The Louisville market is hotter than we’ve ever seen it before. We measure the number of homes that are selling by absorption rate, which takes into account our current inventory and the number of recent sales. The figure is a measure of how long it would take all the homes on the market to sell if no other homes came on the market.
In some price ranges in our market, basically from $100,000 to $300,000, the absorption rate is down to 1.1 months, putting us in an extremely strong seller’s market. For reference, a balanced market is between four and six months of inventory. Right now, you are able to put your home on the market for a little more money while also being able to sell it within a few weeks, or even within a few days. Homes are moving extremely quickly due to the high number of buyers in the market.
If you’re a buyer in the market who is thinking of moving up, conditions are perfect for you. You can sell your home in a strong seller’s market while buying a home in a higher price range that’s in more of a balanced market. If you’re a buyer who is looking in those hot price ranges, however, I have an extra strategy that might help you out.
In this competitive market, we have been using escalation clauses in our offers. We write in the offer that we are willing to increase our offer by $1,000 over the next highest offer up to a certain amount. Without doing anything but putting this clause in our contracts, we can help you make a much stronger offer. This strategy gives you a jump on a lot of buyers out there who have agents who have never even heard of an escalation clause.
Keep in mind that there are a few things to be wary of when using this strategy. For one, the home has to appraise or you have to be willing to pay the difference in the appraisal price and the purchase price. Secondly, we are seeing a lot of sellers simply reject lowball offers, even with escalation clauses. Sellers feel insulted when buyers come in too low, even if they write in the offer that they will increase it. Coming in at list price with an escalation clause is your best bet in this type of market climate.
If you have any questions for us or want to know more about escalation clauses or what’s happening in the Louisville market, don’t hesitate to reach out via phone or email. We would love to hear from you soon.