The best time to sell is when buyer demand is really high and inventory is somewhat scarce. Supply versus demand: it's the fundamental of economics and directly impacts the real estate market as well. It's also what helps sellers sell their properties quickly and for top dollar, and what helps buyers get a good deal on a home they love.
If you're on the selling end of the transaction, your best bet is to wait until the market is in favour of sellers. Of course, any time is a good time to sell, but a seller's market can provide you with higher profits and a faster turnaround time.
The question is, what are the signs of a seller's market?
Not Many Homes on the Market
If there aren't many homes currently listed for sale, all the buyers on the prowl for a new home are vying for the minimal inventory that's available. That means more people are competing for the same limited number of properties.
A seller's market is characterized by a few key things, including the inventory available. If you find that the selection is rather sparse, that's a good sign that the market is favouring sellers.
Days on the Market (DOM) is Low
In a seller's market, homes are snatched up by buyers just as soon as they're listed. If homes are priced right and are in good condition, they tend to sell rather quickly when buyer demand is high in a seller's market. Your agent will be able to look at the number of days on the market (DOM) for the average home before they are sold. The smaller this number is in comparison to the average in the neighbourhood, the more likely a market is in favour of sellers.
Prices Are Through the Roof
As the demand for homes increases, so do their respective prices. Demand is a key driver of prices, so if you notice that the price of homes that are listed continue to climb, that's a good sign that you're in the middle of a seller's market.
We've been seeing prices climb in Toronto for a long time now. The market has definitely been helping sellers realize huge profits on their homes when they sell. Although the market is somewhat cooling off since last year, now is still a great time to sell and make a decent profit if you've held onto your home over the years and developed quite a bit of equity through rapid appreciation.
One of the telltale signs of a seller's market is the frequency of bidding wars and multiple offer situations. Buyers in this climate will often find themselves bidding against other interested buyers at the same time on the same property. It's not uncommon for five, six, seven, or even 10 offers to come in on a desirable property, only to award the winning bidder with a home that ends up selling well over the asking price.
Bidding wars are certainly frustrating for buyers, but they're great for sellers when it comes to selling for top dollar.
Selling Price is Over Asking Price
As we just mentioned above, selling prices can often go well over the listing price in seller's markets when multiple offers come in on a home. When a bidding war sparks, the price of a property can easily and quickly be driven up. Your real estate agent will be able to pull a report that shows the final sales price relative to the original listing price. If you see that the sale price is higher, you're probably in a seller's market.
Sellers Offer No Incentives
In a buyer's market, sellers often throw in some incentives in order to sweeten the deal and entice buyers to take the bait. Sellers might offer to cover part of the closing costs, offer furniture, and even offer cash back to cover the cost of certain repairs or upgrades. In a seller's market, this type of tactic isn't necessary because buyers are already knocking on the door.
Certain market conditions make selling real estate a lot easier. In a seller's market, you're more likely to get more offers, more money on the table, and a faster sale compared to buyer's markets. But even if you're not in a seller's market right now doesn't mean that you won't be able to sell in a reasonable amount of time and for top dollar.
With the help of an experienced real estate agent who is well versed in selling properties in your particular area, there's no reason why you can't expect a quick sale for a solid price.