With the overall economy just inching along, some experts are questioning whether the housing market can continue its momentum throughout the rest of the year. People are beginning to ask questions such as:
Will disappointing economic news adversely impact housing?
Is affordability a major concern in today’s real estate market?
Are we approaching a new housing bubble?
Are mortgage standards too tight? Or have they loosened too much?
Freddie Mac, in their April Economic Outlook, addresses the disappointing economic news and what impact they think it will have on housing:
“Recent data darkened the growth outlook for the first quarter of 2016. However, despite the disappointing economic reports, we still forecast housing to maintain its momentum in 2016.
We’ve revised down our forecast for economic growth to reflect the recent data for the first quarter, but our outlook for the balance of the year remains modestly optimistic for the economy.”
What about real estate?
Freddie Mac was much more optimistic about housing…
“We maintain our positive view on housing. In fact, the declines in long-term interest rates that accompanied much of the recent news should increase mortgage market activity.”
They went on to conclude:
"We expect housing to be an engine of growth. Construction activity will pick up as we enter the spring and summer months, and rising home values will bolster consumers and help support renewed confidence in the remaining months of this year."
The market remains wonderfully robust and successful as we move into the Spring and Summer seasons
Selling your home can be stressful. Whether you are relocating for your job, downsizing for your budget, or expanding for a growing family, you are ready to begin the next chapter in your life. The only thing holding you back now is to get your current home sold. Take the stress out of selling with these seller’s guide tips to attract buyers and get your house sold faster.
1.Enhance Curb Appeal Don’t underestimate the value of curb appeal. Your home’s external appearance creates the first, and lasting first impression, with a potential buyer. Try adding a fresh coat of paint, replacing the front door, and keeping your landscaping trim and neat to set your house apart from your neighbors.
2.Small Upgrades Many buyers will be looking for a home that is move-in ready. While remodeling your kitchen will add value to your home, your return-on-investment most likely will not be 100%. Therefore, small upgrades such as replacing an old water heater or a leaky kitchen faucet will help avoid red flags during home inspection, while also making your home more appealing to buyers.
3.Staging Your Home The first steps to making your home show-ready are to declutter and depersonalize. Remove clutter such as extra furniture and overstuffed closets to make the rooms look spacious and clean. Also, remove family photos and personal items to help potential buyers picture themselves living there. You may even want to consider hiring a home stager to maximize the full potential of the home.
4.Professional Photography Now that your home is properly staged, you need great photos to showcase all the best features. Most home buyers start their search online, so you want your photos to entice them enough to come view the home in person. Professional photographers will be able to use proper lighting and get all the right angles to enhance a room’s appearance.
5.Realistic, Competitive Pricing One of the most important tips that will get your home sold quickly is choosing the right listing price. A price too low will cause you to lose money, but a price too high may lead to fewer offers and cause your house to get stale on the market. A real estate agent can help you determine a fair, yet competitive listing price. They know the local market and can review comparable sales in your neighborhood.
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 their price. 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!
One great way to see this is with the chart below. The higher you price your home over its market value, the less potential buyers will actually see your home when searching.
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. Let's get together to discuss what is happening in the housing market and how it applies to your home. Contact your Coldwell Banker Burnet Real Estate Professional to analyze all of the options and opportunities available to you for selling your property in today’s marketplace.
YES, YES, YES!
New construction is plentiful in Southern Maryland, and you may be considering buying a newly built home. New construction has a ton of advantages, but many buyers make the false assumption that they can save money by not using their own REALTOR when purchasing a new home. This is a huge misconception!
Why buyers don’t think they need their own representation with a Realtor…
Many buyers assume that the builder’s rep will help them with the purchase of their new home. They also assume that working with the internal representation will result in getting a better deal on their purchase.
However, the builder’s rep is working for the builder – not for you! Their success relies on getting the best deal for the builder, who is their employer. There legally can be no discounts passed on to you if you don’t use a Realtor, there is no savings.
But when you use a Realtor, you are the employer.
You, the buyer, may not realize…
You may not know that the commission for buyer representation is legally part of the purchase price. If you are not using your own Realtor, the builder simply receives an extra 3% from your purchase. Basically, it’s free for you to use a Realtor. Free.
You also may not know that the builder is not required to have a licensed agent working for them, and many do not. When you hire your own Realtor you will be hiring a licensed agent who represents you, not the builder! Your Realtor looks out for YOUR best interests. The Builders agent or rep looks out for the BUILDERS best interests. Sometimes the best interests are the same for the buyer and builder, but just as many times they are NOT.
What your Realtor can do for you
Experience isn’t expensive. It’s priceless. Your Realtor, who understands the ins and outs of home purchasing, can work on your behalf to negotiate a better deal, free upgrades, or simply whatever is in your best interest. Most people wouldn’t consider buying an existing home without a Realtor to represent them. Therefore, why consider going through the even more stressful and complicated process of building a home without someone on your side? In many cases, you are committing to something that doesn’t even exist yet.
It can be very daunting to go through the process of home-building, and dealing with the last minute changes and surprises. Buyers can avoid a lot of bad surprises with good representation of their own Realtor.
If you plan to use a Realtor to represent you…
And we sure hope you do!, be SURE to hand your Realtors card to the builder representative at the door of the model, and tell them, this is my Realtor. It is even better for your Realtor to bring you through the door of the model to make it clear at the very start that you have Realtor representation. There are rules as to how you are introduced to a builder, and when a Realtor is due their fee for working for YOU. Just be very clear and give your agents name, and CARD. If you plan to visit a model, give your agent a call and they can call ahead for you so that the builders rep knows you will be coming and you are represented by a Realtor.
“TO DO” List for Buying New Construction
Here’s a helpful list we’ve compiled – follow these “to dos” when working with a builder to have the best experience.
~ Hire a Realtor.
This is simply a must. Like we’ve said, your Realtor is working for YOU. Home-builders prefer to monopolize the sale. They may only give you special “incentive” packages if you agree to use all of their representatives: lender, title company, and even insurance company! But your Realtor can walk you through this process and make sure you are protected, as well as make sure you are getting the best deal. If you decide to use the builder’s lender, your Realtor can make sure you get a good rate and fair closing costs. Your Realtor knows the standards, and can make sure the builder doesn’t try to go beyond those standards. By bringing in your own Realtor, you’re asking your builder to be on their “best behavior.” Your builder doesn’t want to get a bad reputation, and will want the potential to create a good relationship with your Realtor, who will hopefully bring buyers their way in the future if the transaction is successful.
~Don’t sign anything until you’ve worked out every detail.
Your builder may try to capitalize on the emotionality of buying a new home. Once you’ve become attached to this new home, they may try to get you to write up the contract quickly so you don’t lose it. But you absolutely must know what is in the contract, understand it and agree with it. No matter what the builder tells you, IF IT IS NOT IN WRITING IT WILL NOT HAPPEN. Everything will be done as it is written in the contract, so it’s important that you understand it clearly.
Your Realtor can be a great player on your team when going through and trying to understand the builder’s contract.
~Research the builder
Your Realtor is an expert on homes in your area. This will include builders and their reputations. You want a builder that is not selling too many properties to investors – this can lead to creating a rental neighborhood and affects pride of ownership. Ideally, you also want your builder to be constructing homes of equal or greater value in your neighborhood to keep your property values high. However, this is difficult in some neighborhoods because the economy is difficult and people are affording and spending less on homes. Your Realtor can help you sort this out and advise you on these items.
In this crazy economy we are in, several builders are on the brink of shutting their doors, just be very sure your builder is not one of them, and you know who your earnest money will be returned if they close during your construction.
~ Research city plans
New neighborhoods are often in newly developing areas. Therefore, you want to know what is likely to happen in the area you are about to commit to. This includes your city’s plans for roads, public spaces, parks, and schools. You want confidence that your neighborhood is going to become a good place to live as it develops.
The perfect source for this? Your Realtor, who likely already has this kind of information available. This makes the job so much easier.
How to Proceed
So, the first thing you did was hire a Realtor to work with you and your builder. The next thing you should do is tell the builder you’ve got a Realtor when you walk in the office door “Hi, I’m working with The Choporis Crispell Team”).
When touring the model home, ask the builder how much the home costs as you see it! Keep in mind that the model usually contains many upgrades and special features. You will want to understand the difference between the base model and the upgraded models. We can help you understand the difference, As your Realtor, we can advise you on what upgrades make sense and which ones are not worth the cost.
Also, considering upgrades, developers will often want cash upfront for upgrades you order for the house. They do not want to be held accountable for your extras if you decide to walk away from the sale. You should also expect that if you do walk away from the sale, you may not be refunded for these upgrades.
Consider resale, even if you don’t want to. It’s strange to think about reselling your home before it is even built, but you should at least consider it. If your development is old enough, look at the any current listings up for resale and see how the home looks “used”.
Get a copy of the blueprints of your home, along with floor plans and surveys (including room sizes). This will help you in the future if you want to make changes or sell. It’s easy to get them in the beginning, and it’s very important to have them!
As your home is being completed, check in! We recommend visiting every three days to daily. If you are proactive, you can catch mistakes that might happen. Some developers limit access to the site, so you can stipulate this in your contract. I can also help you with this.
Do not close on your home until ALL work is finished. This is very important, and something on which your Realtor can look out for you. If any changes are substantial, have the funds set aside for them until they are complete. Once you close, it can be more difficult to have these things completed, especially if you have already paid for them. (Keep a record of this in writing, signed by buyer and seller!).
Know that your Realtor can look out for you in the event of delays or problems. There are things that happen beyond the builder’s control. Have contingency plans for cost overruns, temporary housing and bridge loans. As your Realtor, we can help you with ideas, and help you work with the lender in these worst-case-scenarios.
The Home Search: Four Tips to Clean Up Your Credit
After years of planning, searching, and daydreaming, you have finally decided you are ready to take the plunge and purchase a new home. But before you start picking out curtains, we have to discuss one topic that can be a bit daunting – your credit score. Your credit score will be the determining factor in getting a mortgage loan. Whether you think you have good credit or not, it’s better to do your due diligence before you jump into the home-buying process. Here are 4 tips to get prepared and clean up your credit.
1. Check Your Credit Report Whether you plan to purchase a home within the next 2 months or 2 years, do yourself a favor and get a head start by going over your credit report right now. A 2013 study by the Federal Trade Commission found that 1 in 4 consumers had errors on their credit report. Even though your credit report does not reveal your credit score, you can identify discrepancies and ensure everything is in order regarding your personal information, accounts, and credits cards. Fortunately, federal law lets you get a free credit report once every 12 months. You can get your free copy of your credit report at AnnualCreditReport.com.
2. Reduce Your Current Debt Keeping low balances or paying off debt completely, especially on revolving credit such as credit cards, is an important part of maintaining and improving your credit score.
3. Manage Your Credit Cards Credit cards can be a beautiful thing. With timely payments, low balances, and long memberships, they can help you build a trustworthy, financial reputation to boost your credit score. On the other hand, if not managed properly credits cards can be very damaging to your score.
Avoid closing unused credit cards as a short-term strategy to raise your scores. Long-term account memberships are favorable, so by occasionally making small purchases on your unused credit cards keeps your account status active. Also, do not open new credit cards that you don’t need, just to increase your available credit. Opening too many credit cards as once can look suspicious and therefore hurt your score.
4. Setup Automatic Payments Your credit can be significantly affected by the timeliness and quantity of your payments. Many credit card companies and financial institutions allow you to set up an automatic payment schedule to make sure your payments are on time every billing cycle. However, be aware if the automatic payments are limited to just the minimum payment, as paying the bill’s entire balance off every month is much more beneficial.
As you may have guessed, there is no quick fix for cleaning up your credit score. It involves a well-rounded strategy that will take time, patience, and discipline. Just remember to keep your eye on prize and stay motivated. Your dream home is waiting!
Will disappointing economic news adversely impact housing?
