What You Need To Know About The Current Real Estate Market - Part I

This is the first in a series of related commentaries I am writing about the current real estate market, which will be chock full of valuable, enlightening, and relevant information you need to know regardless of whether you are buying, selling, or neither.

Let's begin by asking a question. "Who is in control in the current market?" In other words, Are we in a seller's market or a buyer's market? The best way to answer these questions is to first consider the signs of each of these markets.

A seller's market is typically characterized by the following: 1) A limited number of homes for sale
2) A large pool of interested, qualified, and active homebuyers
In this case, the dynamics of supply and demand puts the seller in charge because there are a lot of buyers fighting over a limited supply of homes.
3) Virtually every home seller entertains multiple offers
4) Homes tend to sell for more than the asking or list price
5) Homes tend to sell rather quickly
6) The seller is the decision maker and tends to dictate the terms of the real estate purchase contract
6a) Sellers are reluctant to consider FHA and VA offers (I will cover this in more detail in another commentary)
6b) Sellers are unwilling to agree to a credit to the buyer for closing costs
6c) Sellers are less willing to entertain contingent offers, which are offers contingent upon the buyer finding a buyer for their own home
6d) Time frames for appraisal and loan approval contingencies, currently 17 days from the date of acceptance, are shortened or removed entirely
6e) Earnest money deposits tend to be increased
6f) Contractual deadlines tend to be strictly adhered to and, if not met, the transaction can be canceled and buyers' deposit becomes the property of the seller
6g) If contractual deadlines are extended, fines can be imposed and can range from $50 to $200 per day until the transaction closes 7) Requests from the buyer for repairs are denied as properties tend to sell "as-is"
While this list is meant to be exhaustive, it certainly doesn't cover every circumstance that constitutes a seller's market. In the next commentary I will cover the characteristics of a buyer's market.