When Is a Good Time to Sell Your Home
‘Tis the season for your house sale? Some might say so. Fact is, timing the market is part art, part science – and a whole lot of luck. Here are a few things you might consider before trying your hand at it.
Can I Indeed Time The Market?
While some will debate that a seller can correctly time the real estate market to get the highest price for their property, there are methods that can help you make a more educated decision. Doing this work won’t just help you understand the best timing for your real estate sale – it will also give you the information you need to make smarter decisions throughout the process.
According to Zillow, timing the market doesn’t just come down to a given season – it breaks down into best months, weeks, and even days. Talk to your agent for more specific advice.
Is It a Buyer’s or Seller’s Market?
While many markets straddle the border between several types, there are three typical real estate markets. These are:
- Buyer’s markets, where supply exceeds demand and those seeking homes hold an advantage over those selling them. Specifically, if there is six months or more of supply in a given market, it can be considered a buyer’s market. You can compute months of inventory, or MSI, by dividing the number of total listings by the number of total sales for a given month. Lower price tags tend to predominate here since the law of supply and demand holds that increased supply tends to push down purchase prices;
- Seller’s markets, the inverse of a buyer’s markets in which the number of buyers exceeds the amount of available inventory. In these conditions, nearly every home on the market will likely sell eventually given that there is less than six months of supply available. Here the seller is at the helm and holds greater sway when it comes to not only purchase prices but also terms and conditions of a property sale. An extreme seller’s market is indicated by two months or less of inventory;
- Neutral markets, a balanced scenario in which the number of buyers and sellers are level and interest rates are typically affordable. Lacking volatile swings, there is typically around four months’ worth of supply available. The typical wisdom on these markets is that decent deals may be had, but that neither buyers nor sellers are favored.
Specific timing depends on your local area. Since factors vary within markets, one individual timing tip may not apply to a wide range of locations.
What Strategies Can I Use?
Depending on the conditions where you live, timing the market could mean any number of different factors. For the sake of relative simplicity, let’s look again at the three general markets for insight into sales timing:
- Selling in a buyer’s market can put you at a disadvantage if you aren’t under pressure to go that route. Expect to encounter demands for concessions, repairs, contingencies that introduce greater risk in the transaction, and less control over the deal as buyers with the upper hand tend to request out-clauses that allow them to cancel an agreement outright;
- Selling in a seller’s market, of course, is the inverse of the above. Here’s where you as the seller have the upper hand and can enjoy advantages including rarer repair requests and contingency offers, higher list-to-sales-price ratios that can sometimes spike over asking prices, and the liberty to refuse concessions including seller-paid inspections and seller-paid closing costs. Finally, unlike a buyer’s market, you’ll find that you have far more control over the transaction, which gives you negotiation power to make moves such as commanding shorter inspection periods and appraisal or loan contingency waivers;
- Selling in a neutral market means you’ll encounter comparable sales prices that are similar to those of active listings, stable sales figures, flattened median sales prices, and For Sale signs that turn to Pending within 30 to 45 days. There isn’t much of an obvious upper hand on either the buyer’s or seller’s side, though again, depending on your location, there can be some variation here.
A Few More Factors
If you need to sell your property now, trying to time the market may be more disadvantageous to you since you may find yourself waiting longer than is comfortable to offload your home. However, if you are in a position where you have a little bit of flexibility and can continue to watch trends to see when or if they favor your particular situation – typically when inventory is low, buyers are motivated, and supply and demand are on your side – timing the market may make sense.
If you’re working with a real estate agent, they can advise you on a savvy approach for working within a variety of markets. If you’re taking an alternate route such as selling at auction, to an investor (either conventional or online), or as a For Sale by Owner (FSBO), you’d be well advised to do your homework (including reading some of the many articles on these topics at Sold.com) before making decisions in one direction or another.
