If you have paid any attention to the real estate world lately, then you have probably heard the term “seller’s market” tossed around. 2020 became the year the housing market significantly changed. And, if the first half of 2021 is any guide, it looks like 2021 will continue the current cycle. Detroit is no exception to this rule.
Supply and demand ultimately drive the price of homes and the overall state of the real estate market. A seller’s market is one status, and a buyer’s market is another. Using this valuable knowledge to time your real estate transaction can result in significant differences in outcomes, or it can simply better educate you about the situation on the ground where you plan to move. It’s important to pay attention to the status of your local real estate market, because it can make a difference in both buying and selling a home.
So what does the term “seller’s market” mean, anyway? Keep reading for a quick crash course in understanding a seller’s market.
What Is A Seller’s Market?
A seller’s market is the set of conditions when market demand exceeds the market supply of houses. This status gives the home seller the advantage, because many interested buyers will be competing for a depleted inventory of homes on the market. A seller’s market means that homes sell quicker and more competitively. Since buyers must compete with one another to land their property, they often end up committing more money to the process. Sellers, in turn, can raise asking prices and dial back the negotiations. Often, a seller’s market leads to bidding wars where buyers make competing offers over the original asking price of the home. This condition has become more common over the past year in many more locations, as inventories have simply dried up.
A Picture of the Detroit Real Estate Market
According to Realtor.com, in May of 2021, the median list price of a home in metro Detroit, MI was $70,000, up about 40% from the same time last year. This means that the median home listing price has nearly increased 50% in just over a year. Yet, there are some trends in Detroit, like a slight increase in inventory and homes selling below asking price that would indicate a mixed bag of conditions.
As you exit the Detroit metro area and move out into the surrounding areas, the median sales price runs $267,824, up from $229,475 in April 2020 (according to WXYZ). There is approximately one months’ worth of supply on the market and the average number of days on the market was down to 20.
And these wider conditions are classic signs of a seller’s market, because inventory is running about 1/6th of what is considered a balanced market target of six months’ inventory. In some cases, and in the right areas, homes are being sold on the same day on which they were being listed. Other homes may take a few days to sell. The figure of 20 days on the market has come down significantly from April 2020’s average of 46 days on the market.
Tips For Detroit Area Buyers in a Seller’s Market
If you are in need of a new home in the Detroit, MI area, understanding the conditions on the ground will help your search. Time is literally of the essence when it comes to a seller’s market, so being prepared can help you land the home of your dreams, even in this market.
● Don’t settle. A seller’s market can work up a serious sense of FOMO (Fear Of Missing Out). Buyers might end up making offers on homes that they would not normally consider because they don’t want to lose out or feel anxious to be in a new area without a home base. Purchasing a home is a major commitment, so don’t settle for something that will not ultimately meet your needs.
● Be patient and adjust your trajectory. At the same time, being adaptable and
considering an improvement project if you need another bedroom or a home office can
be one route. All in all, do not get discouraged if you lose out on multiple home bids.
Being patient, carefully considering your options, and only moving when you have
thought things through will help you feel better once the closing date is reached.
● While the chips aren’t against you, work knowing that the seller has the advantage. When making an offer on your potential home, keep in mind that normal negotiations are out the window at the moment. Requiring complex contingencies, concessions, or repairs may derail your offer. Even a closing date too far in the future may hamstring an otherwise strong offer. Sellers will prefer buyers who can move quickly and are not at a high risk for the deal falling through due to financing issues.
● Move quickly. If you do happen to find that dream home in this market, the early bird will have at least a better shot at the worm. Thinking too much about a house right now can easily result in another offer being accepted in the meantime. Work with a mortgage lender to get your loan pre-approved ahead of time, as every second gained will help strengthen your offer.
● Work with the right real estate agent. While life hacks are a thing, real estate agents can help you with real estate hacks to make better, more informed decisions when there is a heated market. An REALTEAM agent will help you button down the details and make your offer the most efficient one possible.
Tips For Detroit Area Sellers in a Seller’s Market
Seller’s have a little less worry in this market right now, but it’s a good idea to maximize the value of your home and place your home on the path to a quick close.
● Prepare for the show. Make sure your home is clean and presentable. It will only help to better market your home and potentially increase your offers.
● Price your home accordingly. While homes tend to sell for higher prices right now, listing your home at an astronomical price point is perhaps not the best idea. Work with a REALTEAM agent to price your home just right, as certain conditions can facilitate a bidding war or bring a better offer for your home.
● Review offers with a fine-tooth comb. Sellers can quickly get lost in a high volume of offers and simply focus on the highest number. At the end of the day, no lender will allow a buyer to pay more for a home than it’s ultimately worth. Make sure that you consider the full financial picture when reviewing an offer on your home.
● Ask for Proof of Pre-Approval. For buyers who require financing, pre-approval can indicate that the buyers have the finances to purchase the home.
● Consider the Contingencies. Be on the lookout for contingencies. Offers that include contingencies are subject to the delays and withdrawals that can come with a contingency. It would be a shame if other homes sell while your home is locked up in a contingency that ultimately falls through.
If you are searching for a home or are ready to sell your home, working with a REALTEAM agent can help you navigate a hectic real estate market. We understand that not everyone is a real estate guru, and our agents seek to simplify the home buying or selling process. Our formula has worked for countless buyers and sellers just like you, so get started today with REALTEAM!