing, and re-list it again in order to resent their Days on Market. This practice is quite common and you’d probably need a neighborhood specialist in order to find out the actual DOM of a listing.

Selling a house “as-is”

Because the competition between buyers is high, often, a high number of inventory is sold. The frequency as well as the duration in which a house is sold affect the condition of the house during the time of selling as well. A lot of homeowners don’t have to make much improvements, if any, during the time the market condition is hot.

Properties are sold higher than the asking price

When there are multiple occurrences that homes are sold with premium, or a deal is closed in a higher price compared to the asking or listing price, it can be assumed that it’s a seller’s market. The higher price is also often a result of the competition between buyers. However, this is not a given. Higher yield than asking prices require work. Home staging is one of the effective practice in making a property so much more appealing and is also known to increase the appeal of your property.