How To Decide Whether To Sell Your Home When There IS A Shortage Of Houses For Sale
There are many real estate markets across the world currently experiencing a shortage of the number of homes for sale.
In the local Adelaide metropolitan market, it’s been a long time since we’ve seen such low housing stocks.
It’s estimated housing inventory is down approximately 20-30% from last year, which is a very substantial percentage.
How Not to Get Stuck Without Having a Place to Live!
It’s very important before listing your home for sale, you’ve made the decision that it’s the right time to sell. One of the biggest factors on whether now is a good time to sell for many homeowners is where they’ll be moving to, after they sell their current home.
So, if there are very few homes for sale in your area, should you sell your current home?
Homeowners who take into consideration the following things will greatly improve the chances that they’re not making a mistake by listing their home.
So, What Are the Advantages Of Selling Your Home When There Is A Shortage Of Other Homes For Sale?
1) A Profitable Sale
The biggest benefit is the likelihood of a more profitable sale.
When there are few homes for sale, in a given area, it’s likely there are many buyers waiting for quality homes to be listed. When a home is listed for sale in an area that’s experiencing a shortage in housing inventory, it’s probable that the new listing will generate multiple offers.
When a new listing generates multiple offers, buyers bid against one another which ultimately leads to sale prices near or above the listing price of the property.
It’s important to note that whilst your current home may yield a high sale price, you’re likely going to pay more for the new home you purchase.
2) A Quick Sale
Another perk to selling a home when there’s a shortage of homes for sale in the area are quicker sales.
When there is a shortage of homes for sale in a given area, it’s considered a sellers’ market.
Buyers don’t have the luxury of waiting days or weeks to make a decision on a property.
When there’s a shortage of homes for sale in an area, if a property is priced correctly, it’ll likely be sold within a few weeks, possibly days after it’s listed for sale.
Of course, even when a market is experiencing a shortage of homes for sale, there are still times, where some homes take longer to sell.
Do You Have Alternative Living Options?
One of the biggest fears of home sellers, regardless of the market conditions, is that if they sell their home quickly they won’t have time to find a new home.
It’s highly recommended that before listing your home in a market that’s seeing a shortage of homes for sale that you review your other options.
- Move in with family members
- Move in with friends
- Move into a short term rental
- Move into an apartment with a lease and wait for housing inventory to improve
- Move into a Caravan Park
- Ask for a longer settlement period
- Put your belongings in storage
While some of these options may not be your ideal, it’s extra important to explore them, just in case your home sells quickly and you cannot find a new home.
Are You Able To Purchase A New Home Before Selling?
Buying a new home before selling an existing home is not a luxury that everyone has.
Consider getting pre-approved for finance before buying or selling a home. One of the most important reasons to get pre-approval beforehand would be to find out if you’re able to buy a new home before selling your current home.
This means that the purchase of a new home is not subject to the sale of an existing home.
Homeowners who have the ability to qualify for a mortgage, not subject to selling their current home, can shop for homes before listing theirs and have the ability to compete in a market that’s experiencing a shortage of homes for sale.
Buyers who are subject to selling a home are often beaten in these markets by non-subject-to-sale buyers.
There are certainly some risks that come with purchasing a new home before selling an existing home. One of largest risks of buying a new home before selling is the potential that the current home has difficulty selling.
Most people aren’t excited to have to pay for two mortgages and if it takes months for an existing home to sell, it can add financial stress.
If you’re able to buy before selling and your current home is having difficulty selling in a hot market, it’s probably because you’re making a mistake… but one that can be corrected!
Is New Construction An Option?
Building a home or buying a newly constructed one is an option. For some sellers, new construction is not an attractive option as they may prefer older homes. There are many factors to consider when deciding whether to build a new home or buy an existing home.
If you’ve decided that new construction is a possible option, the first step is to find a quality mortgage company who offers new construction loans.
There are many options when it comes to new construction financing and it’s important to understand exactly how the financing works, which is why talking with a mortgage company is the first step to exploring new construction.
After figuring out the financing, there are other considerations to keep in mind. Researching the builder, determining where you’d like to build, and understanding the new construction process all will improve the new build experience.
Should You Include ‘Finding a Suitable Property’ Condition?
An option to consider is including a subject to finding a suitable property condition in the listing for your existing home. Such a condition protects a seller from having to actually settle on their home until they find a property that fits their needs.
This may sound like a great safeguard, however, there are some important pros and cons to keep in mind.
The biggest benefit is that it protects a home seller from becoming homeless if they cannot find a property to purchase. The biggest drawback, of course, is that it reduces the number of buyers who’ll be interested in viewing the property since most buyers aren’t willing to wait for a seller to find a suitable new home.
What about rent-back?
An alternative is a rent back option for a seller. A seller can request from a buyer that they have the ability to stay in their current home after settlement for a specified amount of time and pay rent for it..
The primary reason why a rent back option is a better route than a subject to finding a suitable property condition is that it provides the buyer with the peace of mind that they actually own the property when it settles, even though they don’t have possession yet.
If there is a ‘finding a suitable property’ condition, a seller can decide at any minute that they’ve decided not to sell their home and a buyer has now wasted valuable time while they could’ve been shopping for a different home.
Most buyers will simply not take that risk.
One of the most complex situations in real estate is selling and buying a home at the same time. There are so many different routes that the homeowner can take.
If you’re asking yourself, “should I sell my home if there aren’t many homes for sale,” the above considerations should help you with making that decision. A shortage of homes for sale may be great for those sellers who aren’t looking to purchase a new home, but it can be very stressful for those sellers who need to find a replacement home.
Whether you decide to stay put in your current home or attempt to get involved in a real estate market that’s seeing a shortage of homes for sale, the bottom line is that you’re 100% comfortable with your decision and that you have a game plan in place!
If you have thought to yourself, “I want to sell my home in but there are so few homes for sale!”, contact me, and I’d be happy to have a no-obligation discussion about your potential options!
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Regards Eriks & Team Plaza Real Estate