After over six years in the real estate industry and having sold tens of millions of dollars in real estate, I get this questions all the time. How long will it take to sell my Dallas-Fort Worth Home?

Whether you are looking to upgrade, downsize or relocate, making sure your closing dates align can sometimes be tricky. So what should you expect when you sell your house? Well, it all depends on the current market climate.

In a seller’s market where there is limited inventory and buyer demand is high, you might be able to expect your home to sell in just a few days.

In a buyer’s market, you might expect your home to be on the market for longer.

So what determines if it is a seller’s market or a buyer’s market?

A seller’s market arises when demand exceeds supply. In other words, there are more interested buyers than homes for purchase. When supply is low and demand is high, sellers will have the upper hand in negotiations.

Typically, in a seller’s market, homes sell faster, and home buyers must compete with each other to win the bid on a home. Due to the shortage of housing, these conditions often lead to bidding wars. During bidding wars, buyers will make competing offers and drive up the price, typically above what the seller initially asked for. These market conditions force buyers to pay more for a home than they otherwise would and cause them to have to be more willing to accept the property as-is, rather than negotiating repairs.

A buyer’s market arises when the supply exceeds demand. Or in other words, when the amount of available homes for sale exceeds the number of buyers wanting to purchase one. Essentially, there is a greater supply of homes and a lower demand of buyers. Because there are more homes available, it gives buyers leverage over sellers.

In a buyer’s market, home prices tend to decrease, and real estate may stay listed on the market longer. This causes sellers to compete to attract buyers. In response, sellers typically drop their asking prices to be more competitive and are often willing to negotiate more with buyers. While the lower prices are bad news for sellers, it creates a buyer’s market and can be very advantageous if you are in the market for a new home.

So how do you determine whether its a seller’s market or a buyer’s market?

There are two metrics agents use to determine the market conditions.

The rate at which homes are sold, called Absorption Rate

The average number of days it takes for homes to sell, called Days on Market

What is the absorption rate? The absorption rate is is the number of homes for sale divided by the number of homes sold per month. This figure shows how many months it will take to sell the present supply of homes on the market.

Here is an example. Let’s say that your city has 1,000 homes for sale currently on the market (active listings). If 100 homes sold each month, the supply of homes available for purchase will be consumed in 10 months. Hence, an absorption rate of 10.

If 200 homes are sold each month the absorption rate would be 5 and presumably half the current supply will be sold in 2 ½ months.

In real estate, a market with 0-4 months’ worth of inventory is considered a “sellers market”. It’s important to know that not all real estate markets are the same, and the rate of price increase will change with how low or high this number is. So if there’s 4 months of inventory we might expect moderate price increases, while if there’s only 2 months’ worth of inventory we will see sharper price increases and other things such as bidding wars and bully offers.

At 4-6 months worth of inventory we refer to this as a “balanced market”. That means homes are selling a little slower, but there is still demand. In this market prices tend to remain flat, with no advantage to either buyer or seller.

Once the amount of inventory available for sale climbs above 6 months we are entering a “buyer’s market”. This means there are a lot of homes for sale and not many sales. Homes take longer to sell and seller’s start to reduce their prices in order to attract buyers. If you’re ever wondering if prices will start to go down, having an absorption rate of over 6 is a good indicator.

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