Selling your house in a competitive market can be both a blessing and a curse. You may receive a higher selling price for your home, but you also run the risk of overpricing the property and losing interest from potential buyers.
Nonetheless, sellers in today’s market are at a big advantage. We’re currently in the best seller’s market in over 20 years, which means there couldn’t be a better time to sell.
Keep reading to find out our top tips for selling your property in a competitive market, how to navigate the process, and why you may want to consider alternative selling options over the traditional real estate process.
Understanding Competitive Markets
One of the primary drivers of real estate competition is low housing inventory, or a shortage of available homes on the market. Competition among buyers naturally increases when there are fewer properties on the market compared to the number of buyers looking to purchase.
Additionally, high demand for housing is another component of real estate competition. Economic factors like population growth, rise in employment opportunities, and low interest rates mean more potential buyers enter the housing market in search for new homes.
Researching Your Local Market
Sellers should have a thorough understanding of their current market before listing their property or selling to a professional home buyer. This will help to establish a clear path to success throughout the selling process.
The local real estate market often dictates your pricing strategy before listing the property for sale. Real estate agents can provide a comparative market analysis (CMA) analyzing recently sold properties so you can make an informed decision on your listing price.
Conducting local market research also allows you to gauge the level of competition in your area. Knowing how many similar homes are currently listed and how quickly they’re selling can help you strategize and prepare accordingly.
Pros of Competitive Housing Markets
Competitive housing markets are often beneficial to sellers since more buyers compete for their properties. Let’s take a look at the pros of competitive housing markets today:
- Bidding Wars: Selling a desirable property in a good location during a seller’s market is guaranteed to generate interest from buyers. Oftentimes buyers want the property so much that they will engage in a bidding war that drives the final sale price much higher than the original listing price.
- Faster Sales: Competitive markets also result in faster sales for sellers. Buyers may be more incentivized to make offers quickly and hope to get their offer accepted before other buyers find out about the property. This means less time and effort is needed from sellers to find a buyer in their area.
- Negotiating Power: Sellers have the ability to negotiate favorable terms in competitive housing markets. They can dictate important conditions like contingencies, repairs, home warranties, seller contributions, and closing dates.
Cons of Competitive Housing Markets
While selling your home in a competitive market is often a great opportunity to receive top dollar offers, there are some important downsides to consider before listing your property.
- Overpricing: Like we mentioned, overpricing your home is one of the biggest pitfalls of selling in a competitive market. Many sellers believe that the competitive market will support their high asking price, only to find out that buyers are deterred by the unrealistic value.
- Limited Buyer Flexibility: Buyers in competitive markets may be less willing to accept seller contingencies or extensive repairs. This risk puts pressure on sellers to meet strict timelines or concede to buyer requests.
- Stressful Bidding Wars: While a bidding war may drive up the final sale price, they can also be emotionally taxing for sellers and create uncertainty during the process.
Tips for Selling in a Competitive Market
If you’re thinking about selling in a competitive real estate market, you’ll need to be prepared for what’s to come. Let’s talk about the most important tips for sellers today.
Tip #1 – Market the Property Effectively
Although competitive markets are advantageous to sellers, lackluster marketing and exposure may result in little interest in the property. Experienced real estate agents often have access to digital marketing tools and resources to get the word out about your property to generate interest from local buyers.
Additionally, sellers considering working with professional home buyers or listing their property as for sale by owner (FSBO) should look into off-market networking groups on Facebook and other local real estate groups for exposure.
Tip #2 – Be Prepared to Negotiate
Even with multiple offers and buyers competing for their properties, sellers should be prepared to negotiate.
Negotiating in a competitive real estate market allows sellers to potentially maximize profits on the sale. While multiple offers might suggest strong interest for the property, it doesn’t mean that all offers are equal. Negotiating effectively means sellers can assess which offer provides the best terms and highest price.
Additionally, negotiations allow sellers to mitigate potential risks during the selling process. Even in competitive markets, buyers may back out of a deal for various reasons like inspection results or financing issues.
Tip #3 – Consider Cash Buyers
Working with cash buyers should be a serious consideration for sellers in a competitive market. Cash buyers have the ability to pay sellers a lump sum for their property and close faster than a traditional real estate sale.
Also, cash buyers rarely have issues when it comes to financing. Selling your home to a buyer who needs a mortgage means they must be approved by a lender, which can take weeks and is often delayed for a variety of reasons. Even still, financing for approved buyers may fall through due to discrepancies on their application or undisclosed financial blemishes.
Final Thoughts
Selling in a competitive market is a great place to find yourself. You’ll often receive top dollar for your home with the ability to choose between multiple offers from buyers.
However, keep in mind that cash buyers like Capable Home Buyers may be a better option for a faster sale and smooth closing process.