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Home Sales Fundamentals: What Every Homeowner Should Know


Market Temperatures: Hot, Cool, Or In-Between

Few buyers stop to think about the real estate market when they begin their home search, but the temperature of the market can make a great deal of difference in availability, price, contract contingencies, and more. Read on for an overview of three market temps and how to deal with each of them.

Buyer's Market/Cool Market

If you are on the hunt for a home, this is your perfect market condition. This type of market produces plenty of choices and better prices for buyers. Here, it is the buyers that are in short supply. Sellers dread this type of market because they know their home could sit unsold for months and months. They are, therefore, far more willing to make deals with buyers who show an interest in their property. With a real estate deal, almost everything is negotiable, and that means that the price, home condition and repairs, closing costs, and more are all subject to bargaining. Here are some signs that you are dealing with a buyer's market:

  • High inventory levels (as compared to previous time periods).
  • Homes on the market for longer periods of time (greater than six months, for instance).
  • Median sales prices are lower.
  • Fewer completed sales.
  • More and more real estate ads.
  • More and more real estate signs on lawns.

Seller's Market/Hot Market

This market favors the seller, and finding an affordable home that fulfills your requirements just got a lot more difficult if you are a buyer. When buyers have to compete against each other just for an opportunity to place an offer, that is a hot market. Here are some signs of a seller's market:

  • Low inventory.
  • Homes are not staying on the market very long.
  • Comparable sales prices are higher.
  • More homes are closing than compared to other time periods.
  • Far fewer advertisements or "for sale" signs are appearing.

To win in a seller's market, buyers need to do the following:

  • Have lending onboard beforehand.
  • Know exactly what you want and be prepared to make quick offers.
  • Be willing to overlook minor problems with a property and avoid contingencies.

A Neutral Market

As you might have guessed, a neutral market places real estate sales on an even playing field for both buyers and sellers. Neutral markets mean that there is an average number of buyers, sellers, and home availability. Here are some signs of a neutral market:

  • Normal amounts of inventory as compared to previous time periods.
  • Sales prices are in line with the average.
  • Numbers of homes sold are stable with few fluctuations.

No matter what the market temperature is, a real estate agent can find you a home and prepare you to deal with the vagaries of price, availability, and conditions.

About Me

Home Sales Fundamentals: What Every Homeowner Should Know

When I decided to sell my first house, I had no idea how complex the process was going to be. From meeting with several real estate agents to completing the listing and scheduling open houses, it was more demanding than I thought. When it came time to entertain offers, I was at a loss for how to evaluate each one objectively and I made some mistakes that I wish I'd known better about. Now that we've left the closing table, I wanted to create this site to help others who may be new to listing a home. Read through what I've learned so that you can be better prepared for the process yourself.

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