A seller’s market occurs when inventory of homes is low. There is more demand for home from buyers than there are home sellers on the market. This puts your sellers in the position of authority in deciding how the sale will go. A seller’s market allows the seller to set the price and the terms, within reason. The seller has the freedom to choose from one of several buyers, motivating buyers to offer a better price and better terms. As real estate professionals, it is our duty to guide seller clients to make the best possible use of the seller’s market.
Let’s dive into what’s involved in guiding sellers through a home sale during a seller’s market.
The Seller’s Market Strategy
During a seller’s market, it’s important to have a strategy to produce best results. Sellers want to attract multiple competing buyers. Bidding wars drive the asking price upward and encourage more favorable terms as part of the deal to accept the bid. The more competition is created with buyers, the better deal you will find among their offers. Once you have a nice selection of buyers ready, you can guide your seller to choose the best bid and then negotiate from a position of strength for the best price and terms for your seller.
Choosing Your Listing Price
In a seller’s market, listing prices go up. Start with the usual baseline numbers: The assayed value of the house, the home’s last selling price, added value through renovations, and the recent selling price of similar homes in the neighborhood. There are two approaches to a competitive listing price. In a seller’s market, you can list higher than the standard calculation, and challenge buyers to negotiate the price down. Or you can attract more buyers at once by setting the price slightly lower than expected and then negotiate the price up.
Staging to Attract Multiple Buyers
The best bids arrive when a home is staged to inspire the buyers that view and tour the property. While even shabby homes sell fast in a seller’s market, the best price comes from buyers competing to submit the highest bid and best terms to the seller. The more buyers who are competing for a home at the same time, the better the final accepted bid will be.
To this end, it’s important to prepare and stage the home for presentation. Advise your client to repaint the walls, polish and steam the floors, and guide them through light staging. The budget of the client and size of the house will determine the correct amount of staging to invest in.
Selecting the Best Bid and Buyer
When your buyers start to bid, advise your client to wait until several bids have come in at once. There’s no need to jump on the first bid unless it’s already a much better deal than you expected. Buyers competing with each other will offer higher bids and better contract terms to win the opportunity to buy the house.
Guide your seller to weigh the bids based on both their value and potential for negotiation. Help them choose the best bid and buyer of those available and let your buyer’s agent know they’ve been chosen.
Negotiating from a Position of Strength
In negotiations, remind your client that they are in the position of strength. In a seller’s market, the seller has more influence over the contract terms and can ask for more because the buyer is at a disadvantage. A good negotiation for the seller focuses on raising the selling price, sharing closing costs, and reducing any final maintenance costs or contingencies.
That said, being flexible with your buyer in negotiations is also the best way to achieve a smooth and harmonious closing. So negotiate from a position of strength, but advise your seller not to disadvantage the buyer with terms if it can be avoided.
Engaging a Smooth Closing Procedure
Finally, smooth the closing process. Closing is the most hectic time for sellers and their agents because there is so much legal and financial paperwork to take care of in the process. Ideally, agents can make use of a closing platform like Transactly to minimize those many hours of tedious closing. Instead, that time can be spent helping your seller get squared away at the end of the sale. Prioritize face-to-face time and a satisfactory personal conclusion while well-designed software takes care of the tedious closing procedures.
A seller’s agent provides an invaluable service to home sellers, especially in a seller’s market. Without your guidance, sellers wouldn’t know how to get the best price for their homes, even when the advantage is on their side. Your hard work and professional guidance will ensure each of your seller clients is well served and gets the best price for each house sold. For more real estate insights or to get started streamlining your closing process, explore Transactly today.