Understanding the current state of the real estate market is critical to the successful sale of your home. Selling a home in any type of market often involves trade-offs. Those trade-offs revolve around two key issues:
- How quickly you need to sell your home; and
- How much money you need to profit from the sale of your home
The local real estate market conditions will help you determine realistic expectations for both issues.
If you need to sell your home quickly (faster than the average “days on the market”), you may need to price it below most comparable homes in your area. The trade-off in this scenario would be that you may not make the maximum profit on your sale. Conversely, if you are not pressed for time you may be able to price your home on the higher end of comparable properties in your area. The trade-off in this case is that it may take more days on the market to sell your home.
Real estate markets work on the general financial principle of supply and demand. When there are relatively few homes on the market and there are many eager buyers, the market is termed a “seller’s market”. When there are relatively few buyers and several months’ worth of inventory (houses for sale), the market is termed a “buyer’s market”. Remember, regardless of whether your local market is a seller’s market or buyer’s market, you will likely get the benefits of either if you sell your home and then decide to buy another in the same market. The bottom line is know your market, but don't be intimidated by a buyer's market or overconfident in a seller's market.
To learn about the local real estate market, browse your local real estate board's Multiple Listing Service (MLS) for the latest statistics on comparable homes. Ideally, it would be useful to know the average days on the market, average sales price and number of other homes on the market that are comparable to yours. Real estate boards commonly list this information on their websites.
