Home Girls: It’s a seller’s market – True or False?

By Cathy Goodrich, Broker

Master Certified Negotiation Expert

RE/MAX Northwest REALTORS

It's True! It's a seller's market.

Overflowing open houses; multiple offers and escalation clauses; pre-inspections, no inspections and waived appraisals – it’s arguably a new marketplace.

Desperate (and qualified) buyers with cash or low interest loans jump on every new listing because of historically low inventory. 

Homeowners who’ve delayed selling should see this as a window of opportunity to realize a good sales price.

Check out the graph to see the Shoreline and Lake Forest Park real estate market over ten years. A picture IS worth a thousand words.

Months of Inventory-Shoreline/Lake Forest Park

The graph “Months of Inventory-Area 715 and 720” clearly shows the current challenge for buyers. 

First a short explanation: A simple guide for the liquidity in the market is “Months of Inventory” calculated by dividing the number of last month’s active listings by the number of sold listings. 

Three to six months of inventory is a balanced market favoring neither buyers nor sellers. Less than three month’ inventory favors sellers while over 6 months over inventory is a buyers’ market.

In March 2013 there was just one month of inventory. Contrast that to January 2009 with twenty-three months’ supply! It was not a fun time for owners trying to sell their home where prices declined monthly and listing times were three months and longer. Today’s lack of homes for sale more closely recalls the 2005 market where demand outstripped supply, buyers waived inspections and wrote offers with automatic price escalators just to get a house.

How long will it last? No one knows. Is it true for every home? No. Whether a home seller has a choice among offers depends on several factors including the location, condition, price and how desirable it is to current buyers. Even though it may seem counterintuitive in a seller’s market, an professional advisor can help you strategize price and marketing and, as importantly, help you evaluate and negotiate the possible multiple offers.

Unlike 2005 where just about any breathing body could get a loan and homes appraised at value and closed successfully, 13 -15% of transactions now fail or are re-negotiated on appraisal.

Lesson learned: the highest offer isn’t necessarily the best. You need to examine the buyer’s financing, assess their motivation and commitment to the offer, and weigh the other terms, e.g., inspection contingencies, closing times and the experience of the buyer’s broker. 

If you think now may be the time to consider selling your home, interview and get references before choosing a broker. You’ll be working closely together so professional expertise, ethical practices and compatibility are important considerations. It’s a compelling time to be a seller!

Cathy Goodrich can be reached at 206-498-2513