Current Owners Have Plenty to Gain from Selling Now
With the current real estate situation, prices have reached record highs in most markets. Despite that trend, many homeowners are still on the sidelines of the housing market, as they are hesitant in putting their properties up for sale regardless of the incentives to do so. That might be particularly true for owners who bought in the past 10 years, when prices have been below the pre-recession and historical norms. However, other conditions could come together and make the present the perfect opportunity to sell.
Real estate professionals may be wise to seek out current homeowners who may not understand the opportunities presented to them by today's market conditions, and help them get a better feel for why selling at this point in time could be to their benefit, given the type of demand shoppers have been exhibiting for months, and how things could change in the future.
Perhaps the biggest story in the housing market in 2017 has been the massive demand for home purchases among would-be buyers, but the relatively limited inventory of properties they can actually buy in most markets, according to Trulia. In the second quarter of the year alone, the number of homes for sale nationwide fell by nearly 9 percent, marking the ninth straight quarter there was such a decline. In comparison with where the market was five years ago, there are now 20 percent fewer homes up for sale.
Digging into the Numbers
The reason for this trend is clear enough to industry observers: Buyer demand is so great that when any home is put up for sale, owners are likely to find significant enough interest - typically from multiple bidders - that they can get through the real estate sales process quickly and easily. Today, fewer than half of all homes up for sale are still up for sale within two months of being listed, down from nearly 60 percent just five years ago. Not surprisingly, as home inventory declines, so does the average number of days homes spend on the market, and that's likely to be the case for homeowners occupying some of the larger metro territories in the U.S.
Some real estate professionals remain puzzled as to why more homeowners aren't eager to get into the market and earn a significant return on their home investments thanks to today's high prices, according to mLive. List prices and sales prices are both on the rise, and mortgage rates are considered probable to follow suit in the next several months, meaning, while some homeowners may be worried about what they would have to pay after selling their own homes, any waiting they do could end up negatively impacting affordability. Current homeowners may also be waiting for competition to ease so they don't have to go through the bidding process either.
"They're afraid to list before they find something they like," David Elya, a broker at Brookview Realty in Rochester, Michigan, told the news site.
But even beyond that, many current homeowners may have had their credit or other aspects of their finances damaged during the recession, which has long since ended, but the effects still linger. Lenders continue to keep their credit restrictions tight in comparison with historical norms, and while those conditions are easing, some current owners may still have difficulties finding lenders to approve their new mortgage applications.
Further compounding the inventory issue is the fact that homebuilders aren't able to put up new houses quickly enough to meet demand in most parts of the country.
When Sellers Become Buyers
Indeed, current homeowners who may even be thinking about selling have potentially seen the level of competition and decided it's not for them at this time, according to the Portland Press Herald. Given how quickly homes are selling, the amount of work sellers would have to do before they put their homes up for sale - to shop around, put together a bid (usually with mortgage pre-approval) and have that bid accepted - may seem too sizable a task to tackle, even if the ultimate reward could be significant.
The good news for prospective sellers is in the busier markets, the selling process has been so accelerated, everything happens in less than a week. For example, a listing can go up on a Thursday or Friday, with an open house scheduled for that weekend, and multiple bids may come in by Monday. That's a four-day turnaround, and a lot of homes go from not even being listed to under contract within five.
That could encourage current owners on the fence about getting into the market themselves that this might not be the sort of protracted process they might expect, though that means if they do shop around, they will need to have contingency plans in place for getting their own homes listed and under contract quickly.
Right now, it's difficult for even the most seasoned agent to reassure clients - whether they're buyers or sellers, current or prospective - about when today's conditions can be expected to change, according to Trulia. However, there are some positives that could help encourage current owners. For instance, for every 1 percentage point increase in home building efforts, there's a plus-13.3 percent increase in inventory levels across the nation's 100 markets.
There's no one way to explain why the current inventory situation got to be this way, and there's no definitive way for the market to get back to historically normal conditions. With this in mind, it becomes vital for today's agents to help explain to their clients what kind of conditions they can expect to encounter, and whether - given their unique situations - buying or selling may make sense for each individual.
As much as an agent's job revolves around being able to facilitate real estate sales, it's also about providing counsel based on years of experience in the industry and their local markets, giving consumers the best possible advice about how to proceed.
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