This is why it’s the best time to be a seller

Depending on where you live, you may have noticed two trends lately: More For Sale signs have been popping up in your neighborhood than normal, but they’re getting removed relatively quickly.

That’s probably because we remain firmly in the midst of a robust seller’s market, in which buyers have less leverage and commonly compete with rivals on home bids while sellers enjoy greater profits and fewer days on the market than usual.

Based on the latest research by ATTOM Data Solutions, sellers across the country pocketed an average gain of $75,971 on a standard sale in the second quarter of this year. That’s more than $10,700 higher than what sellers earned a year earlier. And it marks a 36.3% return on investment versus the home’s original purchase price — 3.4 percentage points higher year-over-year.

All of which points to an indisputable fact: It’s a golden age for sellers, who are reaping the rewards of an increasingly active real estate market and pent-up demand for housing.

Francine Viola, a Realtor with Coldwell Banker Evergreen Olympic Realty Inc., in Olympia, Washington, says the single driving factor of this steep seller’s market is low inventory.

“Despite the pandemic, there are many more buyers than sellers right now. And with mortgage interest rates so low, buyers are incentivized to purchase as soon as they can,” she says.

Viola notes that the health of the real estate market can be measured by looking at the number of months it would typically take to sell all of the homes listed. Four to six months represents a healthy, balanced market.

“But in our market today, we’re currently at the lowest reading on record — about half a month,” she adds. “With very few options available to buyers, more of them find themselves competing for the same property. And that is pushing up home prices.”

Brandon Brown, broker/owner of Baybrook Realty in Laguna Beach in Southern California, seconds those sentiments.

“While the coronavirus made for up to a two-month pause in the market, that only increased demand for homes. Plus, interest rates being at historic lows means buying power has never been as high,” Brown explains. “With money so cheap, buyers are seeing the value in purchasing properties and ridding themselves of the rental payments that continue to increase.”

This is also one of the unintended consequences of the pandemic, he adds.

“With many people forced to work or quarantine at home, they realized they want to live somewhere bigger or better,” Brown posits.

Consider that many owners who could be selling are actually postponing putting their homes on the market due to COVID19 concerns, says Polina

Ryshakov, real estate economist and director of valuation for Sundae, a San Francisco-headquartered residential real estate marketplace that helps sellers of distressed properties.

“But households that are listing now view today as the perfect moment to cash in and upgrade their living situation,” Ryshakov says.

Rajeh Saadeh, a Somerville, New Jersey-based real estate attorney, professor, and investor, believes the winning streak for sellers will continue for as long as the stock market bubble doesn’t burst.

“Government stimulus and other policies are artificially keeping the stock market afloat. But when that changes, the economy will significantly slow down and start a chain of events that will make it a buyer’s market,” Saadeh predicts. Ryshakov agrees. “Once the stimulus, supplemental unemployment benefits and mortgage forbearance programs begin to subside, we are likely to see a broader economic downturn,” Ryshakov notes. “The impact on the real estate market and housing price declines across geographies would give the advantage back to buyers, assuming we don’t see more losses of jobs with home purchasing capacity.”

Meantime, Maria Quattrone, a RE/MAX @ HOME Realtor in Philadelphia, recommends that prospective buyers be prepared to act fast to land the best bargains right now.

“Buyers with good credit, enough money for a significant down payment and some patience could land nice deals, especially if they can beat out competitors. That means getting everything ready to go — get preapproved for a mortgage loan, know what your nonnegotiables are, and be ready to make an offer quickly,” Quattrone suggests.

Sellers, on the other hand, shouldn’t forget that they remain in the driver’s seat.

“However, you’ll still need to price your home appropriately or it will get overlooked,” Brown advises. “I would keep prices in line with comparable sales in your neighborhood.”