A lot of folks in Madison ask me about the current Madison real estate market. Is it a sellers market or a buyers market? Many Realtors® tend to use the phrase, “months of inventory” as a way of quantifying the type of market that exists. This piece of jargon is useful for buyers and sellers to understand. Months of inventory reflects an estimate of the amount of time it would take to sell all of the current listings in a given area if no other new listings become available.
According to the August 2014 data report by the South Central Wisconsin MLS, Dane county has 4.84 months of inventory. This is up slightly from July which at that time was 4.62. So what does this mean for buyers and sellers? It means that all current listings can expect to be sold within 4.8 months, it is considered a seller’s market because houses are selling quickly. A seller’s market suggests that sellers have the advantage due to the demand for property exceeding present supply.
If there are 6-8 months of inventory, you are looking at a balanced market. Even though listings currently aren’t selling quickly they’re not staying on the market too long either.
Additionally, if there are 9 or more months of inventory, it is considered a buyer’s market because houses are selling slowly. In a buyer’s market, buyers have more negotiating power than sellers do because the supply of listings exceeds the current demand for housing.
What does this information mean for Madison area real estate sellers presently? It means they may have multiple offers, the house may sell quickly, and a little curb appeal may go a long way to driving up the price, or (what every seller wants) a bidding war.
What are realistic expectations for selling your home during a buyers market? Choosing to sell your home in a buyers market and having patience will go a long way as homes tend not to sell overnight. This means that you will need a real estate professional to market your property as efficiently and effectively as possible. I help my sellers by giving their home an evaluation on how to get the most bang for the buck. A little fresh paint, proper staging, and gratifying photos will position your home for the best offer possible. I provide staging advice and professional photography to make sure the house stands out above the rest.
What does this mean if you are currently looking to buy a home in a sellers market? You should be prepared for competition. When you find the home that suits your wants and needs you will have to make decisions promptly and have the ability to submit a good offer with a pre-approval letter (if you plan to finance the home with a mortgage). Negotiating experience from your Realtor® can really benefit you in this type of market.
Conversely, if you are looking to buy in a buyers market you will be looking at an overwhelming number of options. I try to help my clients focus on identifying priorities as what is most important to them. For example, lots size, location, number of bedrooms, bathrooms, school district, etc…I try to help my clients figure out what is most important to them. Once we know what your must haves are we then compile a strategy and proceed to negotiate the best house for the best price.
Whatever the market looks like having a great Realtor® will make things easier and they can provide education and advice for you along the way.