After the Sale: How to Deal With Tightening Inventories and Rising Home Prices

Homeowners in some areas of the country planning to sell in 2017 may find themselves worrying about something potentially worse than finding the right buyer for the home they are selling. In fact, real estate market trend reports are currently indicating that in many areas of the country, home sellers should be able to find a buyer for their home with relative ease.

Unfortunately, these same trends show that the more pressing problem many of these sellers will face is likely to revolve around finding their next home in a market where prices rise as inventories continue to shrink. Sellers who take time to consider their situation and come up with a viable plan will fare better during as these types of trends continue.  

Option One: Sell as Soon as Possible

With an expectation of inventories continuing to shrink throughout 2017 while prices continue to rise, sellers who can get their homes listed and sold before the market really heats up may be in a better position to find their next home than those who wait and sell later in the year. These sellers will likely receive a slightly smaller purchase price for their own home by selling early in the season, but if it means having a better selection of homes to choose from when buying the replacement, the numbers are still likely to work out in their favor. 

Sellers may also be able to take advantage of more aggressive pricing in a market where market trends show that inventories will continue to tighten. In addition to consulting closely with their listing agent, sellers may want to decide on an actual list price immediately before putting their home on market to take advantage of the most current trend. 

Option Two: Consider Renting for a Year After Selling

The thing to remember about real estate trends is that they are constantly changing and the trend toward tighter inventories will also change at some point in the future. Because of this, sellers who are willing to spend a year or more in a comfortable, but inexpensive rental home before buying again can put themselves in the best possible position to buy  when home inventories increase.

If the buyer for the seller's home is not planning to move in for a few months, sellers may be able to work out a rent-back option that would allow them to continue living in the home as tenants. While these arrangements are rare, they can be an excellent option for sellers to consider in tight inventory situations. 

Option Three: Buy the Next Home Before Selling the Current One

Another possible option for sellers who have adequate financial resources at their disposal is to consider buying the next home before putting the current home up for sale. While doing this may not be an option for those who need to sell in order to buy, sellers who can afford to do this may be able to save a significant amount of money on the cost of their next home while still being able to reap the financial reward of selling their current home for more money later in the year.

Sellers who decide to do this should make sure they are working with a responsive real estate professional who understands the market trends and can help them get their home listed and sold at the optimal time, just before the trend changes and prices begin to fall. 

Option Four: Buy a Fixer-Upper Home

Another way to make the best of a tight real estate market is to consider homes that are not move-in ready, such as a foreclosure or distressed home that will require some renovations or repairs. Since the inventory of these homes may also be tightening as more buyers decide to consider buying them, sellers who want to go this route may want to consider purchasing one at auction, instead of as a bank-owned or REO property.

While doing this can be riskier in terms of the likely scope of repairs needed, these homes often sell at very low prices. Sellers who want to try this route will need to work closely with their real estate professional to select the best homes on which to bid. While the auction company rarely furnishes more than generic information on these homes, an experienced, local real estate agent will be able to help their client source historical documents and data relating to the home that can help them make an informed buying decision. In addition, sellers who are considering the purchase of their next home at a real estate auction should make sure they have made adequate financial arrangements to pay for the home well before the auction begins.