What Are Real Estate Market Temperatures, and Why Do They Matter?

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In real estate, the law of supply and demand is always at work. It is the force the dictates the prices of properties, which every buyer and seller in Colorado should pay attention to.

If you are hoping to sell your house fast in Fort Collins, Estes Park, or Wellington, it is imperative to understand the temperature of the market before listing your property. It allows you to determine the most sensible approach to get your property sold for a favorable price.

Hot

A hot real estate market is when there are more buyers than sellers. In other words, the sellers have the upper hand in the negotiation. You can play hard to get, especially if your property has plenty of serious suitors. Regardless of your level of desperation to get rid of your property as soon as possible, the sheer number of people willing to make an offer can suffice to make as much money as you can out of the deal.

So, what constitutes a hot marketplace other than the fact that the buyers outnumber the sellers? One sign the local market is sizzling is when the current inventory is much lower than that of the previous months or year.

Moreover, the number of closed sales are generally high in hot and scorching markets. As a result, the median sale prices are soaring, “for sale” ads are disappearing, and listings are less than six months old.

Cold

When the market is cold, expect the opposite. The inventory is higher as compared to recent months and the past year. Houses for sale spend more than half a year on the market, and real estate advertisements are left and right. Since the final sale numbers are low, the median sale prices are dropping too.

The cold market is the worst place to sell a house because buyers have tremendous power to control the negotiation in their favor. With more properties to choose from, people have the luxury to take their time and be stingier.

If you must get your house sold in a cold market, it might be better to target investors rather than ordinary homebuyers. House flippers have at least low structural and aesthetic standards and are willing to pay cash and close fast.

Neutral

Broker shaking hand of couple

A neutral real estate market is when the scales do not tip in the direction of either buyers or sellers. The balanced state of affairs means everyone can act rationality because neither side has an inherent negotiating advantage.

In a neutral marketplace, the interest rates are reasonable, for there is no reason to make an extra effort to encourage or prohibit property buying. The inventory consists of properties that have been for sale for three to six months. The sale prices are close to those of active listings. The final sale numbers are stable, while the median sale prices are moderate.

Look at the latest and historical statistics before selling your property. At the end of the day, the marketability of your house depends on your understanding of the market’s current temperature.

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