What is This Market Shift?
The real estate market has shifted. As mortgage interest rates rose, potential home buyers backed away. Six months ago when a buyer could get an interest of 3% is long gone and it affects their buying power. For example, the monthly mortgage on a 30 year conventional loan on a $500,000 home at 3% is $2,353. Now, at 7%, the monthly mortgage jumps to $3,328. So understandably, there is less demand to buy a home at this time. Because of this, it now takes longer for homes to go under contract. Still, the good news for home owners is that the number of homes for sale is still very low. The positive side of this is that the price of homes have not declined significantly just yet. According to MarketStats by Showing Time, the median sold price of a home in October is 4% more than it was last year. Still median prices are down 1.6% from last month. So what are homeowners who need to sell their home to do? Here are 5 tips on how to sell your home in a market shift.
5 Tips for Selling Your Home Now
Before putting your home on the market, pretend you are a buyer and tour your home. What stands out to you? Another option is to get a home inspection professional to find the problems for you. You don’t want to put your home up for sale before knowing there is a major and costly problem such as in the roof, plumbing or heating systems. The idea is to fix major repairs first before tackling renovations. And what if you don’t have a budget? There are programs available the will cover the costs of repairs and renovations until you close on your home. Check with your real estate agent about these options.
There are also renovation projects that don’t have to cost so much. Painting your home is an inexpensive way to get major results. There is nothing like the look and smell of a freshly painted home. It’s the emotional factor you want people to have as they enter and tour your home. Other great projects include landscaping for curb appeal, installing new light fixtures; and having your home decluttered and staged.
2. Understanding the Importance of Pricing
Oftentimes, homeowner gauge the value of their homes on those that sold months ago in their neighborhood. There is much more to pricing a home to consider. Important factors include design (3 story versus one-level); materials (brick versus siding), age of the home, neighborhood, condition, land, upgrades and additions, etc. Keep these factors in mind and also consider how quickly the real estate market shifts. Work with a real estate agent with experience you trust to price your home correctly.
3. Work with a Professional
Be sure to work with a real estate agent you trust to give you good advice and be able to explain their strategy in terms of selling your home at this time. You want an agent with experience in working in shifting market and in negotiating on your behalf in challenging times.
4. Offer Incentives
Because you know one of the main obstacle in selling your home will be based on home affordability, work with your agent to offer incentives to potential buyers who are interested in your home. Consider offering seller credit for them to bring down their monthly mortgage payments. One option is to offer seller credit for a 2-1 Buydown through their mortgage lender. This program allows the rates to be brought down temporarily, usually at one rate for the first year and another rate in the second year, until the rate returns. This may appeal to buyers who are hoping rates will go back down in the next year or two, at which point they can refinance. Another option is to use the seller credit to buy down interest rate points or toward the down payment on the loan. These scenarios all help buyers who need cash assistance in order to purchase a home at a reasonable interest rate.
5. Now Wait!
Because you now know that homes are taking longer to go under contract, it’s time to let the time pass and be patient. The market six months ago saw home going under contract in 4 days. Now, homes take longer depending on where you live. It’s not a time to panic. Look at homes that just went under contract and see how long those took. This should give you a good idea of what to expect.
Selling your home at a great price as the real estate market shifts is still very possible. It’s important to understand how the market has changed, what you must now focus on, and what to expect. This is how you are going to sell your home in a shifting market.
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