How to Capitalize on a Real Estate Seller's Market

How to Capitalize on a Real Estate Seller’s Market

Despite a pandemic and economic uncertainty in 2020, lots of homeowners capitalized on the real estate market. In fact, according to NBC news, home sales soared by 21% in the United States.

Throughout the entire year, home sales remained high while supply (or inventory of homes for sale) stayed relatively low. This means that despite the ups and downs of the US economy and stock market fluctuations, real estate in 2020 was a “seller’s market”.

Sometimes you have to strike while the iron is hot when it comes to real estate investments. If you know your current home isn’t your forever home and home prices are high, it may be a good time to liquidate your equity. Real Estate cycles go up and down and it may be hard to know exactly when your home reaches its absolute high point. But a “seller’s market” is a great indicator of when to test the waters on your home’s asking price. 

Here’s the catch. You may sell your property for top dollar, but you could also pay top dollar for your next home purchase. 

So, what do the more savvy real estate investors do to maximize their profits in a seller’s market?

Here are a few strategies that will help you better capitalize on a real estate seller’s market.

Real estate profit strategies by selling high and buying low

Sell high and wait before you buy.

That’s right. When your home value reaches its high point, don’t hesitate to put it on the market, even if you don’t have another home lined up to purchase. In the housing market, demand is still greater than supply. Competing offers are likely to happen for your house. Selling in the midst of a seller’s market gives you the leverage you wouldn’t have otherwise. 

Let a Realtor help you.

Find a Realtor who’s “dialed in” to your neighborhood. A good listing agent will come to your first meeting with some comparable listings in your area. Recent home sales are the best indicators as to where your home can be priced to sell. Your realtor can and should help you understand where you can price your home for maximum profit. 

Listing your house at the right time is key to getting the most out of the investment. But a good listing agent will help you with another thing: pointing out what improvements or staging techniques can get you top dollar.

Sometimes small improvements and your realtor’s insights, like painting your kitchen cabinets or putting some of your less attractive furniture or decor in storage, could translate to a  $10,000-$20,000 difference in an offer price on your house. 

real estate agents are well versed in the current market
Real estate agent help and support

Be patient with your next purchase.

There is a reason why patience is referred to as a “virtue”. Understanding that the market which convinced you to list your house for sale isn’t in the same market you’ll want to buy.

As an example: A first-time home buyer bought a property in a newer neighborhood and paid top dollar. Post purchase, this same homeowner was stressed by a fluctuating real estate market. If prices fell below their down payment, they may not be able to recoup their initial purchase equity. 

In that same neighborhood during a recession period, an investor purchased a house with similar comps for a small fraction of what the couple mortgaged their home for. This became instant rental income and a great investment over time. 

In many instances, patience with your purchase allows home buyers to get ahead of their property investment lifecycle.

keep a close eye on the real estate market

Watch the market.

When you want to know the best time to sell…  Watch the market. It’s easy to watch over local listings by setting up saved searches on real estate websites including Zillow or Trulia. You can investigate recent sale prices and review market trends including the percentage growth month-over-month or year-over-year for area homes. 

While moving to a new home is usually the catalyst for people deciding to list their house, recognizing that your real estate properties are an investment may help you build additional financial security. Developing a “sell first, buy later” mentality may help you come out ahead. 

Review your tax implications, if any.

Typically, the United States Internal Revenue Service (IRS) allows homeowners to exclude up to $250,000 of real estate sale profits if you’re filing “single”. That number goes up to $500,000 for married couples (read more in this Redwood article). But unless you trigger an exclusion to this rule, that means you could deposit between $250,000-$500,000 of home equity in your bank account when you sell your home without tax penalty. It’s just one of the many reasons why retirees view selling their home as part of their retirement strategy.

Live comfortably while you wait

When you can secure a quality rental apartment home with flexible lease options such as Redwood Homes, you’re better equipped to move quickly on the right home opportunity.

As an example, the Redwood Neighborhood Advantage offers residents much more than a traditional multi-story apartment. Each signature single-story open floor plan design comes equipped with two bedrooms, two bathrooms and an attached garage in a neighborhood setting. An apartment home’s unique experience feels like a single-family home. 

If you’re ready to take advantage of a seller’s market and put your property up for sale, learn how thousands of local residents are letting go of maintenance, landscaping, and snow removal temporarily before moving into their next home.

Learn more about Redwood here.