Jul 2, 2020 | Real Estate
One of the first decisions you will need to make when selling your home is what price you want to sell it for. This is also one of the most important decisions you will make. Here are some reasons why the first listing price affects the entire outcome of their home sale.
A Too-High Price Can Exclude Your House
Some home sellers mistakenly think they should grossly overprice their home in order to leave plenty of room for bargaining during the negotiation stage. While a certain amount of bargaining does often occur, falsely inflating the value of your home inadvertently excludes your property from online search results.
It is estimated that 80% of homebuyers search online for houses to buy. Those buyers enter price search parameters that they feel they can comfortably afford. If you overprice your house, your listing won’t even show up in the search results of people who likely would be able and willing to pay you the actual value for your home.
Essentially, you are removing your house from their radar screen, making it invisible to an entire group of qualified buyers.
Properties With Price Reductions Appear Distressed
Another reason it is important to price your home correctly is because if you overprice your home and then have to drop the price due to a lack of interest, your house now appears to be a distressed property. When you see items heaped together in a bin with “price reduced” on the side, don’t you assume they are damaged goods.
It is the same with a house listing that’s labeled “price reduced.” It does not matter if your house is a mansion. With a price drop, buyers will automatically assume something is wrong with it.
The Appraisal May Ruin Your Deal
Even if you succeed in luring someone who’s willing to overpay for your house, you still need to go through the appraisal process so your buyers can secure financing. When the appraisal comes back with a much lower figure, the buyers will have difficulty obtaining a loan because lenders won’t pay over-market prices. Your whole deal could fall apart at the last minute due to a failure to price right when selling your home.
Real estate agents make pricing suggestions based on hard data, like recent comps in the neighborhood. Your best bet is to rely on your real estate agent for advice about pricing your home right to sell.
Jul 1, 2020 | Financial Reports
Case-Shiller’s National Home Price Index showed little change in April as home prices rose by 0.10 percent to a year-over-year average of 4.70 percent. The 20-City Home Price Index showed corresponding home price growth of 0.10 percent to 4.00 percent year-over-year.
Ongoing influences on home price growth before the coronavirus pandemic included short supplies of available homes coupled with high demand for homes and low mortgage rates. While closures and shelter-at-home restrictions in many markets slowed buyer and seller activity, real estate analysts said that home-buyer desiring to buy larger homes to accommodate working at home helped maintain home prices. Homeowners relocating to less congested areas also helped with stabilizing home-price growth in April.
Case-Shiller 20-City Index: Home-Price Growth Rates Increases in 12 Cities
The three top cities in April’s 20-City Home Price Index were Phoneix, Arizona with a year-over-year home price growth rate of 8.80 percent; Seattle, Washington reported 7.30 percent yearly growth in home prices. Minneapolis, Minnesota reported home-price growth of 6.40 percent.
Home price growth rates increased in 12 of 19 cities reported. Detroit Michigan did not report to the 20-City Index for the second consecutive month. The coronavirus pandemic continued to grow and spread throughout the U.S during May; some states that opened their economies quickly are now reconsidering as Covid-19 cases rise at faster rates. Changing data and emerging responses to the spreading virus are expected to impact home price growth in the coming months according to whether the coronavirus spreads or diminishes.
FHFA Home Price Index: Home Prices Increase Despite Coronavirus Pandemic
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported 5.50 percent home price growth year-over-year in April compared to the March reading of 5.90 percent year-over-year growth. FHFA expects home prices to continue rising as real estate markets return to normal. With spring and early summer home sales impacted by coronavirus-related restrictions, Lynn Fisher, deputy director of research and statistics for FHFA, expected sales to pick up during the summer months.
As coronavirus infection rates increase, further restrictions and closings are anticipated and could negatively impact real estate markets and home prices soon.
Jun 30, 2020 | Real Estate
For Sale By Owner (FSBO) at first glance seems like it might be a good idea. After all, in an FSBO transaction, there is the saving of the commission that a real estate agent earns. Does that mean there is more for the homeowner from the FSBO sale? Not always.
One explanation for this is that FSBO homes may get less attention in the marketplace and therefore may receive fewer purchase offers.
Consider The Value Of Time
A professional worker who earns $150 per hour does not save money by doing the janitorial work accomplished by paying someone else $15 per hour. In the same way, there is a cost of trying to sell your home on your own that isn’t necessarily money out of your pocket. Selling a home in every case takes a significant amount of time and attention to manage the process efficiently.
A REALTOR® spends time, energy, and money promoting the properties listed for sale. The real estate agent may help stage the home to get a better sales price and conducts the open house events. They also coordinate showings with other agents and prospective buyers to facilitate the sale of the home. This coordination can sometimes take months of time investment.
Consider The Value Of Professional Representation
It is easy for an amateur to make costly mistakes in a real estate transaction. A real estate agent working in a professional manner may lower the risk of these mistakes. Using a handmade FSBO sign in the front yard does not have the same impact as a professional one.
A REALTOR® pays a significant annual membership fee to belong to the multi-listing service (MLS). A property put up for sale on the MLS system, immediately notifies all the other members in the system that the property is available. A listing agent splits the commission with the agent that brings the buyer. Being on the MLS system means reaching all the agents that may represent thousands of potential buyers. A sign in the front yard has very little impact compared to this.
A real estate agent also markets properties on the Internet through a professional website, presence on social media, and various other paid advertising methods. They take attractive photos and videos of the property to use for marketing purposes. Putting these online attracts attention.
Without the help of a real estate agent, the homeowner needs to make all these marketing efforts and pay for them.
Closing The Sale
A real estate agent does all the grunt work that is necessary to work with the buyer, the escrow company, and the title company in order to have a smooth closing of the transaction. A good agent helps to eliminate potential problems before they arise. This only comes through the experience gained in selling many homes over time.
Conclusion
For the vast majority of homeowners, with little or no experience marketing home for sale and closing a real estate transaction, working with a real estate agent is usually a better idea than trying to go at this alone. A REALTOR® does not get paid unless the home sells, so they are highly motivated to sell the home and close the transaction as efficiently as possible.
Jun 29, 2020 | Financial Reports
Last week’s scheduled economic news included readings on sales of new and pre-owned homes and reports on inflation. Weekly reports on mortgage rates and new and continuing jobless claims were also released.
Home Sales Results Mixed for May
The National Association of Realtors® reported fewer sales of pre-owned homes in May at a seasonally-adjusted annual pace of 3.91 million sales. Analysts expected 3.80 million sales as compared to April’s reading of 4.33 million sales. This was the lowest reading for sales of pre-owned homes since July 2010 and sales were 26.60 percent lower year-over-year.
Lawrence Yun, the chief economist for the National Association of Realtors®, said that sales were expected to rise as coronavirus-related restrictis were lifted and people returned to work. Mr. Yun said in a report that sales of previously-owned homes should surpass last year’s annual sales pace in the second half of 2020. Mr. Yun made this forecast before rising coronavirus cases occurring after the reopening of the economy started.
There was a 4.80 months supply of previously-owned homes for sale in May, which was below the six-months supply indicating a balanced market.
The Commerce Department reported 676,000 new homes sold in May on a seasonally-adjusted annual basis; this surpassed expectations of 650,000 sales and April’s revised annual sales pace of 580,000 new homes sold. New home sales rose by 45.50 percent in May in the Northeastern region; New home sales rose by 29 percent in the West and 15.20 percent in the South, New home sales fell by -6.40 percent in the Midwest.
The average sale price of new homes was $317,900 in May. There was a 5.60 months supply of new homes available in May, which nearly matched the six months average inventory.
Mortgage Rates Hold Steady as JoblessClaims Fall
Freddie Mac reported little change in average mortgage rates last week. Rates for 30-year fixed-rate mortgages were unchanged at an average rate of 3.13 percent; The average rate for 15-year fixed-rate mortgages rose by one basis point to 2.59 percent and the average rate for 5/1 adjustable rate mortgages fell one basis point to 3.08 percent. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.
Initial jobless claims fell to 1.48 million from the prior week’s reading of 1.51 million new claims. Continuing jobless claims were also lower last week with 19.50 million claims filed as compared to 20.30 million claims filed the previous week.
Rising Inflation Indicates Improving Economy
Inflation rose to a seasonally-adjusted annual pace of 8.20 percent in May as compared to April’s reading of -12.60 percent Analysts expected the inflation rate to reach 9.90 percent.
What’s Ahead
This week’s scheduled economic news releases include readings on pending home sales, Case-Shiller Home Price Indices, and labor-sector jobs reports. The national unemployment rate will be released along with weekly readings on mortgage rates and new and continuing jobless claims.
Jun 26, 2020 | Real Estate
A study by the World Health Organization says that 90% of our health comes from where and how people live. Homeowners are paying more attention to wellness. These considerations extend to the home that they want to buy. Do you want to get a great price when you sell your home?
Go green and go healthy.
Going Green
Homebuyers are looking for more than just a quality home in a safe neighborhood. They also appreciate energy efficiency.
Energy efficiency includes new appliances that use less electricity, smart-home technology that manages usage and climate zones, and better insulation as well as new windows and doors. It also includes having a solar energy system to reduce monthly electricity costs.
Wellness Living
Wellness amenities include special lighting, sound systems, interior climate monitoring, plus air and water filtration systems. Newly-constructed homes are being advertised as being more healthy and perhaps extending the occupants’ lives. Older homes can be retrofitted with wellness systems to increase habitability and make them attractive to buyers.
Here are some wellness systems to consider:
- Water Purification — Pure water for drinking and ice cubes with soft water for other uses is high on the list of priorities. The best water purification systems have micro-filtration combined with activated carbon filters. They are able to remove up to 99.999% of any contaminants.
- Air Filtration — Hospital-quality air-filtration systems with HEPA filters remove dust, allergens, pet dander, bacteria, mold, and contagious airborne viruses.
- Climate Monitoring — These advanced smart home systems constantly test the interior air for contaminants. The system will inform homeowners if any toxic chemicals are detected.
- Circadian Lighting — Advanced lighting systems provide full-spectrum lighting that comes on automatically to mimic the natural light cycles of sunrise and sunset. These systems are especially helpful to improve the moods of occupants in areas that have dreary outside weather
- Soothing Sound Systems — Sound systems can be fine-tuned to emit white noise and noise-cancellation frequencies to provide soothing sonics for interior spaces.
- Home Gym — Having an exercise room with large windows and a nice view of the garden is a real plus. This room can also serve as a space for meditation.
- Sunroom — A sunroom is an excellent choice for a home addition. It can be used to relax and get some vitamin D from the sunshine as well as be filled with living aromatic flowers for quality aromatherapy.
Summary
Having a home that is designed to both be energy-efficient and improve wellness is a trend that helps sell them as a wonderful living space that promotes holistic living.
