It’s easy to typecast the players in the real estate market into two distinct roles: buyers and sellers. But it’s not that simple. In many cases sellers are simultaneously buyers, searching for their replacement home, making their best and highest offer and hoping the timing works out.
Although we are in a “seller’s market,” how does the notion that everything is rosy for sellers change when we consider that those sellers may also be buyers? According to our latest survey, more real estate agents than ever before agree that now is a great time to sell, but finding another home to buy poses a significant challenge.
Our survey of more than 800 Redfin agents across the country conducted this month revealed that 89 percent of respondents believe now is a good time to sell, up from 83 percent last year. This is the highest percentage of agents reporting now is a good time to sell since we began conducting this survey in 2012. On the other hand, the number of agents reporting that now is a good time to buy fell from 45 percent last year to 34 percent in March — the lowest result we’ve had since 2012.
Prospective Sellers Fear Not Finding Another Home
When asked for their opinion on the most common reason why prospective sellers are choosing not to list their homes, 45 percent of Redfin agents — a vast majority — reported it is because they are worried they will not find a replacement home. A mere 1 percent of agents reported prospective sellers are concerned their home will not sell.
“Many of my prospective home-selling clients start the process by shopping for a replacement home first before they pull the trigger on listing their home,” said Redfin real estate agent Sabrina Booth in Seattle, where the number of homes for sale fell to a record low in February. “Once they experience how competitive the market is for homebuyers, it gives them pause and some choose not to sell. There are options for these folks, though. One way my clients have solved this problem is to take a home equity line of credit and use it as a down payment for their replacement home before listing their current home for sale.”
Low Inventory is a Major Challenge for Sellers
One out of three agents named low inventory, or a lack of homes for sale, as the greatest challenge sellers currently face. That is up from one in six agents surveyed in November of 2015 — a significant change in sentiment in just four months. Move-up buyers’ plans for selling have become increasingly thwarted by continuously declining inventory over the past year.
“The lack of existing and new homes for sale has fed a vicious cycle of low supply for the past year,” said Redfin chief economist Nela Richardson. “Builders still aren’t providing enough new construction to satisfy demand, which means the market is desperately relying on homeowners to decide to sell. The good news is we are seeing some improvement with a 12 percent increase in new listings this February, a trend we see continuing into March as well.”
The least of all challenges for sellers, according to Redfin agents, is finding a buyer. When one considers these two results in tandem, it’s clear that many sellers can’t take advantage of the fact that the market favors them.
This is also apparent in the shift in sentiment that sellers have unrealistic expectations of their home’s value. Although still the primary pain point for sellers, they are becoming more realistic about the value of their home, with a 23 percentage point decline in agents saying sellers are unrealistic since November.
Redfin Agents Rank the Best Offer Strategies
It’s tough out there for buyers of all varieties, so we asked our agents what they believe is the most effective strategy for getting an offer accepted if you’re unable to pay all cash. The vast majority of respondents, 47 percent, said having the flexibility to waive contingencies makes for the most compelling offer. Just 15 percent believe being the first to make an offer is the ticket to winning a bidding war this year.
About the survey
This survey was conducted between Mar. 10 and 13, collecting responses from 836 Redfin real estate agents. Respondents spanned markets in 38 states across the U.S. View the complete list here.