During a seller’s market, there is a low inventory of homes available in the area. This leads to a rise in buyer demand and homes are on the market for a much shorter time. As a seller, this probably sounds like a great time to list your home for sale. However, it may not be all it’s cracked up to be. When deciding on selling a home in a seller’s market, it is important to consider all the options and strategies available.
Bidding War vs. Traditional Listing
You may have heard a lot about bidding wars leading to homes in your area selling for well above the asking price. However, these claims can be slightly misleading.
Typically, homes that sold in a bidding war were actually initially listed at an artificially reduced price to attract many more potential buyers. A date was set about a week after the home went on the market when all interested buyers could present their offers. Sellers choose this method for selling their home in anticipation of buyers bidding over each other, resulting in a final offer well over the listing price.
But when the initial price was already reduced, did the seller really gain that much? More importantly, what may they have missed out on?
With a more traditional listing, a seller puts their home on the market at a price they actually want it to sell for. Buyers are able to make an offer at any time, and the seller can accept or decline the offers as they come in.
It may be surprising, but this method will often be more successful than a bidding war and results in an even higher final sale price. This is because the house has a much longer exposure to the market than just one week. It gives sellers more time to find a buyer who is willing to pay top dollar for their home. Additionally, many buyers do not like the bidding war process because it is stressful and can lead to major disappointment.
How to Handle Multiple Offers
Whether you opt for a bidding war or a more traditional listing, selling your house in a seller’s market could still result in multiple offers coming in. If this happens, consider the following:
While the highest bid may be tempting, it also leads to risk of the buyer struggling to finance the agreed upon price.
An offer with fewer contingencies decreases the chances of a buyer backing out of the sale.
- Buyer Funding
A buyer who is already pre-approved for a home loan is less of a risk than one who hasn’t secured any financing options.
Ultimately, a bidding war is best if you need a quick sale. However, if you have more flexibility, a traditional listing could lead to bigger profit. A qualified and experienced realtor will be able to help you navigate through these options and provide advice on how to sell your house in a seller’s market.