Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
Aaron Farmer, a realtor at Texas Discount Realty, saw last winter as the perfect time to list a property, with prices at an all-time high and bidding wars fetching offers well above asking prices. . He didn’t know what awaited him.
Farmer listed a south Austin condo for $359,900 for a client, and the offers poured in. The highest bid at $425,000 was 18% above the asking price. While Farmer was on the phone to tell the second bidder that he had lost, he learned that the first bidder had withdrawn the bid.
The first bidder “probably got cold feet and thought, ‘I’m paying too much,'” says Farmer. “I think my salesman thought I was joking with him. He was a little upset because he saw $50,000 disappear.
Although Farmer’s client ended up selling above the asking price to the second highest bidder, such a boost is common as buyers compete to outbid the limited housing supply and sellers scramble to get the most promising offer. It may be the hottest seller’s market in memory, but even sellers are struggling in what Farmer calls an “instant rollercoaster” of market ups and downs.
Navigate a rollercoaster housing market
Real estate experts agree that the high priced and incredibly tight housing market is not healthy for anyone. And it’s probably not sustainable either.
Total housing inventory hit a record low in December at just 910,100 units, down 14.2% from a year ago and the lowest amount in more than 20 years since the data was collected , according to the National Association of Realtors (NAR). Latest Zillow data shows housing stock remains low, falling 9.5% at 950,000 units in March compared to a year ago. That pushed home prices to another monthly high of $375,300, a 15% jump from the same time last year.
The imbalanced housing market also creates unrealistic expectations on the part of buyers and sellers. For example, some sellers are not fully prepared for their home to leave the market within days, or even hours in some cases.
“Once their property hits the market and they’re inundated with exposures, it’s been incredibly stressful for ‘the seller,’ especially when they’re looking at 12 or 24 offers and trying to figure out all the contingencies” , says Tiffany McQuaid, president of McQuaid & Company, a provider of real estate services in Naples, Florida.
For some sellers who have yet to find a new place to live when their current home sells, it also means they must immediately turn around and compete in an oversaturated buyer’s market. In some cases, sellers only had days or weeks to leave when they thought it could take months.
On the other hand, there are homeowners who have purchased in recent years who have enjoyed seeing their net worth rise in the double-digit percentages largely due to an unusual spike in price appreciation. real estate. If these homeowners prepare to sell expecting home prices to still appreciate 20% every year, they could have a rude awakening, housing experts say.
“There are a lot of people who have paid way too much for their homes in the last two years,” says Nicole Bachaud, economist at Zillow. She thinks it might be reset soon, but not in the near future.
Related: Why are houses so expensive?
Instead, Bachaud expects the market to gradually return to a rational level, especially as rising interest rates push some people out of the market.
Selling and buying in the current market
The current real estate market can be intimidating for everyone. This includes potential sellers, who are sometimes so intimidated by the thought of paying more to buy, rent or move multiple times that they stay put. While understandable from a cost savings perspective, this is also one of the reasons supply is so limited today.
“Sellers are so scared they won’t find something, so they won’t list,” says Amy Cesario, realtor at Compass in Denver.
In response, Cesario makes good use of sale-leaseback clauses in contracts. These allow sellers to stay in their homes for as long as possible after the sale is closed, giving them more time to organize their move. However, 60 days – the longest term allowed by most lenders – is sometimes not enough.
And even when salespeople have a plan, it can fail. Such was the case for Judith Mulholland, a retired publishing executive who worked with the McQuaid Company to sell her home earlier this year as she prepared to move into a retirement community. However, the community she chose was under construction, which resulted in one delay after another.
Mulholland says having the right experienced real estate agent made all the difference in helping her through the bumps and ultimately, into her new home.
” The knowledge [the Realtors] in the team made a big difference” in alleviating the stress of the move, she says.
Related: How to find a real estate agent
5 tips to consider when selling your home
With the market in its current state, deciding whether or not to sell can be nerve-wracking. Here are five tips from home experts to consider when selling your home:
- Think about why you want to move and if you really need it. “If you have to move, now is the perfect time for you to put your home on the market,” says Sabrina Brown, broker at Brown & Brown Real Estate in Fresno, Calif. If it’s not necessary, “you’re going to get a great return, but you’re going to lose [it] when you are going to buy.
- If you decide to sell, make sure you use a reputable real estate agent. In such a tight market, good real estate agents prove themselves. “A real estate agent needs to know contracts inside and out to negotiate on behalf of the seller,” says McQuaid. “The most expensive offer is not necessarily the best if the terms don’t work out in the seller’s best interest.”
- Be realistic with your expectations. Although the market can be hyper-competitive, it’s important to maintain reasonable expectations, and a good real estate agent can help. If you overprice your home, it could end up staying on the market and potential buyers may wonder what’s wrong. “Don’t be greedy. You’ll get more if you’re not greedy,” says Cesario.
- Ask yourself if there are simple steps you can take to fairly raise the asking price. It means “hire an agent who will get [sellers] doing the right things,” says Cesario. For example, this could include deep cleaning pet odors or hauling clutter. “Why don’t you try to get another $10,000 by spending $500? What you get in return is dramatic compared to what you spend,” she says.
- Remember that all markets usually revert to the mean. Bachaud says that as interest rates will likely continue to rise this year, some people will be squeezed out of the market, easing the pressure.
Faster and easier mortgages
Check your rates today with Better Mortgage.