A hot topic in today’s real estate world is that it’s a “seller’s market!” No matter where you look or turn, the word lately is that it’s truly a seller’s market and the media can’t wait to let the world know about it as well. But is it really? It’s true, the inventory is low and there are clearly more buyers than there are sellers at this current time. But that doesn’t necessarily mean it’s automatically a seller’s market. Average days on market according to Twin City MLS figures, is 85-90 days. Is that really a good number? Back in the early 2000’s, homes were selling in 5-10 days. That is truly a seller’s market, when a home is on the market for ten days or less before an offer is made against it. If it were truly a seller’s market, would it take nearly three months, on average, to sell a home?
But perhaps more important than these figures, is the process that is currently used to actually determine the final sales price of a home. When a seller or home owner hears how it’s a seller’s market, over and over, the immediate tendency and thought process is one of joy and excitement, and that in turn equates to a very strong possibility of over pricing a home. Despite what a Realtor may advise, because of all this hype, a homeowner may still want to price their home higher than their Realtor’s recommendation. The irony of this is that they may even get that price. However, if it is a financed purchase or offer, the Appraiser that the bank hires will be the one truly dictating what the home is going to sell for. Unless it’s a cash deal, which make up a very small amount of transactions $100K and over, an appraisal is an integral and mandatory part of the process. If the Appraiser comes in with a price that is lower than the purchase price, what then? In that case, the seller either 1). lowers the price to the appraisal amount, 2). the buyer pays the difference (which of course can be financial suicide and really should never happen), or 3). the deal falls apart. But the bottom line is, price it where you want, the appraisal is the great equalizer that’s going to tell both the seller and their Agent, what the home is REALLY worth. Or at least what the bank is willing to lend towards it. It may not happen often, but it does happen, and is always a possibility.
It is very important when a person reads the headlines in the news that states it’s a seller’s market, that they keep things in perspective and trust their Realtor to advise them where to price their home at. Unfortunately, what is often heard instead is that “right there in black and white, on the front page of the newspaper or internet blog, is that it’s a seller’s market! With that being the case, I want MORE for my home than you say it’s worth. After all, it’s a seller’s market, and the buyers will pay almost anything to get my home!” Seems a bit over stated and perhaps even glorified, doesn’t it? Maybe even a bit dramatic. Yet it’s what Realtors hear and deal with every day! It seems as though everyone these days is an armchair Realtor. Hype from the media is probably liable for the vast majority of the false hope they have. Not just from local newspapers either, it happens nation, if not worldwide, and even on reality TV shows. After the big bubble burst a few years back, banks are under more scrutiny than ever before, to make sure this process is done correctly and that we don’t have another real estate crisis anytime soon. That’s good for everyone, whether buying or selling a home or not. But what it has also accomplished, is making absolute sure that the market improves as gradually as it needs to, instead of allowing the housing industry to turn out over-priced homes again, and worse yet, banks lending money for purchasing those over-priced homes. The market has improved and continues to improve, but it is going to be very gradual. Again, that’s a good thing and what is needed in order to right the ship. But it’s really important not to get caught up in the hype and gossip of it being a “seller’s market.” Trust your Realtor and let the system work how it’s supposed to, and everything should work out well!