A recent report showed that homes across the U.S. sold faster than ever during 2017. And experts believe that 2018 could be an even hotter real estate market, due to a chronically low level of homes for sale. So buyers should be prepared for competition.
A Fast-Moving Real Estate Market in 2018
Here’s the big message for home buyers and house hunters in 2018: Be prepared to move quickly when you find a house you want to buy. Nationwide, homes sold at their fastest pace on record last year. And this year could match, or even outpace, that record.
According to a recent report from the real estate information company Zillow, it took a median of 81 days to sell a home in 2017. That was nine days faster than the previous year. The fastest-selling month for houses was June of 2017, when it took about 73 days for a home to sell (including the actual closing process). Since it can take between four and six weeks to close a sale, this means the typical home was on the market for around 30 days, before going under contract.
Buyers Still Dealing With Limited Inventory
So here we are in spring 2018, and housing markets across the country are still red-hot. This is largely due to the dearth of inventory seen in many areas. Home buyers in 2018 are facing limited inventory this home-shopping season, which has been the case for the last three years.
According to the latest figures, housing market inventory across the country has declined on a year-over-year basis for 37 months in a row. This leaves fewer options for home buyers, while boosting competition and prices. In 2017, nearly a quarter of all homes sold across the U.S. went for more than the list price. This shows that stiff competition could be leading to bidding wars and driving prices higher.
According to Aaron Terrazas, senior economist at Zillow, 2018 will be marked by fast home sales.
“As demand has outpaced supply in the housing market over the past three years, buying a home has become an exercise in speed and agility,” Terrazas said in a recent news release. “This [year] is shaping up to be another competitive home shopping season for buyers, who may have to linger on the market until they find the right home but then sprint across the finish line once they do.”
Tips for Buying in a ‘Fast’ Market
Fortunately, there are some things you can do to make the house-hunting process more efficient, and to make your offer stand out. Here are five tips for buying in a competitive market:
The fastest-selling real estate markets of 2017 were mostly located in California and the Pacific Northwest, where inventory is most constrained.
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Home buyers who are planning to enter the real estate market can benefit from having their financing arranged ahead of time. What does that mean exactly, and why is it so important in the current real estate market? Here’s what you need to know.
Many real estate markets across the country are highly competitive right now due to a lack of supply. There are plenty of people in the market looking to buy a home, but there’s not enough inventory to go around. This supply and demand imbalance puts upward pressure on home prices and makes things more competitive for buyers.
Mike Fratantoni, chief economist for the Mortgage Bankers Association, recently cited this as one of the primary factors influencing the market right now. “The major constraint in the market right now is the lack of supply,” Fratantoni told CNBC. “The absolute number of units on the market is near an all-time record low.”
Competing in a Tight Real Estate Market
In a competitive real estate market, home buyers want to have every possible advantage going for them. Among other things, home buyers can benefit from having their financing lined up ahead of time, before they even start looking at houses.
This might mean one of two things, depending on your money situation:
Benefits of Mortgage Pre-Approval
Mortgage pre-approval is basically a kind of financial pre-screening process. This is where a bank or mortgage company reviews your current financial situation to determine (A) if you’re a good candidate for a home loan, and (B) how much you can borrow. This helps you, the buyer, in two ways:
Both of these things could give you a much-needed advantage in the marketplace. This is especially important in an active real estate market where homes are selling quickly, and where multiple offers are a common occurrence.
The current inventory situation across the country also underscores the importance of having professional help from an experienced real estate agent. An agent can help you find a property that meets your needs, evaluate the seller’s asking price, and make a strong offer in a timely fashion. This is the key to success in a competitive real estate market.
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Do you plan to sell a home in 2018? If so, it’s time to start thinking about your asking price. Better yet, you could work with an experienced real estate agent to determine your list price. It’s one of our specialties. In this article, we’ll look at the reasons why it’s so important to price a home effectively, in order to get a quick sale.
Pricing Your Home to Sell Quickly
When selling a home, you can set the initial asking price in one of three ways. You can price it to sell quickly, eventually, or not at all. The first option is the one that appeals to most sellers, for obvious reasons.
The primary goal when selling a home is (A) to get the highest possible price, and (B) to sell within the shortest time possible. So let’s talk about how you would price a home to sell it more quickly.
When selling a home, it can be helpful to change your mindset from “owner” to “seller.” In reality, you’re both of these things. You’re the person who owns the home, and you’re also the one who is selling it. But you’ll want to think more like a salesperson than a homeowner, especially when it comes to pricing your home for the market.
Here’s a short maxim to help you adopt a salesperson’s mindset: “It’s not personal. It’s business.” You can repeat this little mantra when determining your asking price, and when negotiating with buyers. The personal and emotional connection you have to your home does not translate into market value.
Depending on when you first purchased your home, there’s a good chance it has risen in value. That’s because home prices across the country have generally risen over the last few years — and they continue to do so in most cities. So you’ll want to have the property evaluated by a real estate agent prior to setting your price. Your agent will review recent home sales in the area and other relevant data to figure out what your house might be worth in the current market.
The Market Determines Value
And speaking of the market, that is what determines how much your home is worth. The primary market forces of supply and demand dictate how much a seller can charge for an asset (in this case, a house). So it’s important to analyze the broader real estate market — and not just the house itself — when deciding on your initial asking price. This is another area where an experienced agent can guide you.
Setting the list price too high is a common mistake among sellers, particularly those who go it alone without an agent’s help. We live in the Information Age. Thanks to the internet, home buyers are more price-savvy than ever before. Most buyers conduct a lot of research before entering the real estate market. So it’s important that you establish a realistic asking price based on (A) recent sales activity and (B) the unique features of your home.
Pricing is one of the “Three P’s” of a solid home-selling strategy. The other two P’s are preparation and promotion. If you want to sell a house quickly and for top dollar, you must prepare it for the market, price it wisely, and promote it widely.
Have questions? Please contact me if you have questions about selling your home, or if you’d like a market analysis to help determine a good price. This is one of my specialties. I can help you avoid common pitfalls and support your price with current sales data.