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Hot Seller's Market!What does it mean when real estate professionals, journalists and consumers refer to a “hot seller’s market“?  Simply put, it means there’s an imbalance in the market which is very much in the seller’s favor.  In terms of supply and demand, it translates to far more demand than available inventory for sale (supply). It’s a good time to sell, but a hard time to buy.

The Elements of a Hot Seller’s Market

We measure or note the market conditions using a variety of data points;

  • days to sell (and days on market for all homes, including unsold)
  • sale price to list price ratio
  • absorption rate (months of inventory, weeks or days of inventory)
  • number of listings available vs pendings and recently closed homes
  • rapid rise in home sale prices, especially if to unsustainable levels
  • number of offers received on a property at once (multiple offers)
  • buyers upping their price and improving their terms voluntarily, without getting a counter offer
  • buyers writing offers with few or no contingencies, fast close of escrow or other extremely strong terms
  • overall market trends of inventory lessening, prices rising, buyers getting more desperate – how all of these look when viewed as a whole

Basically, when buyers are competing against one another with multiple offers, when properties are selling quickly and over list price, and prices rise, the ball is in the seller’s court and you’ve got a hot seller’s market!

While some of the above can be easily tracked on our multiple listing service, some are not findable anywhere except in conversations with real estate agents who are actively working the market, writing and receiving contracts. What isn’t tracked includes the number of offers placed on a home for sale, whether buyers are engaging in “bidding war” tactics such as upping their price before even getting a counter offer, or offers with no contingencies.

Related reading:

A summary of tips for multiple-offer situations in Silicon Valley real estate contracts

Should you write an offer with no contingencies? What is the risk with a non-contingent offer?

Mistakes that buyers’ agents make which damage their clients’ chances of winning in multiple offers