What is a Seller's Market?

I previously covered Buyer's Markets and what they meant for both buyers and sellers. Feel free to look over that blog entry in conjunction with this one.

Before I dive into talking about a Seller's Market, I want to cover a neutral market very quickly. When there isn't a Buyer's Market or a Seller's Market, there is a neutral market. It lasts about 13 minutes, and just about never in more than one block of property in the country can be in a neutral market at any given time. So... on we go.

There are a few markets, and micro-markets (Thank you Jennifer Bukaty for that term) around the country that are in Seller's Market's even now. Despite the loud whining sound coming out of national media and others, there are places where seller's are outnumbered by buyers seeking their property. And, that is the definition of a Seller's Market. A few years ago in southern California, buyers would bid over list price in order to have a shot at buying a property. Sometimes one could actually flip a property without improving it simply because the values were moving up so quickly.

Obviously, as with the Buyer's Market, in a Seller's Market there will be pockets based on price or area that are less popular. Right now, for example, because of the sub-prime mortgage issues, the tightening of credit, and the $417,000 government backing cap, there are cool spots in the hottest of markets. Properties over $500,000, and properties under $150,000 are less attainable, so they are less hot.

So, we've established that a Seller's Market gives sellers more power when dealing with buyers. But, why do we have a Seller's Market in the first place? Well, there can be a lot of contributing factors. Some of them would include:

• coming off of a buyer's market, the release of "pent up demand" triggers a lot of buyers hitting the market at the same time
  
• local jobs increases, large employer relocating to the area or opening a new facility
  
• loosening mortgage market
• falling mortgage rates

Of course, that list isn't complete, there will always be new and unique factors that will present to launch the market into a hot market. Sometimes it seems that nothing triggers it and it just happens, but generally there are factors listed above that moved the market.

So, Lane, I'm selling my house... what does all of this mean?

What it means to a buyer is that you may be in the driver's seat. Assuming your house is in good condition, staged well, and is desirable, marketing is easier, and pricing will be higher than it might be otherwise. Of course, if the property is priced too high, there will be less activity, and you might have your own little bad market. You can be sure that if your house is sitting in a strong Seller's Market, buyers will wonder why. They may even steer away from it. Going for the throat with aggressive (high) pricing may actually hurt you.

Ok, Lane, I'm a buyer and this is a tough market. What can I do?

Be ready to buy. Get your financing in order. Mentally and financially prepare yourself to offer on a home that you like. It really is that simple. In a strong Seller's Market, many desirable properties will sell in days. If you have a good search set up with your agent, you will know about the property quickly, but so will other prospective buyers. Beat them to the table and present a strong offer. Strength isn't always price (although that is a definite factor). It can also be the solidity of financing, as well as (lack of) other contingencies.