20 Tips for Preparing Your House for Sale This Spring
Homeowners: Do You Know Your Home’s Value?
The latest edition of CoreLogic’s Home Price Index shows that nationally, home prices have appreciated 6.7% over the last year and 0.9% month-over-month. The release of the report included this headline,
“National Home Prices Now 50% Above March 2011 Bottom”
The real estate market has come a long way since 2011, which is great news for homeowners!
Nearly 79% of homeowners with a mortgage in the US now have significant equity in their homes (defined as over 20%), according to the latest Equity Report. The challenge is that not every homeowner knows how much their home’s value has appreciated.
Homeowners in Denver, CO lead the way with 8.7% appreciation over the last year, while owners in Washington and Utah have experienced a 3% increase in values since the start of this year!
Nationally, CoreLogic forecasts that home values will increase another 5.0% by this time next year.
Bill Banfield, VP of Capital Markets at Quicken Loans, recently explained the importance of knowing the conditions in your area,
“With home values constantly changing, and the rates of change varying across the country, this is one more way to show how important it is for homeowners to stay aware of their local housing market.”
Bottom Line
Do you know what your house is worth? Have you stayed put because you are nervous you won’t have enough equity to buy your dream home? Let’s get together to perform an equity analysis and give you the freedom to achieve your dreams.
Get Out of the Rental Rat Race and Into Your Own Home!
Rents are truly skyrocketing right now and they just keep rising. And it’s tough to get out of the rental market sometimes. I get it.
While house prices are rising as well, once you’ve purchased, you’ll probably be locked into your payment rate for 30 years. Of course taxes and insurance seem to rise most years, and there are costs of ownership. I get that too.
The point here is that no matter whether you’re renting or buying, you’re paying a mortgage. It might as well be your own.
If you are even thinking of buying a home, give me a call so that I can route you through to my preferred lender. There ARE ways to buy with only a 1% downpayment (or even zero sometimes).
As an aside, the Infographic included shows just how much less expensive it is for you to own your own home rather than renting.
Get Out of the Rental Rat Race and Into Your Own Home!
How to Get the Most Money When Selling Your Home
Every homeowner wants to make sure they get the best price when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In reality, this just dramatically lessens the demand for their house (see chart below).
Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house.
Realtor.com gives this advice:
“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”
2. Use a Real Estate Professional
This, too, may seem counterintuitive, as the seller likely believes that he or she will net more money if they don’t have to pay a real estate commission. With that being said, studies have shown that homes typically sell for more money when handled by a real estate professional.
Research posted by the National Association of Realtors revealed that:
“The median selling price for all FSBO homes was $185,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $163,800. However, homes that were sold with the assistance of an agent had a median selling price of $245,000 – nearly $60,000 more for the typical home sale.”
Bottom Line
Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.
It’s a Seller’s Market! Should I Downsize Now?
A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market.
In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:
- A smaller home means less space, but it also means less time, stress and money spent on upkeep.
- Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
- Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.
Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.
Q: What kind of lifestyle do I want after I downsize?
A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”
Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire.
This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.
Q: Have I built up enough equity in my current home to make a profit?
A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”
Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.
Bottom Line
If you are debating downsizing your home and want to evaluate the options you currently have, let’s meet up to help guide you through the process.
Do You Know the Real Cost of Renting vs. Buying?
Some Highlights:
- Historically, the choice between renting or buying a home has been a close decision.
- Looking at the percentage of income needed to rent a median-priced home today (30%), vs. the percentage needed to buy a median-priced home (15%), the choice becomes obvious.
- Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own!
The Great News About Rising Prices for Homeowners
Recently there has been a lot of talk about home prices and if they are accelerating too quickly. In some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers out looking for a home, which has caused prices to rise.
The great news about rising prices, however, is that according to CoreLogic’s US Economic Outlook, the average American household gained over $11,000 in equity over the course of the last year, largely due to home value increases.
The map below was created using the same report from CoreLogic and shows the average equity gain per mortgaged home from June 2015 to June 2016 (the latest data available).
For those who are worried that we are doomed to repeat 2006 all over again, it is important to note that homeowners are investing their new-found equity in their homes and themselves, not in depreciating assets.
The added equity is helping families put their children through college, invest in starting small businesses, allowing them to pay off their mortgage sooner or move up to the home that will better suit their needs now.
Bottom Line
CoreLogic predicts that home prices will appreciate by another 5% by this time next year. If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, let’s get together to discuss your options!
Mortgage Pre-Approval for Buyers “and” Sellers!
Some time ago, I received a link to a Forbes article that pretty much debunks what most people think about obtaining mortgage preapproval: “The Mortgage Pre-Approval Con” The article explains how mortgage preapproval works, what information is requested and evaluated by a mortgage officer, and so on. It’s a good article and pretty much says it as it is.
However, one critical fact missing is that most experienced Broker/Agents (that’d be me!) also work with mortgage professionals we trust. That’s because we have experience with them; we know that when they issue a preapproval, they have the level of knowledge and experience to perform. They also meet deadlines — one of the most difficult challenges facing purchases at the moment.
When working with Sellers, I may ask the Buyer presenting an offer to also be preapproved through a lender I trust. Of course that buyer can work with whomever they want … I just want to assure my client, the seller, that by accepting an offer there’s a good chance the sale will actually be completed.
Working with loan officers that have been vetted through experience, minimizes the “con” in mortgage pre-approval!
For a list of loan officers I trust and work with, visit my Lender Resource page.
Short Sale Documentation
Perhaps the most significant part of handling short sale listings is gathering the appropriate documention from the Seller. While each lender / loan type tends to have slightly different requirements, overall the list is similar and must be presented to the Lender at the time short sale negotiations are begun.
Short sale documentation almost always includes at least:
Authorization from the Seller(s) allowing the negotiator to contact lender(s) on their behalf.- Hardship letter. This letter, written by the Seller, describes exactly why the Seller is in need of a short sale and why the lender should consider their request. Not a time for sugar coating, the letter should be heartfelt (I actually like handwritten letters the best).
- Financial Documents (duration varies by lender)
- Pay Stubs (two months)
- Bank Statements (last three months)
- Tax Returns (last two years)
- Financial worksheets (income and expense report for the past three months, and projecting forward for the next three months, or if self-employed, a profit & loss statement will be needed)
As a short sale listing agent, I like to have this documentation in my file at the time a listing is begun. Waiting to gather this all-important short sale document until an offer is received typically delays submission to the bank and the beginning of negotiation services.
For help listing your home and a more comprehensive list of the short sale documentation needed, be sure to consult with your lender, your attorney, and, of course, your trust real estate brokers.
A Great Lender Helps From Start to Finish, Especially in a Short Sale
One of the very first steps in the home buying process is determining how a Buyer will pay for their new home. Not only must a Buyer determine much they can afford, but how an offer must be structured–whether closing costs must be paid by a Seller, gift funds will be used for a down payment, how much of a down payment will be paid, and so on.
Having a great lender as part of the Buying team is critical, but especially so with short sale purchases.
It can be difficult for a lender to help a Buyer determine exactly how much they might need to close the sale. A good faith estimate on the front end of a short sale might not be appropriate; interest rates, dates of closing, and other terms may change before lender approval occurs several months later.
Will the Buyer have sufficient funds to close? Will they have sufficient reserves; will they be comfortable with their payment?
A GREAT lender prepares an estimate of costs at the beginning, then meets periodically with the Buyer throughout the process, updating them on the changes and making sure they understand the numbers. They help the transaction succeed – from start to finish.
Working with an agent experienced in both listing and assisting buyers with short sales … and considering their recommendations for a great short sale lender will ensure success and confidence as a buyer proceeds through the process.