Mid year market update: Three things you need to know:
Shifting trends and industry-leading research are pointing toward some valuable projections about the status of the housing market for the rest of the year.
If you’re thinking of buying or selling, or if you just want to know what experts are saying is on the horizon, here are the top three things to put on your radar as we head into the coming months:
- Home prices are appreciating at a more normal rate: Home prices have been appreciating for about ten years now. Experts at the Home Price Expectation Survey, Mortgage Bankers Association, Freddie Mac, and Fannie Maeare forecasting continued growth throughout the next year, although it should be leveling-off to normal appreciation (3.6%), as we move into 2020.
- Interest rates are low: Over the past 30 years, the average mortgage rate in the United States has been 8.27%, and rates even peaked as high as 18% in the 1980s. Today, at 3.81%, the rate is considerably lower than the historical 30-year average. Although experts predict it may climb into the low 4% range in the near future, that’s still remarkably lower than our running average, suggesting a great time to get more for your money over the life of your loan.
- An impending recession does not mean there will be a housing crash: Although expert research studies such as those found in the Duke Survey of American CFOs and the National Association of Business Economics, are pointing toward a recession beginning within the next 18 months, a potential recession isn’t expected to be driven by the housing industry. That means we likely won’t experience a devastating housing crash like the country felt in 2008. Expert financial analyst Morgan Housel tweeted:
“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”
In fact, during 3 of the 5 last U.S. recessions, housing prices have actually appreciated!
With prices appreciating and low interest rates available, it’s a perfect time to buy or sell a home. Let’s get together to discuss how you can take the next step in the exciting journey of homeownership.
If you’re ready to put your home up for sale, know this: Buyers and their agents are going to zero in on all those things that need doing in your home —as well as some things you hadn’t even noticed yourself.
So why not get ahead of the curve by hiring a licensed home inspector who can pinpoint what needs fixing?
Of course, most sellers don’t get their homes inspected before listing them, because the buyer usually orders an inspection during escrow, and who wants to pay for something they don’t have to?
But if you’re willing to invest the time and money, a thorough inspection before listing your property can make it easier to price your home, manage repairs, and even help sell it faster—and for more money.
So what are the some of the reasons why a pre-listing inspection makes sense? Let’s take a look.
It can save you if you’ve neglected home maintenance
If you have a busy life—or maybe even if you don’t—chances are that obsessing over regular home maintenance might not be your No. 1 priority during downtime. Trouble is, letting painting, roof repairs, and other routine chores slide can lead to bigger issues down the road, says Chicago-based Frank Lesh, ambassador for the American Society of Home Inspectors.
“In a lot of cases, people think, ‘I’ve been here for 30 years; the house is fine. There’s nothing wrong with it,’” he says. “But they’re looking at it with rose-colored glasses.”
Instead of worrying what a buyer’s inspector will uncover—and which could potentially kill the sale—be proactive with a pre-listing inspection, Lesh says. This way, rather than being blindsided, you can then decide whether to make the necessary repairs or to account for that deferred maintenance by reducing the list price. Which leads us to…
You can make a bigger profit on your sale
Sure, a home inspection that you don’t have to do is going to cost money. (An inspection for a 1,200- to 1,500-square-foot house in an average market, for instance, will cost between $350 and $600, Lesh says.) But as the saying goes: Sometimes you have to spend money to make money.
After all, if you invest a little more to repair and spruce up anything the pre-inspection reveals, you can justify listing your home at a higher price, plus, in most states, home improvement repairs you carry out before selling your house are deductible from the profit you make from the sale.
Sometimes, just knowing that a pro has given the house a proper once-over can persuade a buyer to make a bid (assuming that you actually follow the inspector’s recommendations).
You won’t have to scramble to fix things at the last minute
Once a buyer’s inspector submits a report, sellers are usually faced with two choices: If problems are found with the house, they can then either slash money from the sale price, or opt to carry out repairs before the closing date. That often leaves sellers in the lurch, having to get work done pronto—and sometimes paying a premium for the rush work.
After a pre-listing inspection, sellers can research contractors and make the necessary repairs within a time frame of their choosing, so that everything is ready before potential buyers even visit the property.
It’ll minimize back-and-forth negotiation
Buyers often use their home inspection as leverage, asking the seller (that’s you!) for steep discounts based on what their inspector’s report reveals. Not surprisingly, the buyer’s inspection is often where the deal falls apart.
If you’ve already uncovered the issues and addressed them, you can raise the price of your home accordingly, that gives the buyer less leverage in the request for repair process.
Also, in red-hot markets where multiple bids come fast and furious, there’s always a chance that buyers might accept your pre-listing inspection without insisting on doing their own. This can make for a quicker sale.
But make sure a pre-inspection doesn’t work against you
As advantageous as a pre-inspection can be, don’t forget that the inspector’s report could be a double-edged sword: Once you know about a problem, you can’t ignore it.
Sellers are legally obligated to disclose any problems that a home inspection unearths.
For sellers unwilling to do repairs, their own inspection could be used as leverage to negotiate on price and in the request-for-repair process.
Before committing to a pre-inspection, find out what other sellers in your area are doing. Norma can help guide you on whether it’s necessary to sell for more, or if there’s a better—and more affordable—strategy for getting your home sold.
*Article Source: Realtor.com
Homes priced at the top 25% of the price range for a particular area of the country are considered “premium homes.” In today’s real estate market, there are deals to be had at the higher end! This is great news for homeowners wanting to upgrade from their current house.
Much of the demand for housing over the past couple of years has come from first-time buyers looking for their starter home. Many of the more expensive homes listed for sale have not seen as much interest.
According to ILHM’s Luxury Report, this mismatch in demand and inventory of luxury and premium homes has created a Buyer’s Market. For the purpose of the report, a luxury home was defined as one that costs $1 million or more.
“A Buyer’s Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.”
The authors of the report were quick to point out that current conditions at the higher end of the market are no cause for concern.
“While luxury homes may take longer to sell than in previous years, the slower pace, increased inventory levels and larger differences between list and sold prices, represent a normalization of the market, not a downturn.”
Luxury can mean different things to different people. To one person, luxury is a secluded home with plenty of property and privacy. To another, it could be a penthouse at the center of a bustling city. Knowing what characteristics mean luxury to you will help your agent find you the home of your dreams.
If you are debating upgrading your current house to a premium or luxury home, now is the time!
Rising home prices coupled with a lack of inventory in today’s market may cause some homeowners to consider selling their home on their own (known in the industry as a For Sale By Owner). However, a FSBO might not be a good idea for the vast majority of sellers.
The top 5 reasons are listed below:
1. Online Strategy for Prospective Purchasers
Recent studies have shown that 95% of buyers search online for a home. In comparison, only 13% use print newspaper ads. Most real estate agents have an Internet strategy to promote the sale of your home. Do you?
2. Results Come from the Internet
Where did buyers find the home they actually purchased?
- 50% on the Internet
- 7% from a yard sign
- 28% from a Real Estate Agent
- 1% from newspapers
The days of selling your house by putting up a sign and listing it in the paper are long gone. Having a strong Internet strategy is crucial.
3. There Are Too Many People to Negotiate With
Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:
- The buyer who wants the best deal possible
- The buyer’s agent, who solely represents the best interest of the buyer
- The buyer’s attorney (in some parts of the country)
- The home inspection companies, which work for the buyer and will almost always find some problems with the house
- The appraiser, if there is a question of value
4. FSBOing Has Become Increasingly Difficult
The paperwork involved in the process has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 7% over the last 20+ years.
5. You Net More Money When Using an Agent
Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.
A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, they may actually cost themselves more. One of the main reasons for the price difference at the time of sale is:
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”
The more buyers that view a home, the greater the chance of a bidding war for the property. The study found the difference in price between comparable homes of size and location is currently at an average of 6%.
Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent without additional cost?
Before you decide to take on the challenge of selling your house on your own, let’s get together to discuss your needs.