With Halloween approaching, buying or selling a home in today's real estate market doesn't have to be scary! Buyers and sellers should take the good news with the bad and move forward appropriately.
Looking for some great news for sellers? Last week the National Association of REALTORS and Freddie Mac reported that applications for mortgages increased. That's great news for those on the market and looking to sell. There are more buyers in the market to purchase a property. Frank Nothaft, Freddie Mac’s chief economist said that, "Mortgage applications rose for the second consecutive week as of October 11th, elevated by increases in applications for refinancing."
Also interesting is last week's projection from Forbes showing that home prices in 2014 should increase: The Fed could be set to taper in December, or as late as March next year with Janet Yellen at the helm, and still home prices should grow 9% to 10% this year and 7% to 8% in 2014. Forbes is direct in their financial message to property buyers - either choose to buy at interest rates and home prices now or pay more for both later.
Those numbers might seem a little daunting and might seem to put some pressure on buyers. However, buyers must rationally realize that interest rates are projected to rise and home values typically increase. And when that happens, it will limit the inventory of properties that are available in a buyer's budget. If sellers choose not to list - in hoping for a higher sale price down the road - look at what happened last winter in MN both in the metro and in greater MN. There was limited inventory and a rush of buyers. Homes were in high demand and the time on the market was short. The ratio from original list price to sale price was very high. In sales from January-September 2013 in the communities of Apple Valley, Burnsville and Lakeville the cumulative days on the market was only 33 Days and the median sale price increased from $189,900 in 2012 to $218,000 in 2013. That is a median sales increase of 13% in one year.
However many homes currently remaining on the market in the same areas listed above are over priced for the current crop of buyers. If your property has been on the market for longer than 33 days it is time to re-evaluate the list price. Unfortunately for sellers, a home is only worth what a buyer is willing to pay for it. An agent may have priced your home on the projection of where the market was heading when you listed. Ultimately, the market changed direction and didn't continue to increase your property value to coincide with where your list price currently is. Taking a look at the Home Value Projector at REALTOR.com a home in the Minneapolis/St. Paul area valued today at $250,000 could increase in value 8.8% to a value in 2014 of $321,690. Although I'm not confident that home values will continue to increase by 8.8% into next year, the projections are there. Again - if sellers want to price aggressively to maximize their home sale price I still caution against over pricing your property. The goal is to sell your property at the best market price and to do that you must be not only competitive but compelling in your list price when looking at like properties. Also, know that buyers look in a large area when searching for a home. Buyers are looking to maximize their home buying opportunity and, from my experience, many look in multiple areas when choosing a property. As mortgage interest rates are projected to rise in 2014, qualified buyers are going to be looking now. Look back to earlier in the blog where Freddie Mac reports an increase in mortgage applications. Yesterday we saw a drop in rates. So if you are looking to move into your forever home you will probably want to get into that property sooner than later as Forbes Bill Connerly says, "Interest rates will remain low, but long-term rates are not quite so low as they have been." The point of all this information is to illustrate for buyers that now is a great time to buy as you will get more for your money now than in the spring. And for sellers if you are planning to purchase another property after you sell your current property now is the best time for you to sell and to buy. Also, there are many qualified buyers looking for their right property. Sellers, when you decide to list your property to sell make sure you list your property compellingly. If you price your home at the same price or higher price than similar properties, you will help your competition sell their properties and you will remain on the market.
Selling a property doesn't have to be a long drawn out exhausting process. The key is to selling your property is to attract the most buyers and have it priced in a way that when buyers enter your property they are wondering when the next appointment is going to be walking through the door. Buyers will wonder if they have enough time to write and present an offer to the sellers before the next set of buyers has their own compelling showing.
Also when you list your property for sale you want to make sure it is staged, clean and all maintenance issues are taken care of before your first buyers walk through. Consider having a professional home inspection before listing. That way any surprises can be avoided when you have a purchase agreement contingent on a home inspection. Sellers, please remember that buyer's first viewing of your property is online and the second showing is through the door. You don't want to disappoint your buyers when they make the effort to physically walk through your property. Something that would cost you, for example, $50 to fix/replace something could take hundreds or thousands of dollars off your offer - if the buyers even decide to go forward with a written offer.
Working with a professional REALTOR is key to great results. And ask for referrals from your agent. Great agents have many clients who would be glad to talk to you about working with her or him. I know I do. Working as your own sales agent produces less favorable financial results. According to the 2012 National Association of REALTORS® Profile of Home Buyers and Sellers: FSBOs accounted for 9% of home sales in 2012. The typical FSBO home sold for $174,900 compared to $215,000 for agent-assisted home sales.
I am happy to help you in whatever direction you are leaning towards. Please contact me today for your personal, free, no obligation consolation on buying or selling a home.
Liz Lewis Sandwick grew up in Duluth, is married to her husband Robb, has three kids: Caroline (5) Cooper (3), and Max (1) and would love to help you find your next home!