A “Seller’s Market” simply put, means there are more Buyers on the market than Sellers. Low supply meets high demand. When demand becomes higher than the supply, that supply becomes more difficult to purchase and generally making that item more expensive. Think of the new PS5 right before Christmas in 2020.
What does that mean if you are a Buyer right now? It means that you need to have all your ducks in a row. In addition to being well-prepared, you will need to be ready to make accommodations that you generally wouldn’t need to make. Accommodations in regards to possibly paying for condo docs, termite reports and even sometimes, agent commissions. More importantly, you most likely will need to be ready to submit offers above list price. If a unit has a market comparable of $495,000 and is listed at $495,000, there is a good chance the Seller will receive at least one offer above $500,000.
Now, if you are a Seller, you are probably thinking, “Hey, it is a Seller market! I can sell my townhouse with market comparable of $495,000 for $550,000.” Well, generally, with that type of price point the offers you receive will require a mortgage and therefore an appraisal. What is an appraisal? The literal term of appraisal is “an act of assessing something or someone.” Now in the case of real estate, a mortgage appraisal is done by a licensed, trained, certified professional that will come up with “legitimate” property value by looking at data. Data on the recently sold comparable units, replacement cost and/or income possibilities. If the appraised / "legitimate” value is less than the offered price, it is likely that the Buyer’s lender will not be able to complete the loan unless additional Seller’s accommodations are made. Meaning, you as the Seller will need to come back to the table and negotiate your selling price with the Buyer. There are multiple scenarios whereas a Seller you can still sell your unit above the assessed value, but this will require proper advice and planning.
All, one thing holds true. No matter what market you are in, if you want to successfully sell or purchase a property, it will require an experienced, respectful Real Estate Agent/Realtor. With the right Agent you will be well-prepared as a Buyer or have the right experience to plan for possible negotiating scenarios as a Seller in this competitive market.
Until next time. Royal Realty, where SERVICE is KING!
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