4 Things Real Estate Agents Should Do during a Seller's Market
Are we in a seller’s market? Although there are varying definitions for what a seller’s market is, it’s hard to nail down a concrete definition. Generally, it’s when the demand for houses outpaces the supply. And all signs point to us having been in a seller’s market since the end of last year and that we remain in one right now. It’s hard to tell how long the current situation will last, but here are a few tips for real estate agents in a seller’s market.
The Situation in a Seller’s Market
Basically, in a seller’s market, buyers have to deal with a lot more competition. There are simply just way more buyers than there are houses to buy. These conditions make it so that sellers can demand much higher prices for their homes and that buyers don’t have much of a leg to stand on when it comes to negotiations. Due to a lack of supply, bidding wars are often common, further driving up the price.
There are multiple theories as to why we currently find ourselves in a seller’s market. The primary reason seems to be that COVID-19 brought the housing market to a near standstill during the first part of 2020. Once economies began opening back up, all the pent up demand for housing came pouring out, causing the market to explode last fall. That pent up demand combined with continuing low mortgage rates will likely keep the seller’s market going for some time in 2021.
So, as a real estate agent, how can you help your buyers during a seller’s market?
Communicate the Situation to Your Clients
The most important thing as a buyer’s agent in a seller’s market is making sure your clients know what the situation is. They should know that they are at a disadvantage when it comes to making an offer. Now is not the best time to push contingencies, specific closing dates, or concessions. Buyers should determine what’s most important to them and what’s worth potentially losing the property over. You also have to encourage clients to be patient and not get discouraged if they lose several properties they wanted. Not getting frustrated and keeping the eye on the prize is the only way to successfully navigate a seller’s market.
Make Your Best Offer First
The natural motivation of anyone is to spend as little as possible while still getting everything they want. That motivation will cause buyers to wonder if they can get the house for less than the listed price. However, in a seller’s market, you have to help your client understand that they have to make a strong offer to get the seller’s attention.
Make your best offer first to prevent the seller from hesitating and giving a competing buyer a chance to swoop in and make a better offer.
Ensure Your Client Is Preapproved
Again, the name of the game for a buyer in a seller’s market is to not give the seller any reason to doubt you’ll be able to follow through on your offer. You and your client may know that you will be approved for a mortgage loan, but unless they are preapproved, then the seller won’t know for sure. Unless your client is paying cash, then they really need to get preapproved before even beginning the home search and buying process.
Contact the Listing Agent
One thing you can do as a buyer’s agent is contact the listing agent to ask how they would like the offer prepared. If you can save the listing agent some time by preparing the offer exactly how the seller wants it, then they may be more inclined to recommend your client’s offer over a competing offer.
You Can Beat the Seller’s Market
It’s not impossible to help your buyer clients meet their goals and find the home they want in a seller’s market. You just need to keep them informed, make sure they understand that it’s a tougher situation than usual, encourage them to move as quickly as possible (but avoid impulse buying), and, above all else, keep their spirits up if they end up losing several properties they liked.