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Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this.
Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®
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 reality, this just dramatically lessens the demand for their house (see chart below).
Instead 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 buyersfighting 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.”
This, too, may seem counterintuitive, as the seller likely believes that he or she will net more money if they don’t have to pay a real estate commission. With that being said, studies have shown that homes typically sell for more money when handled by a real estate professional.
Research posted by the National Association of Realtors revealed that:
“The median selling price for all FSBO homes was $185,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $163,800. However, homes that were sold with the assistance of an agent had a median selling price of $245,000 – nearly $60,000 more for the typical home sale.”
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 house.
Contact me today to learn more and get your home SOLD!
Tori Denton, PSA, Realtor®
Talk to someone you can trust!
You might not sell a home every week…. but I kinda do!
413.301.4614 or firstname.lastname@example.org
Having the spare capital to put 20 percent down on a home purchase is great, but it’s certainly not the norm. Still, many people think it is and that belief may be holding some would-be home buyers back, particularly young adults.
Indeed, 39 percent of non-owners say they believe they need more than 20 percent for a down payment on a home purchase. Twenty-six percent believe they need to put down 15 to 20 percent, and 22 percent say they need a down payment of 10 percent to 14 percent to buy, according to the National Association of REALTORS®’ 2017 Aspiring Home Buyers Profile report.
But now for the reality: The average down payment on a purchase mortgage was just 11 percent in 2016. And that’s just the average; often times down payments are much lower. For borrowers under the age of 35, the average down payment was just under 8 percent, according to NAR’s survey.
As such, “aspiring first-time buyers think it takes twice as much to buy a home than it really does,” writes Jonathan Smoke, realtor.com®’s chief economist, in his latest column.
How much a person truly needs for a down payment depends on their situation. Their financial circumstances, home location, and the price of the home are important factors.
But there are many mortgage options that offer the opportunity to make low or even no down payments. For example, the Department of Veterans Affairs and the U.S. Department of Agriculture offer no-money down loans to those who are eligible. In 2016, 16 percent of buyers under the age of 35 put no money down on their home purchase.
Further, the largest share of loans for buyers under age 35 last year were for people putting down less than 5 percent on a home purchase (or about $3,500). The 3 percent down payment programs backed by Fannie Mae and Freddie Mac, and the 3.5 percent FHA mortgage that primarily targets first-time buyers, are both helpful programs to consider. These loan programs don’t require unblemished credit either. The average FICO score was 713, but realtor.com® notes borrowers with a 639 were still getting approved.
As such, Smoke says the millennial dreaming about homeownership needs to get this message: They need a FICO score of at least 639 and enough for a 5 percent down payment (that is, if they don’t qualify for the other programs with lower payment options). In that case, they’ll need to save about $3,500 to buy in the typical American town.
Source: “Attention First-Time Buyers: Here’s the Key Stuff You Don’t Know About Mortgages,” realtor.com® (Feb. 9, 2017)
The five variables are number of homes in the area, the share built in the 1960s, share built in the 1970s, owners’ average income, and their level of education. To illustrate how these variables interact, consider the four zip codes where spending per improvement is over $18,000 (compared to $5,800 for the average zip code). These four zips have relatively few homes built during the “sweet spot” for remodeling (between 1960 and 1980), but this is more than offset by home owners who are highly educated and have extremely high incomes. At the very top of the list, spending per improvement is over $22,000 in zip code 10007 (which is in lower Manhattan and contains the World Trade Center), where 99 percent of home owners have a college degree and their average income is well over half a million dollars.
On the other hand, in the fifth zip code on the list (94028, Portola Valley in California), the average remodel is a little over $17,000, and this is driven in part by the age of the owner-occupied housing stock (with a third of it built between 1960 and 1980), although home owners in Portola Valley are also relatively wealthy and well-educated.
The zip codes where total spending on improvements is highest tend to be in large metropolitan areas and contain a large number of owner-occupied homes. At the top of this list, NAHB estimates home owners will spend over $68 million on improvements in 2016 in zip code 20854, a close-in suburb of Washington, DC. Zip code 20854 has over 15,000 owner-occupied homes (compared to 2,849 for the average zip), with average owners’ income slightly over $280,000. Also, a very high 53 percent of the homes in this zip code were built between 1960 and 1980.
NAHB’s improvement spending projections for 2016 are based on a statistical model developed using data from the HUD/Census Bureau American Housing Survey and Census Bureau data for its approximation of zip-code area boundaries from the American Community Survey.
The 2016 projections of home improvement spending in more than 25,000 zip codes spanning the entire country are available for sale on NAHB’s website with discounts for NAHB members and NAHB Remodelers members. Interested in remodeling? Learn more about joining NAHB Remodelers.
The 2016 projections aggregated to the state level are available to everyone and are shown below:
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With home prices expected to appreciate by over 5% this year, some are beginning to worry about a new housing bubble forming. Warren Buffet addressed this issue last week in an article by Fortune Magazine. He simply explained:
“I don’t see a nationwide bubble in real estate right now at all.”
Later, when questioned whether real estate and/or mortgaging could present the same challenges for the economy as they did in 2008, Buffet said:
“I don’t think we will have a repeat of that.”
It is easily explained by the theory of supply and demand. There is a lack of housing inventory for sale while demand for that inventory is very strong. According to a recent survey of agents by the National Association of Realtors(NAR), buyer traffic was seen as either “strong” or “very strong” in 44 of the 50 states (the exceptions being: Alaska, Wyoming, North Dakota, West Virginia, Connecticut and Delaware).
Also, in NAR’s latest Pending Home Sales Report, it was revealed that the index was the highest it has been in a year.
As prices rise, more families will have increased equity in their homes which will enable them to put their home on the market. As more listings come to market, price increases should slow to more normal levels.
Anand Nallathambi, President & CEO of CoreLogic, recently addressed the issue:
“Home price gains have clearly been a driving force in building positive equity for homeowners. Longer term, we anticipate a better balance of supply and demand in many markets which will help sustain healthy & affordable home values into the future.”
Two weeks ago, we posted a blog which explained that current increases in home prices were the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Today, we want to look at home prices as compared to current incomes.
Here is a graph showing the monthly mortgage payment on a median priced home in the U.S. over the last 25 years:
Mortgage payments are currently well below the historic average over that time period. Purchasers are not overextending themselves to buy a home like they did on the run-up to the housing crash.
Lawrence Yun, the Chief Economist at the National Association of Realtors, recently explained in a Forbes article:
“Even though home prices are climbing far above people’s income, exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget. For someone making a 20% down payment, the monthly mortgage payment at today’s mortgage rates would take up 15% of a person’s gross income. During the bubble years, it was reaching 25% of income. The long-term historical average is around 20%. Therefore, a middle-income household does not need to overstretch their budget much if at all to buy a typical home.”
Due to low interest rates, demand for housing has dramatically increased. This has caused a jump in home prices. However, low interest rates have also allowed the monthly cost of buying a home to remain well below historic norms. We are in a strong housing market, not a housing bubble.
Inventory is the issue here – No bubble here! Would you like to know more?? Contact me with your questions or concerns about today’s market. My clients are educated before they make life changing decisions – not educated by them!
I believe every buyer and seller should have the information necessary to make their own qualified decisions… I provide information, advice, guidance, and follow-up…. Let’s work together and make your REALTY dreams a REALITY!
Why it’s important: The old standby of copper—think of those pots your parents, grandparents, or Julia Child used—started its re-emergence last year. And the reason that it’s becoming a more widespread alternative to stainless steel, wood, and other materials isn’t all surface. Yes, copper can add sheen, sparkle, and a 1940s Hollywood glamour. But an equally big impetus is that it reduces more than 99.9 percent of bacteria in between routine cleanings, important because antibiotic-resistant superbugs are on the rise, according to The Copper Development Association, based in New York.
How this will impact real estate: This shiny, goldlike hue will become more prevalent in homes as concern grows about buying healthy houses without mold, toxins, and bacteria. To help, U.S. manufacturers are producing more options in copper than just refrigerator, oven, and other appliance fronts, the developments that initially helped revive the trend. Throughout homes, buyers can add copper sinks, door handles, light switches, and trim. To enhance its appeal, manufacturers are also expanding the types of hues available. Already, there’s a copper-penny color, brushed nickel, yellow brassiness, and bronze on the market.
Source: Barbara Ballinger, Realtor Mag