The Biggest Mistakes Sellers Are Making Right Now
The Biggest Mistakes Sellers Are Making Right Now The housing market is going through a transition. Higher mortgage rates are causing more moderate buyer activity at the same time the supply of homes for sale is growing. And if you aren’t working with an agent, you may not realize that. Here’s the downside. If you’re not informed, you can’t adjust your strategy or expectations to today’s market. And that can lead to a number of costly mistakes. Here’s a look at some of the most common ones – and how an agent will help you avoid them when you sell. 1. Overpricing Your House Many sellers set their asking price too high and that’s why there’s an uptick in homes with price reductions today. An unrealistic price will deter potential buyers, cause an appraisal issue, or lead to your house sitting on the market longer. An article from the National Association of Realtors (NAR) explains: “Some sellers are pricing their homes higher than ever just because they can, but this may drive away serious buyers and result in unapproved appraisals . . .” To avoid falling into this trap, partner with a pro. An agent uses recent sales of similar homes, the condition of your house, local market trends, and so much more to find the price that’ll attract more buyers and open the door for multiple offers and a faster sale. 2. Skipping the Small Stuff You may try to skip important repairs, thinking you can pass the task on to your buyer. But visible issues (even if they’re small) can turn off potential buyers and result in lower offers or demands for concessions. As Money Talks News says: “Home shoppers like to turn on lights, flush toilets and run the water. If these basic things don’t work, they may assume you’ve skipped other maintenance. Homes that appear neglected aren’t likely to fetch top price.” If you want to get your house ready to sell, the best place to turn to for advice is your agent. They’ll be able to do a walk-through with you and point out anything you’ll need to tackle before the photographer comes in. 3. Not Looking at Things Objectively Buyers today are feeling the pinch of high home prices and mortgage rates. With affordability that tight, they may come in with an offer that’s lower than you’d want to see – especially if you didn’t stage, price, or market the house well. It’s important you don’t take this personally. Getting overly emotional can put the sale at risk. As an article from Ramsey Solutions says: “Remember, a buyer’s offer is not a reflection of their opinion of your home or your housekeeping abilities. . . The sale of your home is strictly a business transaction. If they start out with a low offer, don’t take it personally and get emotional. Instead, channel that energy toward negotiating. Work with your agent and make a counteroffer.” 4. Being Unwilling To Negotiate The supply of homes for sale has grown. That means buyers have more options, and with that comes more negotiation power. As a seller, you may see more buyers getting an inspection, requesting repairs, or asking for help with closing costs today. You need to be prepared to have those conversations. As U.S. News Real Estate explains: “If you’ve received an offer for your house that isn’t quite what you’d hoped it would be, expect to negotiate . . . the only way to come to a successful deal is to make sure the buyer also feels like he or she benefits . . . consider offering to cover some of the buyer’s closing costs or agree to a credit for a minor repair the inspector found.” An agent will walk you through what levers you may want to pull based on your own goals, budget, and timeframe. 5. Not Using a Real Estate Agent Notice anything? For each of these mistakes, partnering with an agent helps prevent them from happening in the first place. That makes trying to sell your house without an agent’s help the biggest mistake of all. Real estate agents have experience and expertise in pricing, marketing, negotiating, and more. That knowledge streamlines the selling process and usually results in drumming up more interest and ultimately can get you a higher final price. Bottom Line If you want to avoid making mistakes like these, you need to work with a real estate agent.
Are Home Prices Going To Come Down?
Are Home Prices Going To Come Down? Today’s headlines and news stories about home prices are confusing and make it tough to know what’s really happening. Some say home prices are heading for a correction, but what do the facts say? Well, it helps to start by looking at what a correction means. Here’s what Danielle Hale, Chief Economist at Realtor.com, says: “In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices . . . We don’t have the same established definitions in the housing market.” In the context of today’s housing market, it doesn’t mean home prices are going to fall dramatically. It only means prices, which have been increasing rapidly over the last couple years, are normalizing a bit. In other words, they’re now growing at a slower pace. Prices vary a lot by local market, but rest assured, a big drop off isn’t what’s happening at a national level. The Real Estate Market Is Normalizing From 2020 to 2022, home prices skyrocketed. That rapid increase was due to high demand, low interest rates, and a shortage of homes for sale. But, that kind of aggressive growth couldn’t continue forever. Today, price growth has started to slow down, which is a sign the market is beginning to normalize. The most recent data from Case-Shiller shows that after being basically flat for a couple of months last year, prices are going up at a national level – just not as quickly as before (see graph below): The big takeaway? So far this year, there’s been a much healthier pace of price growth compared to the pandemic. Of course, that’s what’s happening now, but you may be wondering what’s next for prices. Marco Santarelli, the Founder of Norada Real Estate Investments, says: “Expert forecasts lean towards a moderation in home price growth over the next five years. This translates to a slower and more sustainable pace of appreciation compared to the breakneck speed witnessed in recent years, rather than a freefall in prices.” It’s all about supply and demand. Increasing inventory plus limited buyer demand, due to relatively high mortgage rates, will continue to ease some of the upward pressure on prices. What This Means for You If you’re thinking about buying a home, slowing price growth is welcome news. Skyrocketing home prices during the pandemic left many would-be homebuyers feeling priced-out. While it’s still a good thing to know the value of the home you buy will likely continue to go up once you own it, slowing price gains are making things feel more manageable. Odeta Kushi, Deputy Chief Economist at First American, says: “While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn’t boarded up just yet.” Bottom Line At the national level, home prices are not going down. And most experts forecast they’ll continue growing moderately moving forward. But prices vary a lot by local market. That’s where a trusted real estate agent comes into play. If you have questions about what’s happening with prices in your area, reach out to an agent.
How the Economy Impacts Mortgage Rates
How the Economy Impacts Mortgage Rates As someone who’s thinking about buying or selling a home, you’re probably paying close attention to mortgage rates – and wondering what’s ahead. One thing that can affect mortgage rates is the Federal Funds Rate, which influences how much it costs banks to borrow money from each other. While the Federal Reserve (the Fed) doesn’t directly control mortgage rates, they do control the Federal Funds Rate. The relationship between the two is why people have been watching closely to see when the Fed might lower the Federal Funds Rate. Whenever they do, that’ll put downward pressure on mortgage rates. The Fed meets next week, and three of the most important metrics they’ll look at as they make their decision are: The Rate of Inflation How Many Jobs the Economy Is Adding The Unemployment Rate Here’s the latest data on all three. 1. The Rate of Inflation You’ve probably heard a lot about inflation over the past year or two – and you’ve likely felt it whenever you’ve gone to buy just about anything. That’s because high inflation means prices have been going up quickly. The Fed has stated its goal is to get the rate of inflation back down to 2%. Right now, it’s still higher than that, but moving in the right direction (see graph below): 2. How Many Jobs the Economy Is Adding The Fed is also watching how many new jobs are created each month. They want to see job growth slow down consistently before taking any action on the Federal Funds Rate. If fewer jobs are created, it means the economy is still strong but cooling a bit – which is their goal. That appears to be exactly what’s happening now. Inman says: “. . . the Bureau of Labor Statistics reported that employers added fewer jobs in April and May than previously thought and that hiring by private companies was sluggish in June.” So, while employers are still adding jobs, they’re not adding as many as before. That’s an indicator the economy is slowing down after being overheated for quite some time. This is an encouraging trend for the Fed to see. 3. The Unemployment Rate The unemployment rate is the percentage of people who want to work but can’t find jobs. So, a low rate means a lot of Americans are employed. That’s a good thing for many people. But it can also lead to higher inflation because more people working means more spending – which drives up prices. Right now, the unemployment rate is low, but it’s been rising slowly over the past few months (see graph below): It may seem harsh, but a consistently rising unemployment rate is something the Fed needs to see before deciding to cut the Federal Funds Rate. That’s because a higher unemployment rate would mean reduced spending, and that would help get inflation back under control. What Does This Mean Moving Forward? While mortgage rates are going to continue to be volatile in the days and months ahead, these are signs the economy is headed in the direction the Fed wants to see. But even with that, it’s unlikely they’ll cut the Federal Funds Rate when they meet next week. Jerome Powell, Chair of the Federal Reserve, recently said: “We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy.” Basically, we’re seeing the first signs now, but they need more data and more time to feel confident that this is a consistent trend. Assuming that direction continues, according to the CME FedWatch Tool, experts say there’s a projected 96.1% chance the Fed will lower the Federal Funds Rate at their September meeting. Remember, the Fed doesn’t directly set mortgage rates. It’s just that whenever they decide to cut the Federal Funds Rate, mortgage rates should respond. Of course, the timing of when the Fed takes action could change because of new economic reports, world events, and other factors. That’s why it’s usually not a good idea to try to time the market. Bottom Line Recent economic data may signal that hope is on the horizon for mortgage rates. Count on a local real estate agent you can trust to keep you up to date on the latest trends and what they mean for you.
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