The housing market keeps sailing along at a breathtaking pace. 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 2020. As we shared with you last week, the number of homes here on Cape Cod is significantly less when compared to last year, as well.
The key to continued success in the residential housing market is for more listings to become available. However, many homeowners are worried that selling their homes could be challenging for several reasons.
Recently, Homes.com released the findings of a survey that identified those concerns, in addition to 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, 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 buy before prices appreciate out of their reach
- To secure a mortgage at a historically low rate, while they last
- To finally own a home of their own
These buyer needs to 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 his/her 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 biding war, the price of the item for sales escalates. Bloomberg recently reported that “for the first time ever, the average U.S. home is selling for above list price.”
3. Homeowners don’t know if they will get an offer without their homes requiring work or updates.
Again, leverage is the greatest strength a seller has. 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.
It may also be wise to let future homeowners remodel the bathroom or the kitchen and make design decisions that are best for their specific tastes and lifestyles. 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. It makes sense to not over-invest in your home with upgrades that the buyers may change anyway.
We are always available to work with you to assist you in determining the key projects that will maximize your listing, without overdoing it. Historically low inventory likely makes some projects that were seen as crucial just a few years ago less critical to the sale of the house today.
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 explained that 83% of homes that sold this March were on the market for less than a month. The average days on market (DOM) right now is 18 – a new record! All cash sales can usually be closed in 30 days. If a mortgage is involved, the rule of thumb is usually 45 days to close.
So, 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.
Selling your house is often daunting, even more so today. However, the fact that we’re in such a strong sellers’ market clearly eliminates many common concerns. Let’s connect at 508-568-8191 or firstname.lastname@example.org so you can learn more about the opportunities for homeowners who are ready to sell.
…and watch for our video series discussing ways to manage selling your home and buying a new one at the same time.
Don’t wish for it; go for it!
Mari and Hank