The Arizona housing market has been red hot for close to two years and because of this the home price growth that we have had in Phoenix has reached historic levels. Home buyers have been asking the question all year about whether it is a good time to buy a house now or not, hoping the real estate market will pull back and give up some of the price gains that we have had. But the Arizona housing market continues to show continued growth leaving buyers to ask if we are in a buyer’s market vs seller’s market?
What is a Seller’s Market?
A seller’s market is one in which there are more buyers hoping to buy a home than there are number of homes for sale. In a seller’s market, home seller’s have more negotiating power than prospective buyers and home prices reflect the large number of buyers competing for a small number of homes.
Here are some strategies for both buyers and sellers for either buying a home or selling a home.
3 Strategies for Buyers
Buyers operating in a seller’s market need to be organized, prepared, and aggressive in a seller’s market. Homes move quickly when they come on the market and buyers need to be available to see homes when they come on the market and be ready to put in an offer when they see a home they like.
Get Pre-Qualified for a Mortgage
Most Realtors that work in real estate full time and know the market well will not even agree to show you homes unless you have a mortgage pre-qualification completed.
Getting this step done where a loan officer reviews your asset and income documents is a must anytime you are buying a home, but it is even more important when we are in a seller’s market. Having this step completed shows the seller that your finances have been reviewed by a loan officer and by having a pre-qualification letter shows that your loan officer has confirmed that you are qualified to buy a home.
Act Quickly
When you find a home that you like and it meets all of your requirements, be prepared to act quickly by putting in an offer to purchase the home. If your Realtor deems it necessary, consult with your loan officer to see if it is possible to submit your offer with an early close date if that will help your chances of having your offer accepted.
Prepare for a Bidding War
When in a seller’s market be prepared for homes to sell for over asking price. In Phoenix, homes selling for more than list price has been a phenomenon for more than a year now. Buyers have to respond by having a budget with some funds dedicated to offering over list price if they hope to win the bidding on the home.
Work with your Realtor to learn what the norm is for the neighborhood where you are shopping for a home. Are homes selling for $5K, $10K, or even $20K over list price? Know that range in advance of shopping for a home and make sure you have the funds and the budget to realistically compete.
3 Strategies for Sellers
When you find your local real estate market in a seller’s market, sellers can almost dictate the terms on how they sell their home. In a seller’s market it seems like almost any home for sale with reasonable terms sells in only a couple of days, or sooner. But Sellers can still benefit from some of the following tips.
Price the Home Fairly
You want buyers to show up to tour your listing and if a seller over prices the home far outside the norm for the community, they risk not attracting buyers to even look at the home if it is overpriced. Price the home fairly so buyers will flock to the listing, whether online or in person at a Realtor Open House.
Post your Listing as a Coming Soon Listing in the MLS
If you want to generate some interest in your property before it comes on the market, have your realtor place it in the MLS as a “coming soon” listing so buyers agents make their clients aware there is a prospective home coming up in their preferred neighborhood.
This strategy will also have buyer’s agents calling your Realtor to ask to schedule a showing either before or on the day the listing goes live. This is a great strategy to generate interest in a listing before the listing goes on the market.
Have your Next Home Lined Up
In a seller’s market, landing a home is hard to do so make sure whenever possible to secure your next home before selling your current home. Besides, most sellers in a seller’s market won’t agree to a Contingency offer so it’s important to have your next home plans solidified before selling your current home. Sellers will have plenty of offers to choose from without any contingency.
What is a Buyer’s Market?
In a buyer’s market there are plenty of homes for sale but not enough buyers ready to buy a home. Buyers have all of the negotiating power in a buyers market because sellers are very willing to negotiate when there are plenty of homes on the market for sale. Here are some tips for both buyers and sellers when your real estate market is in a buyers market.
3 Strategies for Buyers
Sellers need to get their properties in top condition when selling in a buyers market and they need to find an agent who can market their property well. It helps when selecting a real estate agent to choose an agent that has worked in your neighborhood before and possibly has potential buyers looking for a home in your area.
Offer less than asking price (but offer to close early)
When sellers are hungry for offers on their home for sale, they may be very negotiable when settling on a price. The more motivated they are to move, the more negotiable they will be on price. Find out why the seller is selling and then structure your offer accordingly.
Ask for Seller Concessions
No time like a buyers market to ask for the seller to pay for some of your closing costs. This practice is common in a buyers market but almost unheard of in a sellers market. So take advantage of the real estate market conditions to have the seller agree to as many of your terms as possible.
Ask the Seller to Make any Major Repairs
This is a no-brainer if your local real estate market is in a buyers market. When you have an accepted offer on the home you like, order the inspection as soon as possible so you have time to get it scheduled and review the document when it is finished. If any major repairs are found, negotiate those in your repairs request to have the seller pay for any of those repairs.
3 Strategies for Sellers when we are in a Buyers Market
Buyers are going to be selective when looking at the many homes on the market in a buyers market. That means sellers need to improve the curb appeal of their home by doing things like painting the exterior if the last paint job was more than ten years prior. In addition, update the landscape and plant some colorful flowers to add some beautiful colors to the front of the home.
Clean up the Home and Improve the Curb Appeal
Like we say above, sellers need to make their home the prettiest, most updated home on their street when they are in a sellers market. If a buyer pulls up to your home in a buyers market and your home is showing wear and tear and is missing some basic updates to make it look presentable, they won’t even take the time to look at the interior if the exterior is showing any signs of being run-down. Add some curb appeal to the home to attract more potential buyers.
Do a Pre-inspection (if Budget Allows)
If possible, have a home inspector come in to inspect the home for any repairs that may need to be done. This may be the best $500 – $600 you will ever spend when we are in a buyers market. You might be surprised at what the inspector turns up and it’s better to have those items repaired well before your home goes on the market.
Select a Realtor that Knows your Neighborhood and Markets their Properties Well
Experience matters in a buyers market where the real estate agent’s neighborhood expertise will help to price your home for a quick sale. In addition, if your real estate agent focuses on your neighborhood, they will know other agents in the area with potential buyers or they will have their own clients that want to buy in your area.
Phoenix Housing Market, Is it a Buyers Market or a Sellers Market
As we move in to a new year, the Phoenix housing market continues to be a strong sellers market at the moment. We continue to see strong job creation in the Phoenix area, and because of all of those new jobs coming to Phoenix, we have more than 200 people per day moving to the Phoenix area.
In the recent article we published about our 2022 Phoenix real estate housing market forecast, we talk about the factors making the real estate market continue to grow. Our local Phoenix economic indicators continue to remain strong and when jobs are growing and the local economy is strong this normally means that housing will continue to show strength and home prices will continue to increase.
Because our economy is doing well, people want to move to Phoenix and call our area home. We will continue to see those people moving to the area and hoping to buy a home, and that activity will keep pushing home prices higher.
In our Phoenix housing market forecast we said that home prices will continue to rise in 2022, but home price growth will slow down to more normal levels since the historic appreciation rates we saw in 2021 are unsustainable. Slower home price growth will help more buyers get into homes as we continue to see growth in wages.
If you would like to set up a FREE Mortgage consultation, or if you would like to get pre-qualified to buy a home, please feel free to reach out to me anytime either via email at steveATthehomebuyinghub.com or via phone at 480 365-8978.
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