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Aaron Farmer, a realtor at Texas Discount Realty, sees last summer as a good time to list his property, with prices at an all-time high and bidding wars bringing offers well above asking price. He hardly knew what he was doing.
Farmer listed a South Austin condo for $359,900 for a client, and the bidding went through. The highest offer at $425,000 paid 18% of the asking price. Just as the farmer called to inform the second highest bidder that he had lost, he learned that the first bidder had canceled the bid.
The first bidder “must have got cold feet and thought, ‘I’m overpaying,'” the farmer said. “I think the salesman thought I was messing with him. He was a little upset to see $50,000 gone.
Although the farmer’s client still ends up selling to the second highest bidder above the asking price, buyers compete against each other for the limited housing supply and sellers scramble to find the most promising bid. It may be the hottest seller’s market in memory, but even sellers are struggling with what Farmer calls a “quick roller coaster.”
Exploring the roller coaster housing market
Real estate experts agree that a high-priced and incredibly tight housing market isn’t healthy for anyone. And it probably won’t last.
Total housing inventory fell to a record low of just 910,100 units in December, down 14.2% from a year ago and the lowest in more than 20 years since the data was collected, according to the National Association of Realtors (NAR). The latest Zillow data shows that housing inventory is low, falling 9.5% to 950,000 in March from a year ago. That pushed home prices to another monthly high of $375,300, up 15 percent from the same period last year.
The unbalanced housing market is also creating unrealistic expectations from buyers and sellers. For example, some sellers are completely unprepared to fly their home off the market within days or hours.
“Once their property is on the market and filled with showings, it’s incredibly stressful for the seller, especially when they’re looking at 12 or 24 offers and trying to make sense of all the contingencies,” says Tiffany McQuaid. President of McQuaid & Company, a real estate services provider in Naples, Florida.
For some sellers who don’t find a new place to live when their current home sells, that means they have to immediately turn around and compete in a crowded market. In some cases, sellers may only have days or weeks to release when they thought it would take months.
On the flip side, there are homeowners who have bought in recent years and are happy to see their home equity increase by double-digit percentages. Real estate experts say these owners may be in for a rude awakening if they prepare to sell, expecting home values to always appreciate 20% each year.
“There are a lot of people who have paid more for their homes in the last couple of years,” said Zillow economist Nicole Bachaud. Although not in the near future, she thinks it may be due for a reboot soon.
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Instead, Bachaud expects the market to gradually return to a more reasonable level — especially as interest rates rise, which will force some people out of the market.
Selling and buying in today’s market
The current housing market can scare anyone. This includes potential sellers, who are sometimes too bold to pay too much to buy, rent or move. While understandable in terms of cost savings, it’s one reason supply is now so limited.
“Sellers don’t list because they’re afraid they won’t get something,” says Amy Cesario, a real estate agent with Compass in Denver.
In turn, Cesario is making good use of the lease clauses in the contract. These allow sellers to stay in their home as long as possible after the sale closes, giving them more time to make moving arrangements. However, 60 days—the longest most lenders allow—is still sometimes not enough.
And even when sellers have a plan, it can fail. That’s the case for Judith Mulholland, a retired publishing executive who worked with McQuaid’s firm to sell her home earlier this year as she prepares to move into a retirement community. However, the community she chose was under construction, causing them to delay each other.
Mulholland says finding the right, experienced realtor made all the difference, getting her through the rush and finally into her new home.
“they have [the Realtors] It has made a lot of difference in the team,” she said to ease the stress of moving.
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5 tips to consider when selling your home
With the market’s current state, deciding to sell can be nerve wracking. Here are five tips from five real estate professionals to consider when selling your home:
- Think about why you want to move and if you really need to. “If you need to move, now is a good time to put your home on the market,” says Sabrina Brown, a broker with Brown & Brown Real Estate in Fresno, California. If it’s not important, he says, “You’ll get a great return, but you’ll lose [it] When you go shopping.
- If you decide to sell, make sure you hire a reputable real estate agent. In such a tight market, good real estate agents prove their worth. “A real estate agent needs to know the terms inside and out to negotiate on behalf of the seller,” says McQuaid. “A high price offer is not necessarily good if the terms do not work in the best interest of the seller.”
- Be realistic with your expectations. While the market can be highly competitive, it’s important to have reasonable expectations, and a good real estate agent can help with that. If you overprice your home, it may stay on the market – and potential buyers may wonder what the problem is. “Don’t be greedy. If you are not greedy, you will get more,” says Cesario.
- Consider if there are simple steps you can take to properly increase your asking price. This means hiring an “acquiring agent.” [sellers] To do the right things,” Cesario says. For example, this may include deep pet odors or pulling out clutter. Why not try to earn $10,000 by spending $500? “What you get in return is amazing compared to what you put out,” she says.
- Remember that all markets generally revert to the mean. Bachaud said interest rates could continue to rise this year, pricing some people out of the market and easing the pressure.
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