The inventory in the luxury market is extremely low, which gives these homeowners a great opportunity, says DeCaro, a realtor with eXp Realty in Ashburn, VA, near Washington, DC. We've had people call us and say they're on holiday and beg us to wait until they get back to make an offer.

In the Washington, D.C., metro area, there is only a two-month supply of luxury homes, according to a study by Realtor.com, which defines a luxury home as one listed or sold for more than $1 million.

In the luxury market, buyers are not affected much by rising mortgage rates because they either pay cash or put more down and borrow less, which keeps the inventory of luxury homes lower and homes under contract within days.

A balanced market usually equates to a six- to seven-month supply, says Hannah Jones, an economic data analyst at Realtor.com. (Monthly supply refers to how long it would take to sell all the homes at the current rate of sales if no other homes were listed for sale.) A seller's market equates to a six-month supply or less, Jones said.

The oversupply dynamic fuels buyers' competitive instincts, forcing them to outbid each other in the race for supply.

In this sense, listing a property in a tight market can help increase a seller's negotiating power to get the highest possible market price for their property. However, strong seller's markets are generally not the norm, and well-located, reasonably priced properties sell quickly under most market conditions.

In addition to inventory levels, Walkup recommends that homeowners be aware of seasonal market trends and local demand trends before deciding when to list their home.

In addition to Washington, D.C., markets with the lowest supply of luxury homes include Las Vegas (1.4 months of supply), San Jose (1.8 months of supply), San Francisco (1.9 months of supply) and Reno, Nevada (2 months of supply), according to Realtor.com.

Over the past few years, buyer demand has slowed in most luxury home markets, and luxury homes are taking longer to sell on the market, Jones said. In response, some homeowners may delay listing their homes for sale until buyer demand recovers, exacerbating the low inventory.

Uncertainty in the general economy and the increased cost of living due to inflation may cause buyers and sellers to hesitate.

This actually gives an advantage to homes that have strong curb appeal due to updating or being located in good neighbourhoods.

In a low inventory market, sellers who can offer reasonably priced, move-in ready homes will still receive a lot of attention from buyers.

Despite the low inventory of luxury homes in the market of Sabra Kirkpatrick, a realtor with Brown Harris Stevens in Palm Beach, Florida, she advises her clients to wait until at least after Labour Day to list their homes.

It doesn't make sense to list when there are the fewest people looking at homes, even if there isn't a lot of competition. It's been a very hot summer, and luxury home buyers are travelling more than ever, so if they have kids in school they won't be here until September, and if they don't have kids they won't be here until November.

Kirkpatrick stressed that sellers should look at who their potential buyers are and then see what listings might come on the market, rather than jumping into the market because there are fewer homes for sale.

In New York City, it's not a buyer's market or a seller's market, it's a broker's market. If you want to get more business, you have to convince people not to put their lives on hold while waiting for the market to get better or worse.

Buyers and sellers need to be equally motivated and willing to negotiate.

Splendore says, "Some sellers aggressively price their homes because they think they can get whatever they want when the listing price is low, or if they're the only home on the market in that price range." But buyers don't want to pay more, especially with higher mortgage rates and economic uncertainty.

In Washington, D.C., DeCaro says that while low inventory will prompt some homeowners to list their properties for sale, it's important to understand why someone wants to sell.

DeCaro says, "If someone is going to retire in a year or two or wants to downsize, we know they can sell now because of the lack of competition." Maybe in a year or two, you may not be able to sell for what you're paying now, and there will be less certainty of a future sale.

One strategy for homeowners who need to sell their property before they buy their next one is to sell it now and rent it back from the buyer, DiCarroll advises. She recently sold a 10,000-square-foot home in Vienna, Virginia, that was listed for $2.6 million, for $2.7 million. The buyer paid cash and offered a long-term leaseback so the sellers could find their next property.

If you wait, the market may shift again and sellers will face more competition," DeCarlo said. It's better to sell when you know you can, rather than get trapped."