How do I know if my area is a seller’s market?
A seller’s market is great news for homeowners. The balance of power is in your favour as there are more buyers than homes for sale in the area. Properties sell quicker and often attract multiple offers causing a bidding frenzy.
At PropCast, we’ve built a free online tool where you can input your postcode and we use an algorithm to tell you how ‘hot’ your local market is. But a good local estate agent will also be able to confirm whether the micro market for your type of property is hot. Or you can look at online property portals to see how quickly properties are selling.
A good indication of a seller’s market is if you see the majority of properties go under offer within 30 days after six to 10 viewings. In a seller’s market, if you choose your estate agent wisely you should expect to receive at least two viewings per week and be under offer within four to six weeks. From offer acceptance to legal completion, it will usually then take a further 11 weeks depending on the length and complexity of any linked transactions.
Another way to tell if you’re in a seller’s market is to look at what local housebuilders are doing. Developers offer incentives when the market is cool and take them away when the market is hot. If you see offers of “stamp duty paid” or “free legals” that may indicate your market is not so warm after all.
Tips for buying/selling in a seller’s market
Selling in a hot market is much easier than if you were in a cold market. Still, it can’t hinder your cause to make sure your home is looking its very best.
However, if you are to secure your dream home in a hot market as a buyer, you need to be organised and realistic in order to compete against other purchasers. Register with all the local agents, call them regularly and spring into action the moment a property you like hits the market. Homes don’t stay available for very long in a hot market.
It’s also really important to be pre-approved by your mortgage lender with a mortgage in principle before you make an offer, so that you can act quickly when it is accepted. Make your initial offer close to your best and final offer, as you won’t be the only person interested in the property. In a hot market, sellers can afford to be picky so you don’t want to antagonise them unnecessarily with a low-ball offer. Very rarely will you grab a ‘bargain’ in this type of market.
The upside as a buyer is that you’ll probably see some immediate capital appreciation on your investment.
Tips for buying/selling in a buyer’s market
If you’re a homeowner, a cold market isn’t something to worry about. There are buyers out there – they’re just not prepared to pay the prices most sellers are currently asking. Overpricing causes most homes to remain on the market for too long, and such homes eventually sell for less than their market value.
One of the first questions a buyer will ask is ‘how long has it been on the market?’. If the answer is more than six weeks and there have been successive price reductions, they won’t have much confidence in the value of your home.
If you’re strategic you actually have a chance of securing great results from your sale and potentially even attract multiple interested buyers. The key is to think about your competition and make sure your property stands out with excellent presentation and realistic pricing. Identify the properties that are your direct competitors, and then position your home so it represents the best value for money. If you want the absolute best result from your sale, you need the absolute truth from estate agents, so make sure you choose one that isn’t afraid to give you brutal honesty about the market. Also make sure they are currently selling (or recently sold) property comparable to yours as this will mean they already have relationships with your target buyers.
Although buyers have the upper hand in negotiations, there will still be competition over the best value for money properties. Position yourself as the best buyer possible by being organised and having all of your paperwork ready and mortgage agreement in place.
PropCast is a free online interactive tool by consumer advice service TheAdvisory. Visit theadvisory.co.uk/propcast to try it out