- Distressed property sales fell to its lowest number since NAR began tracking it in 2008.
- As you can see, with less distressed properties, sales are up in all price ranges except the $0 – $100K price range.
- Interest rates are still at historic lows, signifying that now is the right time to buy!
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 latest 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 from CoreLogic’s report and shows the average equity gain per mortgaged home from June 2015 to June 2016 (the latest data available).
For those that 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, and even 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.
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!
In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.
If you’ve been thinking about buying a home of your own for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale with rose-colored glasses.
Do you really need that farmhouse sink in the kitchen in order to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the man cave of your dreams be a future renovation project instead of a make or break now?
The first step in your home buying process should be to get pre-approved for your mortgage. This allows you to know your budget before you fall in love with a home that is way outside of it.
The next step is to list all the features of a home that you would like, and to qualify them as follows:
- ‘Must Haves’ – if this property does not have these items, then it shouldn’t even be considered. (ex: distance from work or family, number of bedrooms/bathrooms)
- ‘Should Haves’ – if the property hits all of the must haves and some of the should haves, it stays in contention, but does not need to have all of these features.
- ‘Absolute Wish List’ – if we find a property in our budget that has all of the ‘must haves,’ most of the ‘should haves,’ and ANY of these, it’s the winner!
Having this list flushed out before starting your search will save you time and frustration, while also letting your agent know what features are most important to you before starting to show you houses in your desired area.
BIG GARAGE SALE EVENT
SATURDAY AND SUNDAY
AUGUST 13TH AND 14TH 2016
10:00AM – 5:00PM
IF YOU ARE LOOKING FOR A GREAT DEAL COME SEE US – WE HAVE IT!
BABY STUFF***KIDS STUFF***CLOTHES
COME SEE WHILE THEY LAST!
MAPS GIVEN AT EACH HOME SO YOU CAN HIT ALL THE SALES!
COLLECTING FOR THE GREENWOOD FOOD BANK
We are also collecting food for our less fortunate neighbors.
If you have extra canned or dry food (or pet food), drop it off at
Windermere Real Estate at the corner of 125th and Greenwood 206-367-4720
- Set the market value on possibly the largest asset your family owns (your home)
- Set the time schedule for the successful liquidation of that asset
- Set the fee for the services required to liquidate that asset
An agent must be concerned first and foremost about you and your family in order to garner that degree of trust. Make sure this is the case.
Be careful if the agent you are interviewing begins the interview by:
- Bragging about their success
- Bragging about their company’s success
An agent’s success and the success of their company can be important considerations when deciding on the right real estate professional to represent you in the sale of the house.
However, you first need to know that they care about what you need and what you expect from the sale. If the agent is not interested in first establishing your needs, how successful they may seem is much less important.
Look for someone with the ‘heart of a teacher,’ who comes in prepared well enough to explain the current real estate market and patient enough to take the time to show how it may impact the sale of your home.
Not someone only interested in trying to sell you on how great they are.
You have many agents from which to choose. Pick someone who truly cares like Steve and Sandra.
The inaugural Opportunity Cost Report was released recently by realtor.com. The report explained that “with interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today's market have become very steep”.
The report estimates that, based on today's dollars, the average purchaser would accumulate $217,726 in increased wealth over a 30-year period.
(You can get the projected wealth increase for almost 100 metros here.)
What could this mean to someone sitting on the fence waiting to buy?
Experts believe that both home prices and mortgage interest rates will increase over the next twelve months. Obviously, if this does happen, the monthly cost of a home a year from now will be dramatically higher than it is today. The Opportunity Cost Report breaks down exactly how much a purchaser could lose over increments of one year and three years. Here are the results based on an average purchaser in the U.S. delaying their purchase:
If you are ready, willing and able to buy a home, waiting doesn't make sense.
When you are ready to jump off the fence, give us a call, text or email and put our experience and negotiating skills to work for you!
In today's market, with homes selling quickly and prices rising some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.
Here are five reasons:
1. 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
2. Exposure to Prospective Purchasers
Recent studies have shown that 88% of buyers search online for a home. That is in comparison to only 21% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?
3. Results Come from the Internet
Where do buyers find the home they actually purchased?
- 43% on the internet
- 9% from a yard sign
- 1% from newspaper
The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.
4. FSBOing has Become More and More Difficult
The paperwork involved in selling and buying a home 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 9% 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.
Studies have shown that the typical house sold by the homeowner sells for $208,000 while the typical house sold by an agent sells for $235,000. This doesn’t mean that an agent can get $27,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.
Before you decide to take on the challenges of selling your house on your own, sit with us and see what we have to offer.
Steve Hill and Sandra Brenner
Windermere Real Estate
If you’re in the market for a home, you’re probably in the market for a mortgage. With the exception of all-cash buyers, most buyers will find out soon what their FICO score is and what banks think about it.
The FICO score has a huge impact on whether or not lenders consider you an acceptable credit risk, and yet there are more than 53 million Americans out there who don’t have a credit score at all. This doesn’t mean they’re a bad risk, necessarily… it just means they haven’t used credit cards, held a previous mortgage, or had an auto loan. They may be perfectly responsible financial citizens. So how do they apply for a mortgage?
In an attempt to broaden access, FICO has begin to factor new data sources. Announced in April, 2015, FICO will now include two additional sources: A national utility database, presided over by Equifax, and LexisNexis, which relies on public records.
The idea behind the change is this: First, the timeliness of utility payments can be used as month-to-month evidence of financial health. Second, FICO will be looking at LexisNexis address changes to determine how often people have relocated. In theory, frequent moves may be an indication of increased risk.
Though the impulse may be good, the changes are not without some controversy. Some argue the accuracy of the Equifax database may be a concern. It also adds one more credit reporting database which must be monitored. There’s also a worry that the “frequency of move” may unfairly punish people and provide a disincentive for relocations, downsizing, and upsizing of homes, provided FICO only uses the LexisNexis information in a punitive way.
More details are sure to emerge, but one thing is for sure: The era of Big Data in the cloud will be sure to cast their shadow on the way financial institutions assess risk in the years ahead. One hopes that they ultimately let in more sunshine than shade when it comes to helping buyers attain the dream of homeownership.
Steve Hill and Sandra Brenner
Windermere Real Estate
Active: These are homes available on the NWMLS.
Pending Inspection: These are homes that are under contract, but contingent upon a buyer’s subjective satisfaction of a home inspection. A buyer can walk for any reason during this phase of the contract.
Pending: The home is under contract and in the process of closing.
Last month we talked about the benefits of having a home professionally inspected prior to listing it on the open market. The other day, Steve and I were talking about the cost to home sellers of going Pending Inspection and then back Active on the MLS—meaning the house failed inspection, or at least that is the perception from buyers and agents. We did a little research to see what the ratio of list price to sold price was for homes that went Pending Inspection at least twice, versus homes that went Pending Inspection or Pending just once. We’ve always suspected that homes that “failed” inspection most likely will not receive as high of offer the second time around. Our research shows that assumption is correct. Homes that went Pending Inspection at least twice, sold on average of 94.6% of the original list price. Homes that went under contract once sold for an average of 96.32 of the last sales price. That is a 1.71% difference, which doesn’t sound like a lot, but it adds up. We looked at homes that sold in the last 6 months in Mill Creek. The average selling price in Mill Creek in that time period was $460K. If the average home went under contract and failed the inspection, that home owner potentially lost $7,866! However going under contract twice also added an additional 34 days of market time. Basically they spent an additional month on the market—an extra month of keeping the house “show ready” at anytime. That is not fun!
The typical process in a house purchase is an offer contract with an inspection contingency. During that inspection period the buyer will typically ask for some repairs, try to re-negotiate the purchase price, or worst case scenario exit the contract. For about the last 18 months Steve and I have changed our process so that we can avoid going Pending Inspection for our sellers. In the past we’ve been successful about 60% of the time. The addition of the pre-listing inspection is an evolution of that original goal to go straight to Pending. We believe this extra step will help our sellers avoid the pitfalls of a failed inspection on the MLS.
Steve Hill and Sandra Brenner
Windermere Real Estate
In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.
There is no “later.”
Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.
John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:
“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”
Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.
Don’t build “negotiation room” into the price.
Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.
Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!
A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.
Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?
The Price is Right
Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position. Check out our Ulimate Home Selling System HERE.
Steve Hill and Sandra Brenner
Windermere Real Estate