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What is a Seller’s Market?

A Seller’s market is exactly what it sounds like it should be, only different.

How many times have you heard location, location, location as the answer to a real estate question? Market shares that answer but adds some factors. In real estate, the definition of market depends on location. A specific street may be a hot market; for instance, Wall Street carries panache for financial firms, so those addresses sell for a premium.

Cities or counties run hot and cold. Even states experience real estate booms.

The seller’s market occurs when significantly more people want to buy into the location than want to sell. This fact translates into higher prices for property. Good, if you’re the seller. If you own property, the best time to sell a house is when your property is in a seller’s market.

What signs should you look for?
Has your location changed in a significant way? Suburban locations might be placed in the newest high school district, or maybe a major employer bought the vacant industrial property a mile away.

Urban or near-in locations may have a new commuter rail stop, or just become trendy for no apparent reason.

Cities which grow rapidly, particularly with new employment or new industry clusters — like Silicon Valley with computers — become seller’s markets overnight.

When considering selling your home, look for the signs of a seller’s market. A good sign is the lack of for-sale signs.

Stable neighborhoods bring in good prices. Stable neighborhoods in a trendy section of town bring great prices.
How many homes are for sale on your street? Neighborhood? Subdivision? School district? If the answer is very few, that’s a good time to sell.

  • So what are the location factors that create new seller’s markets?
  • New employment opportunities
  • New school districts
  • New tax concessions
  • Neighborhood perquisites (newer mixed-use communities creating location)
  • Trendy-ness
  • Prevalence of desired home models (ranchers in aging communities)

Other than location, what fuels a seller’s market?

Okay, location isn’t really everything. The property flipping business is based on creating value by upgrading distressed property and creating a move-in condition house.

This business is based on the real estate adage that buying the worst property and selling the best property in a neighborhood is the most profitable pathway. Only partially true.

Not everyone is a house flipper. In fact, most buyers desire a move-in condition house.

You can create a one-house seller’s market by owning the most well-maintained house in the neighborhood. That’s the one most people want to buy.
You’ve heard of curb appeal. By cleaning your front yard and keeping it mown and manicured, you create a good first impression in order to raise buyer interest. Clean and refresh your entry, kitchen and baths and you will give a good interior first impression. You’ll be in the seller’s market, marginal as it may be, over your sloppy inattentive neighbors.

The demand in the neighborhood, the houses that sell at a premium, may be two-story colonial homes with garages. A rancher in that neighborhood may not be part of the seller’s market. On the other hand, as the population of an area gets older, one-story homes or high-rises with elevators may become the hot property to own.

The Foreclosure Issue
The glut of homes owned or controlled by financial institutions affects the markets. Nobody wants to live in a neighborhood which is run down and blighted with vacant homes. When mortgage lenders take back many homes, they actually hurt their own values.

If your property is in a similar neighborhood without the foreclosure issue, you may be in a seller’s market.

Seller’s markets are a function of demand for certain real estate valued against the supply of that product, the for-sale inventory. Recognize a seller’s market by the lack of for-sale signs, or a buyer’s market by the large number of vacant homes or for-sale signs. Well maintained, proud neighborhoods are often seller’s markets. Better public transportation access can bring demand to areas, as can better employment access.

If you’re currently in a buyer’s market and want to predict which neighborhood is likely to become a seller’s market, look for the transitions in schools, taxes, employment, transportation, or attractions coming nearby.

You can always create a seller’s market of one house by pricing your property appropriately for the times. Buyers will come knocking.

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