October 2, 2015
The new FHFA, Federal Housing Finance Agency, House Price Index has been published with data through the end of July, 2015. Here’s a chart to get the discussion going:
Notice that house prices are approaching the highs from 2006. We should be having parties, tailgate barbecues, rejoicing! We’re not, simply because this is a number derived from repeat sales of homes, so let’s analyze that a little.
The FHFA House Price Index tracks the resales of homes, from one price to the next resale price. Now, this is an accurate indicator of price movement if the home hasn’t been materially changed since the previous sale. So, why is this high level not telling us that things are great?
First, and most important, it requires repeat sales of homes, so if there aren’t huge numbers of sales, then we’re looking at a number derived from a small set of sales data. So, we’re not necessarily seeing an excited bunch of buyers flocking to the market. We are seeing a whole lot of homeowners who aren’t selling, waiting for rising values. So, we have a small inventory and competition for it. If all of the homeowners on the sidelines listed their homes tomorrow, we’d see a major difference.
Now let’s contrast some recent Zillow home sales price data. There are plenty of critics of the accuracy of Zillow data, but there is some value in it. A recent study at Zillow tells us that one in four homes are worth less today than a year ago. It’s really hard to see one data set saying prices are rising to high historic levels, and another telling us that a major chunk of homes are worth less this year than last.
We’re seeing around a third of major urban markets experiencing competition and significant price gains. However, the rest of the country is definitely not seeing a flood of buyers fighting over even a low inventory of listings.
Of course, you’ll hear from the National Association of Realtors that Zillow’s data is faulty, and I do agree that you have to take it with a grain of salt. However, if homes are worth so much more now than two years ago, would we not see a flood of listings from fence-sitting owners who want to cash in and move up or move away?
Real Estate is Local
We’re back to the “real estate is local” meme, and it’s still around because it’s very true. Your local market is going to have its very own unique economic and home price influences. You can’t take national news and surveys and just apply them locally.
If you’re a homeowner who has considered selling but held off due to market conditions, it probably is a good time to check out your home’s value. Listing before the rest of the world figures out things are better will get you a better sell price.
Don’t call an appraiser, as their approach to market value is different than that of a real estate professional. The real estate agent is trying to get you a sold price near to the top of the market, and their CMA, Comparative Market Analysis, is going to give you a pretty good idea of its value.
But, get a CMA from two or three agents from different brokerages. Their process requires choosing recently sold comparable properties, and their selection process can change the outcome significantly.
September 24, 2015
You’re getting excited about buying a home, and you’re seeing some really great properties in desirable subdivisions and neighborhoods. Driving through a neighborhood, you see well-manicured lawns, no junk in the yards, and just a general upscale appearance.
That’s in large part often due to HOA, Home Owner Association, covenants and restrictions. I’m not knocking the concept, nor many of the most popular restrictions in place around the country. Maintaining everyone’s home value by keeping neighborhoods looking good is important.
However, too many buyers do not take the time to actually read the sometimes really thick HOA documents presented to them during the transaction process. Few real estate agents are going to try to sit them down and make them read them either.
The fact is that a restriction on your use of your home or lot can be perfectly suitable to one owner and very onerous to another. You and your family are the ones who will live in the home and in most cases you’ll be fine with what you cannot do or have according to covenants and restrictions. The key is to know before you buy.
Let’s use a couple of examples that are actually pretty common. I’m not saying that they will make you want to move, but they can make life inconvenient.
Boats – Boat Trailers
In a great many areas, you cannot have a boat trailer, with or without a boat on it, sitting in your driveway. If you envisioned your double-wide driveway accommodating your second car (one in the garage) and your boat on a trailer with a cover, that won’t be happening. You’ll come home to find a note on your door from the HOA.
Sure, you can put both cars outside and the boat in the garage, but that $ 5,000 boat is enjoying the protection you had envisioned for your $ 50,000 SUV. The vast majority of the residents of the subdivision are fine with this, as they don’t think the neighborhood looks nearly as good with boats in front yards. You on the other hand, may have looked elsewhere if you’d just read that HOA restrictions document.
Outdoor Storage Building
Maybe you did give the restrictions a quick overview, and you didn’t see anything about not being able to have a storage building in the back yard. You have hobbies and must store a lot of stuff that won’t work in the garage. So, you get your Home Depot 10 x 10 building and you’re in business … wrong.
What you missed was the restriction against anything in a yard that peaked above the height of the wooden privacy fences, all mandated to be no higher than six feet. Now, instead of a storage building in which you can stand erect, you’re erecting something more like a big doghouse for your stuff.
No Big Deal – Unless It Is
Neither of these examples may mean anything to you, nor may any other of the sometimes hundreds of pages of covenants and restrictions. But, you won’t know until you read them. Do not ignore any document presented to you as a disclosure in the transaction process, as it can be really annoying or worse later.
September 18, 2015
There can be emotions involved when you’re selling your home. Emotions can get intense if you also find that the buyers are doing some hardnosed negotiating. If you want to get out in front of some of the tough negotiating, think about using throwaway contingencies right from the start.
What are contingencies in a real estate deal? There are always contingencies, many mandated by the process itself. You’ll have a financing contingency, inspection and repairs contingencies, and even deals contingent on your approval of surveys and other documents. These are normal requirements to protect both parties and get through a successful closing. However, there are other contingencies specific to the property or the buyers and sellers.
When you’re listing the home for sale, your listing agent will ask a lot of questions, many of them necessary to properly present the property in the Multiple Listing Service. They want to be sure that the property is listed with all features properly categorized, especially as to whether certain items are to be included in the sale or not. Generally, anything built-in, such as built-in bookshelves and all items permanently affixed like light fixtures are expected to be included. There will likely be specific contract language addressing what is and what is not to go with the sale.
What we want to talk about here are items or contingencies that you may not even be thinking about, or that you simply don’t care that much about. You shouldn’t consider them as unimportant to the buyer just because they aren’t important to you. Let’s look at some examples.
A free-standing wine refrigerator - You would normally just be thinking of taking it with you, but you should specifically rule it out as going with the sale so the buyer sees that when they make their offer. If you don’t feel strongly about it however, then you have a negotiating point that you can trade for concessions in price on their part.
A free-standing hot tub - In many cases the homeowner will list this as staying with the home to make it a selling plus. They don’t want to take it with them anyway. However, you may want to list it as excluded in order to make it a “giveaway” trade item to offset demands of the buyer or to get their offer price up.
The backyard storage building - That self-assembled metal storage building that you really intended to leave could also be excluded as a throwaway contingency item. You can give it up to get buyer concessions even though you never really intended to disassemble it anyway.
High end patio furniture - Some sellers want to take their deck and patio furniture with them, but they aren’t totally in love with it. Generally these items will not be mentioned in the contract as it is furnishings and expected to go with the seller. However, you can use it as a giveaway if you hear that the buyers like it or they have none of their own.
This strategy isn’t for every deal. An example: if every home for sale in the neighborhood is including the hot tub, excluding yours in the listing could hurt showings. Balance the competitive environment with your negotiation tactics.
Remember that the entire process from the signing of the initial contract through inspections and document reviews is still a negotiation. Even if you don’t use a throwaway contingency in the original price negotiation, it could come in handy in negotiations over repairs of items in the inspection report.
September 12, 2015
There’s no shortage of news about Uber and how it is connecting riders with drivers and cutting out the taxi companies. Some cities are fighting the trend and legislating them out of the area, and others are still trying to figure out how this service has become so popular so quickly. This isn’t about that, but it is about connecting buyers and sellers directly and increasing the value for both in the process.
I’m thinking that there is an opportunity for retail consumer home buyers to work directly with real estate fix & flip investors to get a great deal on a home and create more profit for the investor than they may be getting now.
The Wholesale Fix & Flip
I call it wholesale because many fix & flip investors are buying a property in need of rehabilitation and selling it to a rental property investor when it’s a rentable property. The reality of this situation is that both parties involved are investors. The rental property buyer, at least if they’re good at what they do, wants to buy the home at a significant discount to current retail market value.
The fix & flip investor does a lot of due diligence, research and marketing to locate properties with motivated sellers. The goal is to get a deep discount buy on a home needing work, perhaps a foreclosure, rehab it, and sell it to a rental home investor. The rental home investor is a pro, so they want to pay less than it’s actually worth in the current market. Usually they’re looking for a 10% to 20% discount.
Of course this challenges the fix & flip investor, but that’s why they make their profits. They are skilled at locating the very best distressed properties for purchase and making their profits on the rehab. They can still sell at a market discount to the rental property buyer.
There has been a definite shift in this market recently, primarily due to the drop in foreclosures and rising prices at which the fix & flip investors have to purchase. It makes it more challenging to make a decent profit to justify their risk and efforts. More fix & flip investors are selling to regular consumer buyers in the retail market.
There are other challenges in this market. One is that marketing costs are higher, and definitely costs of sales rise with real estate commissions. It’s a necessary cost of doing business, but it does discourage some investors from working in the retail sector. The costs of holding the property increase the longer it takes to sell. Generally, on the wholesale side the sale is closed quickly with a buyer who the investor has already solicited for the property. When it’s going retail, marketing must turn up a buyer.
Fix & Flip investors should be taking an Uber approach.
Suppose fix & flip investors do more general marketing with the goal of letting retail buyers know that they are in the business of selling to them, and that the investor has mortgage contacts to help them to finance their new home. Advantages include:
• Higher profits on the flip.
• Buyers can reach out to investors earlier and possibly even specify some finishes and amenities, just as they can with a new home builder.
• Buyers can possibly get a small discount to full retail value, even with the investor getting a better-than-wholesale profit on the deal.
It’s just an idea, but it seems to be logical and a way to create a win-win situation for investors and buyers.
September 10, 2015
Before my added “Ya Think” emphasis, the title is the same as a title of an article this week over at Money,USNews.com. It’s not surprising to see an article like this now, as the China situation took the Dow Jones down in a dramatic way over the course of a week or so. If you want some historical perspective, there are some dates and Dow plunges historically:
• August 24, 2015: -588.47
• August 21, 2015: -530.94
• August 8, 2011: -634.76
• Six more 600 points or larger drops since 2000.
Yes, if you just bought and held for 15 years, you would have done well in stocks. Unfortunately, many people can’t simply drop a major chunk of change into stocks and just let it ride for that long. And, depending on when you buy, having to sell after a drop like these can be devastating to your savings and retirement.
So, that said, I’m not saying dump all of your stocks and buy real estate … particularly not now. However, the next time your stock broker advises you to “diversify,” don’t just do it with stocks. Let’s look at some of the points referenced in the linked article.
Actually, the article wasn’t really that positive about the advantages of investing in real estate. Things like the ease of placing stock trades and low cost of transactions were mentioned. Property taxes were mentioned as a negative, and they are to a point. The article’s title really wasn’t in my opinion supported very strongly by the content. So, let’s take a look at some differences between stocks and real estate as an investment asset class.
Stocks are susceptible to inflation risk. Your return is whatever it is, including dividends. When inflation gets rowdy, it can take away major chunks of your investment gains in stocks. That’s not to say that real estate is inflation proof, but there are some logical reasons why it may be better.
Let’s think about what inflation really is. It is an increase in the cost of goods and services. So, what do you expect to happen to home prices when wood, tile, wiring, plumbing and other materials and labor costs increase? If it costs more to build, usually within a reasonable period of time it will cost more to buy. Your owned property value can actually increase during inflationary periods.
Interest Rate Increases
When interest rates rise, stocks and definitely bonds usually suffer. It costs companies more to borrow to expand and finance operations, so their profits are reduced. Bonds carry a fixed rate of return, so their value drops when interest rates increase.
If you own rental real estate with a fixed mortgage rate, interest rate increases don’t really bother you. In fact, they can help. If mortgage rates rise, more people must rent than buy. Rental demand increases and rents rise.
Sure, you must pay property taxes if you own real estate. However, if you’re doing your job, you factor those into your purchase of rental property and the positive cash flow you project to receive. Sure, they can go up, but you may be able to offset that with rent increases.
One major difference is in using the IRS 1031 Exchange rule for growing your real estate portfolio. While the stock market investor will pay capital gains taxes in the year they sell a stock at a profit, real estate investors get a major break. Using this IRS rule, you can sell and roll the profits into another investment and forego paying capital gains. It’s complicated and the rules are strict, so an accountant needs to be involved.
I’m not trying to push anyone into real estate who is afraid of it or not suited for a landlord’s duties. But, there definitely are reasons for real estate as a diversification strategy.
August 21, 2015
As Seen on LinkedIn
Three or four TV and cable networks are wowing viewers with successful real estate “fix and flip” shows. After all, it’s exciting to see an entrepreneurial person or couple successfully buying, rehabbing and selling homes for hefty profits. There’s adventure in the negotiations, working with temperamental contractors and selecting finishes and fixtures. It’s a great business.
However, there is another group of real estate investors out there who may actually have some of these fix and flippers as their customers. To understand the value of wholesaling in real estate, let’s take a look at the basics or regular wholesaling in the retail marketplace.
Wholesaling the Consumer Way
Let’s use grocery items as our example. The grocery wholesaler receives their products in bulk from manufacturers and major farming, ranching and processing operations. They warehouse the products, and they then transport smaller quantities to retail grocery stores and even help them to stock the shelves in some cases. It takes a lot of money and resources to be in this type of wholesale business, involving:
• The money to buy in bulk
• Real estate for warehousing
• Trucks for transporting
• Personnel to drive trucks, take orders, manage
• Insurance for all of this
It’s a major investment to be a wholesaler, whether it’s groceries or auto parts. The margins in this type of wholesale business are tiny, mostly in the low single digits. It’s all in the volume.
Real Estate Wholesaling
If you want to get really excited about opportunities available to the average person, real estate wholesaling can do the job. Whether you have money or not, you can wholesale real estate and make far better margins than the traditional wholesale business. Here’s how it works:
• Find the property: This is all research, much of it online, some of it marketing to find motivated sellers, and some of it just driving around and seeing an abandoned home that may be on its way to foreclosure.
• Control the property: I use “control” because you don’t necessarily have to buy it. I’ll get to how this is done in a moment.
• Present to your buyer: You must maintain a buyer list, a group of mostly active rental property investors and fix and flip investors who are always in the market for a deal. You deliver the deal to the buyer and take your wholesaler commission out of the middle.
Sure, it’s not a slam dunk. Each phase requires dedication, knowledge and a rabid desire to succeed. However, once you cultivate the buyer side and build a list of investors who want deals, you can then go out and work to find them.
Yes, you will have to locate and negotiate deals at a discount deep enough to take a profit and still give your buyer a discount to retail value. However, your expense of doing business is low, and the right deals can deliver amazing profit opportunity.
There are two ways to “control” a property as a middle person wholesaler. The first is an assignment contract. You enter into a contract with the seller to buy the home with an assignment clause. This means that you have the right to assign your purchaser rights to someone else, ultimately your buyer. Generally you only need to put up some modest earnest money to make this happen. Then you sell your rights to your buyer at a profit. Your buyer takes over the deal and becomes the buyer, letting you out of the deal altogether.
The other way is to actually pay for the property and mark it up to sell to your buyer. There is plenty of financing out there from what we call “transactional lenders.” Since you’ll usually be buying and selling within hours or a couple of days (you’re not improving the property), the lender need only supply the money to buy the house for that short period of time. They charge you a hefty interest rate for a short time, and some other fees on top of that. However, structuring your buy and sell to take care of that with a profit is how you make money.
This is a very simplistic description of wholesaling in real estate, but perhaps it will entice you to check it out further, as you’re searching for a low overhead and high profit business.
July 29, 2015
According to a survey from bankrate.com, Americans’ number one choice for investing is real estate. Though they’re overall still concerned about jobs and the economy, the survey respondents mostly feel good about their personal finances.
There is a ton of information in this survey. It’s not all about real estate as an investment, but more about how today’s Americans view their personal financial situations and their plans for the near future.
• Job security: 22% of respondents feel more secure in their jobs this year over last year. This was a small drop from the June results to July.
o New workers expressed more security in their jobs than older workers on the other end of their careers.
o Republicans were three times less likely to feel secure in their jobs than Democrats.
o Lower income workers felt more secure than workers earning closer to the median wage.
• Savings: 29% say they’re less comfortable with their level of savings than they were last year.
o College graduates are more comfortable with their savings levels than those who have never attended college.
o 34% of Republicans were less comfortable with their savings than last year, while this was true for only 22% of Democrats.
o People living in urban areas were twice as likely to feel comfortable with their savings as those living in rural areas.
• Amount of Debt: Survey respondents were asked about their comfort level with their debt this year compared to last.
o Lower income households were more than twice as likely to say they are uncomfortable with their debt level as those in higher salary brackets.
o In the Midwest, 31% of respondents felt more comfortable with their debt, but only 19% in the Northeast said the same.
o 32% of full time workers are more comfortable with their debt, while only 18% of unemployed saying the same.
• Overall Financial Situation: The survey participants were asked how they feel this year about their overall financial situation compared to last year.
o 33% of men feel better compared to 25% of women.
o 38% of Democrats feel better about their overall financial condition this year compared to 27% of Republicans.
o 25% of people who never attended college felt worse about their situation compared to 15% of college graduates.
That’s all interesting, but let’s get to what grabbed my attention. Here are the results of what survey respondents considered as good investments. They were asked what they considered the best investment vehicle for money they could tie up for 10 years or longer.
• Real estate was at the top at 27%.
• Cash investments (savings accounts, CDs, etc) held the second position at 23%.
• The stock market came in at 17%.
• Precious metals were at 14%.
• Bonds were farther down at 5%.
• 8% didn’t like any of the choices, and 7% didn’t have an answer.
I’m really happy to see these results, and I hope that I’ve helped new investors to recognize the potential and get involved in real estate investing.
July 23, 2015
Builder sentiment is at its highest level in a decade, with that index at 60. The midline between positive and negative sentiment is 50, and the index has been sitting in the 50s for a while. This rise is not unexpected, as housing starts are up significantly as well.
In June, housing start building permits surged to an eight-year high. Groundbreaking rose by almost 10 percent to over one million units. This is good news for a whole lot of people, as home construction is one of the most powerful stimulants in the economy. When people are buying, and homes are being started, there is a general uptick in many economic areas.
Builders are happier than in the past 10 years, and housing starts are jumping. But this is a double-edged sword when it comes to coming back from our severe downturn. During the crash, home building almost stopped completely. For a while, even apartment and commercial construction suffered dramatically.
When the work goes away, the workers go away as well. If you’re a carpenter, electrician or plumber, you can’t sit around and wait a few years for a new home to build. Where they go is not data we’re aware of, but they definitely go do other things. Some start their own business, maybe repairs or remodel, while others take jobs totally unrelated to their previous construction experience.
Nine trades (9-trades index) are tracked in relation to home construction. According to National Association of Home Builders economist Paul Emrath, the 9-trade shortage is now at a level around where it was during the boom of 2004 through 2005. However, that’s when starts were at around 2 million each year, while right now they’re at just over half that number. It’s clear that this shortage indicates the flight of many workers from the trades over the past seven or so years. Unemployment in the construction industry is at its lowest level since 2001.
This is a less-discussed influence on home prices as well. We have growing building permits and home starts combined with fewer workers in the trades that are necessary to build those homes. Contractors are competing in hiring, with way too few workers from which to choose. If I were a skilled electrician, concrete worker, plumber or other construction worker, I would be negotiating for some nice rewards for making it through the lean years.
When the trade workers demand more, the contractors factor it into their bids and new home prices rise. Supply and demand rules, and this increases the cost of existing homes as well. If it costs more to build new, then the value of an existing home usually rises as well. Of course, how close it tracks with new home price increases depends a lot on location, age and amenities.
It’s a half-empty and half-full situation, but in general we should have a positive economic outlook if home building begins to increase again. New trades workers will come into the workforce for the high wages, and some of the old ones will return. It’s a good thing for the most part.
July 21, 2015
I’ve been a real estate investor and trainer my entire adult life, and I still find it to be fun and exciting, as well as very profitable. In speaking around the country and in email conversations with active investors and students around the world, I’ve noticed a growing trend over the past few years. More women are creating and growing successful real estate investing businesses than ever before.
As our society evolves, we’re seeing more single parent households and a trend toward delaying marriage until later in life. Unfortunately, we also have a rather high divorce rate in the U.S. Whatever our attitude about this evolution, there’s one thing that is clear; there are more unmarried women out there who are the main income source for their households.
It’s not just about being unmarried either. It’s not news to most of us that many families are financially dependent on more than one income. We have fewer stay-at-home spouses these days as well. Stretching one income doesn’t get the job done in many cases. An employed spouse often makes the difference between barely making it and enjoying nicer things.
What I’m seeing is a strong interest from women in doing more than just holding a job. They want to invest in their financial futures, and they’re finding real estate is a viable path to a comfortable life, or even a wealthy lifestyle. It’s not just casual observation that fuels my enthusiasm for this trend. There are more examples every day of women actively investing in real estate in all of the strategies available.
Gena H. — If you’re struggling with decisions about finances and how to improve your future, you may have experienced what Gena H. from Washington State did a few years ago. Watching late night T.V., Gena was exposed to real estate investing, perhaps one of those infomercial broadcasts. At 1:15 AM she woke up her husband to tell him that she was going to become a real estate investor. She adores her husband, so she really didn’t get upset when he groggily patted her on the shoulder and said “that’s nice dear” before falling back asleep.
She also didn’t let his next morning concerns and warnings about how difficult and risky it could be discourage her. His doubts about the real estate market or how they didn’t have much money to get started also faded into the background noise of breakfast preparation. Gena moved forward, and today she is an extremely successful real estate investor with a secure financial future and a doting husband.
Jen G. — Working in an accounting office, Jen wasn’t gazing out of her window dreaming of a better life only because she didn’t have an office window. She was a single mother with a young son and a desire for a better life for both of them. Once she committed to real estate investing, she didn’t waste any time in getting her feet wet.
Jen experienced what many new real estate investors do when she announced her intentions to family and friends. From well-meaning concern to outright negativity, she was warned that it takes a lot of money and experience to invest in real estate, and that it was very risky. Financial ruin was predicted by some, but she jumped in, learned the strategies and changed her life. In just six months she was able to fire her boss at the accounting office and has never looked back. It wasn’t long before she had almost 200 deals closed, and she’s still charging hard.
Tammy R. — Living in a fast-moving real estate market in CA, Tammy was home schooling her four children when she decided to start a real estate investment business. Her husband told her “it won’t work for you,” but she didn’t let fear slow her down. She didn’t have much money to start, as is the case with many new investors. Because of this, she adopted wholesaling as her primary strategy.
A real estate wholesaler uses a couple of different strategies to control a good investment property and match it up with an investor with money searching for a deal. This requires very little of her money, as she is the person in the middle between the seller and investor buyer. She locates the right investments and makes a nice chunk of change when she turns the deal to her investor buyer.
Tammy leveraged her profits, and began to see her deals and wholesale profits get larger every year. After dozens of deals, she had a firm footing in the market and the knowledge and experience to grow her business even more. If you ask Tammy today for advice, the first thing you would hear is that you “can’t let naysayers spoil your dreams.” There’s no magic potion for success in real estate investment. If you simply don’t let others discourage you, the tools and knowledge are out there to create a successful business with or without a lot of cash.
I’m still a very active investor, and there are some truths that never seem to change. Real estate investment works in any area, in up, down or sideways markets, and for anyone who invests their time, energy and enthusiasm in getting started. It’s not about how much money you have, whether you’re male or female, married or unmarried or even how old you are. Anyone can do it if they just ignore the naysayers and take the leap.
The fact that the ratio of women to men taking that leap is growing is a great thing for the marketplace. America doesn’t play favorites by gender when it comes to energy, enthusiasm and the desire for success.
July 15, 2015
Every day more homeowners exit “underwater” status, owing more on their mortgage than their home is worth. Others have owned long enough to have kept some equity through the crash and partial recovery. However, many are sitting on the sidelines waiting for more market price improvement, or they simply do not want to buy another home, so they stay put.
It’s not hard to understand the “waiting” decision, but perhaps it’s time to at least take a look at some reasons that could change your mind. This isn’t advice to sell now, just the presentation of some factors that may not have entered into your decision process when considering listing your home. If they change your mind or motivate you to list, it should be because you’ve run the numbers and considered all of the options.
1. Inventory is low: Supply and demand is always in control in a marketplace unless there is undue interference by government. Inventories of both new and existing homes for sale are historically low right now. Low supply usually creates upward pressure on prices. Many studies and surveys are also showing that buyers are returning to the market, though more of a stream than a river of demand. However, combine low inventory and increasing demand, and you may get more for your home than you think.
2. Mortgage rates are low: Whether you believe that mortgage rates are going up soon or not, many would-be buyers are concerned that they will lose buying power if they wait too long. It helps sellers when buyers can afford more home due to low mortgage rates. There’s the other side of this coin as well. If you sell now with the plan to buy right away, you’re getting the same low interest rate advantage. The money you take away from your sale, though possibly somewhat lower than if you wait a while, will go farther in financing another home.
3. Some markets scream sell: If you own in an established area with a history of stability and high demand, it makes a difference. Real estate is local, and while national influences bear on prices, the right location can make a major difference in your cash out on a sale. Check the number of sales in your neighborhood versus others in the market area to see if the demand is higher.
4. Real estate brokers are hungry: The downturn in number of sales and homes in the inventory is not just a problem for buyers. Real estate agents are selling fewer homes, and that means they’re taking home less money. They don’t make money in any other way than getting to the closing table. You can probably negotiate a lower commission rate for your listing in the current market climate.
5. Don’t forget holding costs: Every day you keep your home you have costs to stay there. Waiting a year to get a 1 percent or 2 percent bump in selling price can be a mistake if your costs exceed that amount. If there is a real estate property tax increase, that’s extra holding cost. Air conditioning, heating, plumbing and electrical problems can jump up unexpectedly. Consider your normal repair and maintenance costs in relation to an unknown bump in price if you wait a year or more.
Whether it’s the right time for you to sell your home or not is entirely based on your desires and situation. However, if you haven’t considered all of these five factors, do so and you may change your plans.