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Pricing

Get the Most Money Selling Your Home

How to Get the Most Money from the Sale of Your Home | Simplifying The MarketEvery homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you get the most money selling your home? Here are two keys to ensure that 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 actuality, this just dramatically lessens the demand for your house (see chart below).How to Get the Most Money from the Sale of Your Home | Simplifying The MarketInstead 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. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:
“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”
The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

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 home.

More Americans Say Now is a Good Time to Sell!

More Americans Say Now is a Good Time to Sell! | Simplifying The MarketRecently released data from Fannie Mae’s National Housing Survey revealed that rising home prices were the catalyst behind an eight-point jump in the net percentage of respondents who say now is a good time to sell. The index is now 21 points higher than it was this time last year.Overall, 62% of Americans surveyed said that now is a good time to sell (up from 58%), while 26% of respondents said that now is not a good time to sell (down from 30%). The net score is the difference between the two percentages, or 36%.According to CoreLogic, home prices are now up 6.7% over last year and 78.8% of homeowners with a mortgage in the US now have significant equity (defined as 20% or more).As home prices have increased, more and more homeowners have realized that now is a good time to sell their homes in order to take advantage of the extra equity they now have.At the same time, however, rising prices have had the exact opposite impact on the good-time-to-buy scale as many buyers are nervous that they will not be able to afford a home; the net score dropped 5 points to 18%.Doug Duncan, Vice President & Chief Economist at Fannie Mae, had this to say,
“In the early stages of the economic expansion, home selling sentiment trailed home buying sentiment by a significant margin. The reverse is true today. The net good time to sell share is now double the net good time to buy share, with record high percentages of consumers citing home prices as the primary reason for both perceptions. Such a sizable gap between selling and buying sentiment, if it persists, could weigh on the housing market through the rest of the year.”
Buyer demand continues to outpace the supply of homes for sale, which has driven prices up across the country. Until the supply starts to better match demand, there will be a gap between the sentiments surrounding buying and selling.

Bottom Line

If you are considering listing your home for sale this year, now is the time!

14,904 Homes Sold Yesterday… Did Yours?

14,904 Homes Sold Yesterday… Did Yours? | Simplifying The MarketThere are some homeowners who are patiently waiting to get the price they hoped for when they originally listed their houses for sale. Something these homeowners might want to take into consideration is the fact that if their homes haven’t sold yet, maybe they’re not priced properly.

After all, 14,904 houses sold yesterday, 14,904 will sell today, and 14,904 will sell tomorrow.

14,904!

This is the average number of homes that sell each and every day in this country, according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.44 million. Divide that number by 365 (days in a year) and we can see that, on average, over 14,904 homes sell every day.The report from NAR also revealed that there is currently only a 4.2-month supply of inventory available for sale. 6 months inventory is considered ‘historically normal’.This means that there are not enough homes available for sale to satisfy all of the buyers who currently are out in the market in record numbers.

Bottom Line

We realize that you want to get fair market value for your home. However, if it hasn’t sold in today’s active real estate market, perhaps you should reconsider your current asking price.

Home Prices – Where Are They Heading?

Where Are the Home Prices Heading in The Next 5 Years? | Simplifying The MarketToday, many real estate conversations center on home prices and where they may be headed. That is why we like the Home Price Expectation Survey.Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. Then they average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 5.0% over the course of 2017, 4.0% in 2018, 3.2% in 2019, 3.0% in 2020, and 3.0% in 2021. That means the average annual home price appreciation will be 3.64% over the next 5 years.Where Are the Home Prices Heading in The Next 5 Years? | Simplifying The MarketThe prediction for cumulative appreciation increased from 17.8% to 18.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative home price appreciation of 6.7%.Where Are the Home Prices Heading in The Next 5 Years? | Simplifying The Market

Bottom Line

Individual opinions make headlines. We believe this survey is a fairer depiction of future home prices.  If you are thinking of buying a home, stop thinking and start acting!  Call me today.

Home Prices Up 6.64% Across the Country! [INFOGRAPHIC]

Home Prices Up 6.64% Across the Country! [INFOGRAPHIC] | Simplifying The MarketHome Prices Up 6.64% Across the Country! [INFOGRAPHIC] | Simplifying The Market 

Some Highlights:

  • The Federal Housing Finance Agency (FHFA) recently released their latest Quarterly Home Price Index report.
  • In the report, home prices are compared both regionally and by state.
  • Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!
  • Alaska & West Virginia were the only states where home prices are lower than they were last year.

Rising Home Prices Mean Great News for Homeowners

Rising Home Prices Mean Great News for Homeowners | Simplifying The MarketRecently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers who are out looking for homes, which has caused prices to rise.The great news about rising prices, however, is that according to CoreLogic’s Homeowner Equity Report, the average American household gained over $14,000 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 during the 1st quarter of 2017 (the latest data available).Rising Home Prices Mean Great News for Homeowners | Simplifying The MarketFor 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, pay off their mortgages sooner and even move up to the home that will better suit their needs now.

Bottom Line

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!

Should You Buy Your Home Now

3 Questions to Ask Before You Buy Your Dream Home | Simplifying The MarketIf you are debating the question, "should you buy your home now," you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

3 Questions to Ask Before You Buy A Home

Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

1. Why am I buying a home in the first place? 

This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.For example, a survey by Braun showed that over 75% of parents say, “their child’s education is an important part of the search for a new home.”This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:
  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space
What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in May (the latest data available) was $252,800, which is up 5.8% from last year. This increase also marks the 63rd consecutive month with year-over-year gains.If we look at home prices year over year, CoreLogic is forecasting an increase of 5.3% over the next twelve months. In other words, a home that costs you $250,000 today will cost you an additional $13,250 if you wait until next year to buy it.

What does that mean to you?

Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy. 

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.The Mortgage Bankers Association (MBA), NAR, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:3 Questions to Ask Before You Buy Your Dream Home | Simplifying The Market

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

Are Home Prices Approaching Bubble Territory?

Are Home Prices Approaching Bubble Territory? | Simplifying The MarketAs home values continue to rise, some are wondering,  "Are home prices approaching bubble territory."  Zillow just reported that:
“National home values have surpassed the peak hit during the housing bubble and are at their highest value in more than a decade.”
Though that statement is correct, we must realize that just catching prices of a decade ago does not mean we are at bubble numbers. Here is a graph of median prices as reported by the National Association of Realtors (NAR).Are Home Prices Approaching Bubble Territory? | Simplifying The MarketWe can see that prices rose during the early 2000s, fell during the crash and have risen since 2013.However, let’s assume there was no housing bubble and crash and that home prices appreciated at normal historic levels (3.6% annually) over the last ten years.Here is a graph comparing actual price appreciation (tan bars) with what prices would have been with normal appreciation (blue bars).Are Home Prices Approaching Bubble Territory? | Simplifying The Market

Bottom Line

As we can see, had there not been a boom and bust, home values would essentially be where they are right now.

Home Hasn’t Sold Yet? Definitely Check the Price!

If Your Home Hasn’t Sold Yet… Definitely Check the Price! | Simplifying The MarketThe residential housing market has been hot. Home sales have bounced back solidly and are now at their fourth highest pace over the past year. Demand has remained strong ­throughout spring as many real estate professionals are reporting bidding wars with many homes selling above listing price. What about your house?

If your home hasn’t sold yet, it could be the price!

If your home is on the market and you are not receiving any offers, look at your price. Pricing your home just 10% above market value dramatically cuts the number of prosp­­ective buyers that will even see your house. See chart below.If Your Home Hasn’t Sold Yet… Definitely Check the Price! | Simplifying The Market

Bottom Line

The housing market is hot. If you are not seeing the results you want, sit down with your real estate agent and revisit the pricing conversation.

Price It Right From The Beginning

“Wishin’ and hopin’ and ‘ thinkin’ and prayin,'”  the first line of a Dusty Springfield tune sung by numerous artists gives some pertinent advice on how not to find love.  This simple advice is also the cornerstone of how not to sell a property.

If you want to sell your home for the most money in the least amount of time you must price it right from the beginning.  Pricing a home right from the beginning, at or slightly below market, quickly produces multiple offers along with the prospect of a bidding war:  Now isn’t that exactly what every seller should want?

With house prices increasing at various rates across the country, some sellers may think they can list their homes at a higher price and adjust if necessary. That would not be a good strategy. This is a post KeepingCurrentMatters ran several years ago by Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research. To view other research from FIU, visit http://realestate.fiu.edu/.

The Research

Are there any negative effects from changing the listing price of a property?  This question haunts Brokers/Agents as well as sellers of property every day. At present, there does not seem to be a consensus answer to this question within the professional real estate community. Fortunately, this question was scientifically investigated by John R. Knight. Unfortunately, few know the results of Professor Knight’s research.

In Knight’s research, the impact of changing a property’s listing price is investigated. Additionally, the types of property that are most likely to experience a price change are also estimated. The findings from this research indicate that, on average, properties which experience a listing price change take longer to sell and suffer a price discount greater than similar properties.

Furthermore, bigger price changes are found to experience even longer marketing times and greater price discounts. Finally, as for which properties are most likely to experience a price change, Knight finds that the greater the initial markup; the higher the likelihood that any given property will experience a listing price change.

Implications for Practice

Sellers as well as Brokers/Agents should therefore be aware of the critical necessity of getting the price correct from the start.  Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight. Brokers/Agents’ desire to take a listing and get the price right later will ultimately lead to their working harder according to Knight, and they are not doing their sellers any favors. Thus, an initial and detailed analysis of the proper price is much more critical than many originally thought.

Interestingly, I have found in my own research that the direction (up or down) of the listing price change does not matter. A listing price increase and decrease both lead to similar results found in Knight’s work – longer marketing times and lower prices.

Therefore, get the price right from the beginning.  It is always best for the seller and the listing agent.