Many people have been reading that the Orange County Housing market is current a balanced market. What exactly is a balanced market? Simply put, a balanced market is a healthy market with a 4-6 month’s supply of inventory. Neither the buyer nor the seller is considered to have an advantage over another in a balanced market. Is this the same as selling and buying in the sellers market we recently experienced? No it is not. To those ends, we wanted to share some tips and things to consider when selling your home in a balanced market.
A balanced market is an interesting thing for home sellers. Most of the time, those that are selling their home can afford to buy a new home before they sell their old home. This presents problems to you as the home seller, as you may be able to find a home that you like before you are able to sell your home. A balanced market often causes homes to sit on the market for a bit longer, so you should be sure that you can afford to have the home sit on the market for a few months before it sells, or make arrangements in your selling agreement to provide for a longer contingency period or rent back (where the buyer allows you to effectively rent the home back from them for a given period of time). When the market is balanced you also cannot count on selling your home for your exact list price (or over list). So buying a new home before you sell can leave you in a bad place if you don't have savings to fall back on.
It’s important not to count on a specific list price in a balanced market. Because homes sometimes take a bit longer to sell, it's important to be somewhat flexible on the list price if you want it to sell. Flexibility on your list price may allow you to sell your home more quickly, should you encounter picky buyers. Buying a new home, before you sell your existing home can be tricky if you absolutely must sell your first home for a specific price. For this reason, it is often best to put off buying a new home until you sell your current home.
One other option for homeowners that are looking at selling and looking to buy at the same time is to write your purchase agreement in a way that makes the purchase contingent on your current home selling. Sellers won’t always accept contingent offers, but if your offer is good, and they have a reasonable expectation your home will sell, they most likely will accept. This will allow you some time to attempt to sell your current home before you officially get in over your head with a new home.
What Does All This Mean?
The bottom line is that in a balanced market it a little more risky to buy before you sell. A good tactic that many people use in a balanced market is to sell your current home first. This will give you plenty of time to decide what sort of home you want, so that you aren't rushing through the home selection process. By the time your home sells you will know exactly what you want and you can go for it. If it happens that your home sells really quickly in the balanced market, that's okay!
Selling first just makes the most sense. Because you don't know how long your home will take to sell in a balanced market and you cannot determine how much it will sell for. If you are a risk taker, you don't have to go this route, but most people find that the sell first philosophy works better in the balanced market.
