How do you know if it is a Buyer’s or Seller’s Market? Here are a few methods:
Listen to what others tell you. OK, but how do THEY know what kind of market it is?
Base it on your experience. If you have slowed down, it may not be because of the market, but because you are not doing the marketing and prospecting you should be doing!
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Calculate the current market conditions statistics monthly. Divide your market area into 4 to 5 price ranges and by zip codes if necessary. Each month you will need to find out how many active listings there are in each area/price range, as well as how many listings went under contract in the last month. (I also find out how many listings are under contract and how many listings closed. This is for general knowledge.) |
The next step is to find out how many month’s supply there is in each area/price range. Simply divide the number of active listings by the number of listings that went under contract in the last month.
Now that you have the statistics, you need to know how to interpret them. Here’s the basic interpretation method:
Under 2 month’s supply Extreme Seller’s Market
2-3 month’s supply Seller’s Market
3-4 month’s supply Balanced Market
4-5 month’s supply Buyer’s Market
5-6 month’s supply Extreme Seller’s Market
Over 6 month’s supply Very Extreme Seller’s Market
Once you have this information, you will be able to accurately tell others about the current market conditions. Now you have the information to make marketing and prospecting decisions. These statistics can also help you when working with buyers and sellers.
Another idea is to add a Market Statistics Report to your CMA. With the same techniques you can analyze and segment of the market, as long as there is ample data to analyze.
The author of this article is Linda Grissette. Some of you may remember her as Linda Grayson. Linda is a Broker-Associate with River City Real Estate. She is also the company trainer. Learn more about how River City Real Estate can help you make more money...even in today's market...browse through this site.
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