Updated: Apr 4, 2020
Is there anyone out there who doesn't want to get the full asking price or more after you've listed your house? Probably not! Everyone wants to get the full asking price for their house, however, depending on market conditions in your local area, you may not be able to get full price. That is unless you’re willing to get a little creative.
Two Types of Real Estate Markets
Buyers markets are created when housing supply outpaces demand and inventory is plentiful. Buyers markets give home buyers more negotiating power since they have options, which can lead to you accepting a lower offer than what you expected to sell your home for.
Seller's markets are the exact opposite of buyers markets. Seller's markets occur when housing demand far outpaces the supply. Would-be home buyers have fewer options to choose from as inventory shrinks, thus prompting them to pay a premium for a house they like.
A Quick Trick to Determine if You’re In a Buyers or Sellers Market
A straightforward metric you can use to determine whether or not your in a buyer's or seller's market or the strength of a buyer's or seller's market is the list price to sales ratio.
If homes are consistently selling 110% over listing price, you’re in a seller's market. Conversely, if homes in your area are always selling at 90% of their listing prices, you are in a buyers market.
Sellers Market Example
Homes are listed at $100,000 but are selling for $110,000
Buyers Market Example
Homes are listed at $100,000 but are selling for $90,000
It’s much easier to get full price for your home in a seller's market when buyers are bidding up homes in bidding wars, but is there a way to get full price in a buyers market? Yes, there is! Keep reading to find out how.
What Is A Lease Purchase?
A lease purchase is a method of buying a home that allows the seller to rent/lease their home to a prospective buyer for a certain amount of years and gives the potential buyer the exclusive option to purchase the house after the lease terms are up.
Sometimes a lease-purchase is also called rent-to-own. So if you see rent-to-own, know the two terms are synonymous.
A lease purchase requires the buyer to put up a sizable down payment, also known as an option deposit, that is non-refundable. Putting up a large, non-refundable option deposit shows the seller that the buying party is serious and is going to do everything in their power to buy out the house at the end of the terms.
Making sure the buyer has substantial skin in the game is critically important when engaging in a lease-purchase. Buyers willing to put up a sizable, non-refundable option deposit demonstrate they are serious and are not likely to walk away.