One of the best approaches to use with sellers involves identifying the 4 Key Indicators that impact real estate activity: Supply, Demand, Consumption and Value. Let’s consider each:

1. Supply – Even if supply levels seem to be decreasing or stabilizing, the number of active listings in many areas is still very high, when compared to a healthy market. Point this out to your sellers as an indication that it may take a while to get back to a completely normal market, especially with the current Pent-Up Seller Demand.

 

2. Demand – Although demand may be increasing, your sellers should be reminded that the current conditions may just be a “Window of Opportunity”. We’re still facing some issues with our economy, and if interest rates increase, the demand could drop drastically. Encourage them to exploit the current window of opportunity while it’s still open.

 

3. Consumption – In many areas, sales activity is increasing when compared to the past few years, but we may still be far from what is considered “normal”. Perspective sellers should consider that when the month’s supply of inventory is above 6 months, there’s usually pressure for price depreciation. This trend also increases the likelihood of future price drops.

 

4. Value – Most areas have experienced a significant drop in prices during the past several years. Calculate the year-over-year drop or increase in average sales price for your seller’s specific area and price point to determine the potential depreciation they could experience if they wait even longer to sell. Average price per square foot can also be calculated as an indicator.