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What kind of experience can you expect if you decide to sell your house in the current real estate market?

By now everyone is aware that the current real estate market is heavily skewed toward the seller’s side.  This is due, mainly to a severe lack of housing inventory. Lots of factors have combined to create this supply issue.

Firstly, there has been a sort of generational mind shift.  People just don’t seem to want to move as often as they did in the past. They are staying in their homes much longer before putting them on the market.

Then there are the low interest rates.  It has become a lot more economically attractive to refinance your current mortgage at the new rates than it is to buy a new house.

Restrictions on builders, along with the increase in the cost of building materials mean that there are a lot fewer new builds going on the market.

If you add all of this with the enormous number of new homebuyers and the ability to work from home, you get a large part of the population moving from urban apartments to owning homes in the more affordable parts of the country.

All of these factors have created a market that is hungry for houses.

So, you would think that home sellers would be jacking up prices and cashing checks all day long.  Well, the truth is, selling your home in this market you are probably more in control than you have been in a long time.  You are in a much better position to negotiate and ultimately get a great price on your home.

But a great price is not the same thing as an unrealistic price.

There are still basically three ways you can price your home:

  1. You can underprice the house.  This means you get a lot of attention for the property and hope for a bidding war that drives the price up to your dream levels
  2. You can aim for the stars.  You know it’s a seller’s market so you price the house as high as possible to make the most on the deal in one go.
  3. Or, you go the boring route and charge a fair market price for your house like you would in any other market.

Price the House Low

Believe me when I say that in this market it is EXTREMELY hard to actually underprice a house.  Just about any house at fair market price or below is going to get a lot of attention, multiple offers and bid up significantly.

The only drawback is that this is not a guarantee.  You have to be prepared for a situation where you may actually only get one or two offers on your house.  It may never get bid up to the range you were looking for, or even a fair asking price.  Its rare that this happens but a very real possibility.

Going For It

In this real estate market, there is a very real temptation to shoot for the stars and set a dream price for your house.  After all, your neighbor sold their house for a lot and the market has only gotten better.  Surely your house is worth a lot more now.

While it might be hard to underprice a house, right now, it is very easy to overprice one. Lots of overpriced houses are still sitting on the market, even though people are snapping up houses before they put signs in the yard. Overpriced houses get a few curious visitors and a lot fewer actual offers.

Today’s home buyers have access to a lot of information.  They know what similar houses are selling for so they know beforehand when a house is severely overpriced.

If you are expecting some sort of reverse auction where a buyer offers you a lower price that is still pretty high, you will be disappointed.  It might happen, but, more often than not, Homebuyers just shy away from overpriced houses.  They see the seller as being unrealistic and move on.

Sell Your House at Fair Market Price

Yes, I know, It’s boring.  There is so much excitement in the real estate market right now it feels like you’re missing out by not doing something daring. But remember, the market takes care of itself.  If the price of homes is truly going up then it will be reflected in assessments and comps.

If you set a fair price and have the numbers to back it up you will still attract potential buyers.  These buyers will still make offers and the bidding will most likely go up. But, if the price does not shoot through the roof, you will at least have a good chance of getting the price you set.

As normal as it sounds, setting your house to market is ultimately a better route than trying to set the market with your house.

Selling and Buying

At this point, I think it’s important to remember that a majority of home sellers are also in the market to buy a new house. This means that they will have to experience the ups and downs of both sides of the market.

It’s important to plan ahead in a market this fast.  You might end up selling your house before you are able to move into your new house.  You need to really be aware of the timing of your transactions in order to not wind up homeless for a while.

It is possible to put contingencies in your contract for whether the house closes after your new house closes or vice versa. Unfortunately, contingencies will make your offer look a lot less appealing, for either someone trying to buy your house or the person selling you your next house.

Take the time and get some guidance so that both sides of your move work our best for you.

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