How To Decide Whether To Sell My Home When There Is A Shortage Of Homes 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 Rochester market, it’s been almost a couple decades since real estate agents in Rochester NY have seen such a low housing inventory.
The Greater Rochester are housing inventory is down approximately 33% from last year, which is a very substantial percentage. Many homeowners are facing the question, “should I sell my home if there aren’t many homes for sale?”
It’s very important before listing your home for sale, you’ve made the decision that it’s the right time to sell your home. One of the biggest factors on whether now is a good time to sell for many homeowners is where they’ll be moving after they sell their current home.
So, if there are very few homes for sale in your area, should you sell your current home?
In this article we’re going to discuss some important considerations to make when deciding whether you should sell your home if there aren’t many homes for sale in your area. Homeowners who take into consideration the following things will greatly improve the chances that they’re not making a mistake by listing their home.
What Are The Benefits Of Selling A Home When There Is A Shortage Of Homes For Sale?
Before we dive into the considerations to make when answering the question of whether to sell your home when there aren’t many homes for sale, let’s discuss the benefits of selling during a low housing inventory. Below are a couple of the benefits of selling a home when there is a shortage of homes for sale in a real estate market.
1.) Profitable Sales
The biggest benefit to selling a home when there aren’t many homes for sale is the probability of a very profitable sale is strong. When there are few homes for sale in a given area, it’s highly likely there are 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 highly likely that the new listing will generate a multiple offer situation.
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. Recently while selling a home in Webster NY, which is experiencing a shortage in housing inventory, the new listing generated 3 offers and ultimately resulted in a profitable sale for the seller. This specific property sold for several thousand dollars over the asking price!
It’s important to mention, and some real estate professionals neglect to discuss with a home seller, that their current home may yield a very high sale price but they’re likely going to pay top dollar on the new home they purchase.
2.) Quick Sale
Another perk to selling a home when there’s a shortage of homes for sale in the area are quick sales. When there is a shortage of homes for sale in a given area, it’s considered a sellers market.
An experienced buyers agent will educate their clients that when buying a home in a sellers market that they won’t have the luxury of waiting days 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 days after it’s listed for sale.
Of course there are some scenarios, even when a market is experiencing a shortage of homes for sale, where a home can take longer than a few days. A couple of the most common scenarios include selling a unique home or selling a luxury home.
Do You Have Alternative Living Options?
One of the most important considerations to make when deciding whether to sell a home when there is a shortage of homes for sale is if 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 exhaust your other living options. Below are a few of the most alternative living options that we’re seeing sellers consider, should they not be able to find a new home because of the shortage of homes for sale.
- Moving in with a family member
- Moving in with a friend
- Moving into a short term rental
- Moving into an apartment with a lease and wait for housing inventory to improve
While many of these alternative living options may not be ideal, it’s extra important to explore all of your options 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. It is an important consideration to explore when deciding whether to sell your home if there’s a shortage of homes for sale in your area.
There are dozens of reasons to get pre-approved for a mortgage before buying or selling a home. One of the most important reasons to get pre-approved beforehand would be to find out if you’re able to buy a new home before selling your current home. This is commonly referred to as being a “non-contingent buyer,” meaning that the purchase of a new home is not contingent on the sale of home.
Homeowners who have the ability to qualify for a mortgage, not contingent on 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’re contingent on selling a home are often beat out in markets that’re seeing a shortage of homes for sale by non-contingent 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! There are many reasons why a home isn’t selling, but the first two you should evaluate, if you’re home is having trouble selling, are price and the exposure (marketing) your is getting!
Is New Construction An Option?
New construction is an increasingly popular option for homeowners looking to sell a home in a market that’s seeing a shortage of homes for sale. 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 due to the lack of existing homes for sale, 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 many tips for buying new construction to keep in mind. Tips such as 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 A Suitable Property Contingency?
If you’re selling a home in an area that’s seeing a low number of houses for sale, an option to consider is including a suitable property contingency in the listing for your existing home. A suitable property contingency in real estate protects a seller from having to actually close on their home until they find a property that fits their needs.
This may sound like a great safeguard for selling a home in a market where there very few homes for sale to purchase, however, there are some important pros and cons to suitable property contingencies to keep in mind.
The biggest benefit to a suitable property contingency is that it protects a home seller from becoming homeless if they cannot find a property to purchase. The biggest drawback to a suitable property contingency is that it reduces the number of buyers who’ll be interested in viewing the property since some buyers aren’t willing to wait for a seller to find a suitable property.
Depending on how severe the shortage of homes for sale in an area is, an alternative to a suitable property contingency 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 closing for a specified amount of time.
A few years ago while selling a condominium, the seller needed additional time to find a new property and decided against the suitable property contingency. We were able to negotiate a 90 day rent back option for the seller after closing which allowed sufficient time for them to find a new property.
The primary reason why a rent back option is often a better route than a suitable property contingency is because it provides the buyer the peace of mind that they actually own the property when it closes, even though they don’t have possession yet. If there is a suitable property contingency, 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.
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 is fantastic 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!
Other Helpful Real Estate Resources
- How Does Dual Agency Work in Real Estate via Bill Gassett
- How Long Does It Take To Sell A Home
- First Time Home Seller Tips
Have you thought to yourself, “I want to sell my home in Rochester but there are no homes for sale!” It’s very important that if you’ve considered selling your Rochester home and are concerned about not finding a replacement home, that you make the above considerations. If you’d like to consult with a top Rochester Realtor, contact me, and I’d be happy to have a no-obligation discussion about your potential options!
About the authors: The above article “Should I Sell My Home If There Aren’t Many Homes For Sale?” was written by Kyle Hiscock of the Hiscock Sold Team at RE/MAX Realty Group. With over 35 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.
© 2017, Kyle Hiscock. All rights reserved.