Winter is a Great Time to Sell to a Rabbit

by Karen Goodman on November 28, 2007

When is the best time to sell?

This question is asked of real estate agents all the time. The answer really has to do with supply and demand, and the different type of buyers out there.

Supply and Demand:

First, let’s talk about supply and demand. We all know that when there is limited supply and lots of demand, products sell for a premium. It’s the reason that the new iPhone can be so expensive. The iPhone is the only model with these new features. As soon as some other manufacturers come up with similar products, the price for all of them will come down.

It works the same for homes for sale. You have a house you want to sell. If your home has features of mass appeal that are hard to find in your price range in your area, the house should sell easily. Low supply with high demand = fast sale.

On the other hand, if you home is very similar to all the other nearby homes on the market in your price range, and there are a number of homes on the market, it could take a long time to sell. High supply with low demand = slow sale.

How do you determine the level of supply and demand?

In real estate, supply equals the number of ACTIVE properties on the market that are available for purchase. Demand can be found by looking at homes that recently went under contract. In the St. Louis area, most home contracts close in about 4 weeks. So, the homes UNDER CONTRACT represent demand, or buyers that were looking within the last few weeks.

In a sellers market, you have a buyer looking for every one or two properties that are available. Let’s say your subdivision has 5 homes for sale, but there are also 5 homes that are under contract. You have a 1:1 ratio…which means you have a sellers market in your subdivision!

On the other hand, a buyers market has many more homes available than there are buyers looking at those homes. If your subdivision has 10 homes for sale, but there are only 2 homes under contract (5:1 ratio), you have a buyers market since there are many homes to choose from for every buyer that is looking.

Remember, real estate is all LOCAL, so it doesn’t matter what the national statistics say, or even your citywide statistics. It’s all about the supply & demand in your neighborhood or area.

Rabbits and Turtles:

I like to think of buyers as either rabbits or turtles. Rabbits are ready to jump as soon as they can. Turtles are cautious and thoughtful, and take their time. There is nothing wrong with a turtle buyer, but they probably aren’t going to buy a home this month. If you have your home for sale, which type of buyer would rather have schedule a showing?

There are lots of turtles out there in the current market. They are the buyers that would like to move IF they can find their dream home. They would like to move IF they can just get their house sold. They would like to move IF they can find a great deal.

Rabbits are ready now. The biggest group of rabbits is relocating and need to find a home to get settled into their community and get their kids enrolled in school. Sometimes rabbits make a purchase on their first house hunting trip to a city. Sometimes it takes a few months. But it rarely takes them longer than a few months to buy (unless they can’t sell their old home…which means they really are turtles).

For another way of classifying buyers, check out Jonathon Greene’s Real Opinionated blog that describes all buyers as either: first time buyers, same city move up buyers, investors and relocating buyers.

Turtles can turn into rabbits. When the first-time buyer’s lease is only a few months from ending, they’ll turn into rabbits. When that same-city move up buyer sells their house and is going to close in 4 weeks, they immediately become a rabbit.

So back to my question – When is the best time of year to sell?

There definitely are fewer buyers looking for homes in the winter, but the supply of available homes is also much lower. And, the buyers that are willing to trek through the snow and look for homes when it is frigid outside are definitely rabbits. Last winter I showed 22 homes in one day to a family with a baby during an ice storm! The next day they picked one and we had a contract before they flew back home.

One of my current listings is in a popular subdivision in Chesterfield and has only one competing home within a mile radius. Do we have a good chance of snagging the next relocating rabbit? You bet we do!

(UPDATE: Within a week of posting this article, I received an offer on my Chesterfield listing. And the following day I received a call from an agent working with a relocation buyer that has a relative in same subdivision who really wanted to see this house. You can predict what will happen based on supply & demand and pricing!)

So, check your subdivision comps for supply & demand, and if you don’t have much competition, don’t be afraid to list your home in the winter.