Potential sellers and must-have sellers Loaner

I wanted to take a moment to talk about the types of sellers that exist in the real estate market.

There are generally two types of sellers in the market: potential sellers and must sellers.

The first group is made up of people who would sell their property, but only for the right price. They are often not in a big hurry or interested in negotiating much, if anything.

The second group is motivated sellers who must sell, even if the price is not right. These owners will usually quickly reduce their listing price and offer concessions to buyers.

For the moment, the market seems dominated by the first group. This is why you see a lot of properties on hold, even if they are “overpriced”.

And coupled with the continued lack of inventory for sale, it’s one of the main reasons home prices continue to rise.

The situation is very different from the early 2000s, when sellers were desperate to sell their properties, leading to cascading price declines across the country.

Let’s discuss why this is important and how it impacts today’s real estate market.

What is a potential home seller?

As the name suggests, a “prospective seller” is an owner who wishes to sell their property, but only if the conditions are met.

Typically, this means they will only part with the property at the right price. And that good price is generally a high price.

For example, you might see a home listed for $500,000 in a neighborhood where most other properties are selling for, say, $450,000.

This is usually the first clue. The price is higher than comparable properties. Another way to look at this type of salesperson is that they simply aren’t motivated.

They threw their goods on the MLS to see if there were any takers. Chances are they’re not that serious.

It’s almost the equivalent of the home buyer who visits open houses just to be curious, often with little intention of making an offer.

The potential seller is like that and doesn’t care too much whether their property sells or not.

Often, they go against the listing agent’s wishes by listing the property for “too much money.”

And this type of property languishes on the market, often for months, or even years in some cases.

The essential seller is motivated

Conversely, we have the “must seller,” who is the complete opposite of the potential seller.

This individual must sell his houseand quickly. They don’t have time to have fun and be featured prominently.

The property must be listed competitively and the seller must be willing to agree to such things as seller concessions and repair requests.

The best way to sum up this type of home seller is the word “motivated.” In fact, you might even see the phrase “motivated seller” in their property listing or on their yard sign!

A home buyer should favor this type of seller because they will be much more willing to negotiate.

And the starting point for their list price should also be more reasonable.

For example, if recent comparable sales in the neighborhood were for $450,000, there’s a good chance they would be listed for a similar price. Or even lower!

The best way to summarize is that the property has a “sale price”.

Today’s real estate market is dominated by potential sellers

Taking these two definitions of home sellers into account, I would say that in most markets across the country we have plenty of potential sellers.

For what? Well, if you look at the price sellers are trying to sell for versus what buyers are willing to pay, there is often a significant gap.

You hear many potential buyers say “that’s too much” or “I’m not willing to pay that.”

But the fact is, many people who have their properties rated “too high” don’t really care. They are not motivated sellers.

They are simply putting their properties on the market to test the waters. In their minds, if someone offers them a complete or close list, they will accept it.

Otherwise, well, whatever. Let it sit and bide your time. There is no urgency.

What this means for the property market is that despite the low level of affordability, house prices continue to rise.

The CoreLogic S&P Case-Shiller Index showed that prices rose 4.25% year-over-year in August, although the rate of appreciation slowed for a fifth consecutive month.

And house price increases are expected to slow further, with an annual gain of just 2.3% expected by next August. But prices keep increasing…

Low supply and cheap mortgages keep sellers patient

The continued low supply of existing homes has kept housing prices rising.

But the rate of appreciation has slowed, and that can be blamed on both high mortgage rates and high home prices. However and above all, property prices are not fallingat least at the national level.

This lack of accessibility could eventually lead to a real drop in prices, especially in overcooked markets, but this will depend on the type of seller who dominates the market.

For comparison, during the mortgage crisis of the early 2000s, the market was saturated with unavoidable sellers.

Many couldn’t (or didn’t want to) make their next mortgage payment, often because it was an adjustable rate mortgage or because they qualified through their stated income and never really had the ways to do it initially.

Today you have a home seller with a very low fixed rate mortgage who could to want for sale, but he is not at all desperate.

Until that changes, I wouldn’t expect the terms of buying a home to change much.