5 Big Reasons to Sell Your Home This Year

On February 25, 2019   /   Selling a Home  
Tags: , , , , , ,
sold sign in front of home

By: Rachel Stults

5 Big Reasons to Sell Your Home This Year

It’s no secret that life’s been pretty good to sellers for the past several years. Even if you had no need—or desire—to move, the housing landscape might have seriously tempted you to put your house on the market anyway. After all, it’s hard not to see visions of dollar signs when your neighbors are unloading their homes for tens of thousands over asking price.

But as they say, all good things must come to an end. And you’ve probably heard that the white-hot housing market of years past is finally beginning to cool.

So if you haven’t listed your home before now, did you miss the boat? Absolutely not. But with each passing month, the experts say, you can expect the housing climate to shift a bit more in buyers’ favor.

“It’s definitely still a seller’s market in most of the country. But it’s not the same seller’s market that you saw in the last couple of years,” says Danielle Hale, chief economist of realtor.com®. “You might have to think about how your home compares to the competition that buyers are going to see when they’re shopping. And you might have to price a little bit more competitively, or think about other enticements to attract buyers.”

There’s still a chance to cash in for top dollar, though, if you move quickly. Here are the biggest reasons to sell ASAP in 2019.

1. You won’t be the only listing for long

The top reason sellers have been in the catbird seat for the past several years? Inventory. There simply weren’t enough homes on the market to keep up with buyer demand. And when a “For Sale” sign did go up, you can bet a bidding war would soon follow.

“You might have been the only listing in your neighborhood, and you could put your home up at a certain list price and you would likely see multiple offers at or above that list price,” Hale explains.

That tide is turning this year, Hale says. That’s because the number of homes for sale is finally increasing, albeit slowly. For now, buyers still outnumber inventory. But if you’re thinking about selling and don’t want to compete with your neighbors, it’ll pay off (literally) to list earlier rather than later. (This is particularly true in pricier markets, where inventory is increasing at a faster rate than more affordable areas.)

“It’s going to depend on what neighborhood you’re in, but we expect it to be more common this year that you won’t be the only listing,” Hale says.

2. You still stand to make a ‘handsome profit’

Home prices have been on a meteoric rise for the past seven years. In January 2012, the U.S. median home price was $154,700. Today, that figure has nearly doubled—to $289,300—and sellers have rejoiced.

Now comes a twist: 15% of all home listings saw price cuts in January, according to realtor.com data.

That might sound like bad news if you’re thinking of selling. But hear us out: Those moderating prices, combined with today’s mortgage rates (more on that below), mean increased buyer demand for your house.

Plus, it’s not that home prices aren’t still increasing—they’re just not increasing at the frenzied pace of previous years, which often featured multiple offers at or above asking price, Hale says. So even though you might have some more competition as a seller, things are still looking pretty sweet for you when it comes to cold, hard cash.

“Even if you don’t get an offer above your asking price, you’re probably still going to come away with a handsome profit from being a seller in 2019,” Hale says.

But again, it’ll pay to put your home on the market as soon as you can—before conditions change.

“Sellers who list their homes earlier in the year tend to get a higher sales price, often above list, and shorter days on market,” says Ali Wolf, director of economic research at Meyers Research.

3. There’s high demand for homes under $300K

There’s more good news if you own a home below the national median price of $289,300. Not only is that inventory increasing at a slower rate than its luxury counterparts, but there are more buyers shopping at those price points.

“If you’re a below-median-price seller, you will see a seller’s market that is as good as what you saw in previous years—maybe even better,” Hale says. “You might still see multiple offers coming in quickly, maybe even above asking price.”

4. Mortgage rates are at a new low

Something strange has been happening over the past few months. Experts predicted mortgage rates would rise—and at the end of 2018, they were indeed ticking upward as expected.

But since the start of the year, rates on a 30-year fixed mortgage (the most popular home loan) have been falling, sliding last week to a new 12-month low of 4.37%. And of course, those historically low mortgage rates mean you could have more buyers knocking on your door.

Plus, this temporary dip in rates creates an opportunity for trade-up buyers as well. After all, if you’re selling your home, there’s a good chance you’ll need to buy another one.

Bottom line: Now’s the time to hustle and get both transactions done.

“Sellers need to take advantage of low rates as much as buyers do,” Wolf says. “Sellers don’t want to get stuck in their homes when rates go up and the math no longer makes sense to move.”

5. Millennials are flooding the market

Historically speaking, people tend to buy their first home around age 30. And guess what? We’ve got a whole bunch of people turning 30 in the next two years—nearly 5 million, in fact, according to realtor.com data. So you can count on those millennials to be a driving force in the housing market.

“Millennials want to own a home as much as prior generations,” Wolf says. “We saw millennial shoppers scooping up homes in 2018—and 2019 will be no different.”

What’s more, Hale adds, is that you won’t just be seeing demand from first-time buyers. Older millennials in their middle to late 30s have already owned a home for a few years, and could be looking at now as a prime time to trade up.

“From a seller’s perspective, you’re going to have possibly more interested buyers,” Hale says. “So that’s motivation to put your house on the market.”

Back to Top

5 Reasons It’ll Pay to Sell Your Home Early in 2018

On January 15, 2018   /   Selling a Home  
Tags: , , ,
sell home

By: Holly Amaya

It’s been nearly a decade since the Great Recession delivered the worst housing crash in modern memory. But these days, the fallout feels squarely in the rearview mirror. Markets have bounced back with fervor, and confidence is skyrocketing: From Charlotte, NC, to Stockton, CA—and everywhere in between—homes are flying off the market at record prices, and buyers are still clamoring to get in the game.

One thing is clear: It’s a great time to be a seller.

“We’ve seen two or three years of what could be considered unsustainable levels of price appreciation, as well as an inventory shortage that resulted in a record low number of homes for sale across the country,” says Javier Vivas, director of economic research for realtor.com®.

In other words: Today’s buyers are exhausted. And in many cases that means they’re willing to sacrifice to get a toehold in the market.

Sounds like the stuff of seller’s dreams, right? But know this: If you plan to sell in 2018—and you want to unload your home quickly and for maximum money—your window of opportunity may be rapidly narrowing. Here’s why you should get moving ASAP.

1. Rates are still historically low, drawing buyers into the market

We may not be enjoying the rock-bottom interest rates of yore, but by historical standards, today’s 30-year mortgage rates—hovering just above 4%—are still low. And experts agree mortgage credit will remain relatively cheap for most of the year.

That means the getting’s still good for buyers—and, subsequently, for sellers looking to unload their homes.

But rates are on the rise, and it’s been widely predicted that they’ll reach 5% before year’s end. Buyers know that the longer they wait to buy, the more expensive it will be.

Roughly translated, that means you’d be wise to list your home earlier in the year, before more rate hikes kick in. Not only will you capture the market of buyers scurrying to close a deal, but if you’re buying after you sell, you’ll also benefit from those lower rates.

2. Inventory remains tight—and demand high

Simply put, there are more buyers than available homes—particularly in red-hot markets where land is scarce and it isn’t cheap to build.

And the housing shortage will likely get worse before it gets better: Realtor.com data predict inventory will remain tight in the first part of this year, reaching a 4% year-over-year decline by March.

Sellers, that means this is your opportunity to be wooed. Buyers, their choices limited, are going to great lengths (and making some major concessions) to win the house, says Katie Griswold, a Realtor® with Pacific Sotheby’s in Southern California.

“We’re in a very favorable seller’s market,” she says. “We’re seeing bidding wars—which push up prices—and buyers are submitting offers with very pro-seller terms, like forgoing the repair request or waiving the appraisal contingency.”

And cash investors are in the mix, too, accounting for 22% of all home sales transactions in November 2017 (up from 20% in October), according to the National Association of Realtors®.

Those cash buyers are snapping up homes in an already tight market and keeping some first-time buyers at bay (sorry, buyers!). But if you’re selling, you stand a better shot at an all-cash offer—one you just might be crazy to refuse.

Of course, there’s a catch: Inventory levels are predicted to begin rising in the fourth quarter, marking the first inventory gain since 2015 and setting the stage for more dramatic housing gains to come. So if you’re thinking of selling, start preparing now in order to walk away with a sweet paycheck.

3. Home prices are still increasing

From coast to coast, home prices continue to rise—which translates to more money in your pocket when you sell.

But the gains are predicted to be more moderate than in years past. Realtor.com data suggest a 3.2% increase year over year, after finishing 2017 with a 5.5% year-over-year increase.

Bottom line: You still stand to make a pretty profit if you sell this year, but the earlier you can list, the better off you’ll be.

4. People have more money in their pocket

Record levels of consumer confidence, low unemployment, and stock market surges are setting the stage for high home buyer turnout in 2018. For the first time since the 1960s, the Fed has projected that the unemployment rate will drop below 4%, and the domestic stock market is enjoying a nearly unprecedented rally.

The housing market is already reflecting this boom: Existing-home sales soared 5.6% in November 2017 (the most recent month for which data are available) and reached their strongest pace in almost 11 years, according to the NAR.

“Incomes are growing and people are finding better and more stable jobs,” Vivas says. Buyers “are feeling pretty good about (their) finances.”

And thanks to the GOP tax legislation, which nearly doubles the standard deduction, we’ll see fewer people itemizing, says National Association of Home Builders Chief Economist Robert Dietz.

“The income effect of that is that most people are getting a tax cut—which should help (buyer) demand,” Dietz says.

All of these factors combined mean more buyers could be on the hunt, with more money in their pockets to shell out on a home for sale—possibly yours!

5. Millennials are ready to commit

Millennials, often crippled by student debt, have been especially hampered by rising interest rates and high home prices.

But the aforementioned conditions are ripe in 2018 for these first-time buyers to take the plunge, and experts predict that millennials will make up a vital part of the buyer pool over the coming year: Millennials could account for 43% of home buyers taking out a mortgage in 2018 (a 3% year-over-year increase), according to realtor.com data.

“As people move into their 30s, they’re looking to move from renting to homeownership,” Dietz says. “And we predict that trend will continue even more this year.”

More home buyers flooding the market can only mean good things for sellers—at all price points.

Back to Top

Get Moving! 4 Urgent Reasons You Should Sell Your Home in 2017

On February 27, 2017   /   Selling a Home  
Tags: , , ,
sell house

By: Lisa Gordon

If you’ve been sitting on the fence about selling your home, it might just be time to hop off. Now. To put it in other terms: 2017 is poised to be the year of the home seller, real estate experts say. So what are you waiting for?

“Sellers have been in the driver’s seat for the last two years, but this year is shaping up to be even better for several reasons,” says Jonathan Smoke, chief economist of realtor.com®. “Nothing is bad for sellers today.”

A combination of factors is coming together to make 2017 a prime seller’s market for most of the nation. Here’s what’s driving it:

Reason No. 1: Mortgage rates are still low

It’s all about rates, baby. Low mortgage rates translate to lower monthly costs. Lower costs entice buyers, which is good for sellers.

Although mortgage rates have been ticking up since mid-October to slightly over 4%, the rates for a 30-year fixed mortgage—the most popular home loan—are still hovering near 30-year lows. For now.

“We expect them to hold at this (4%) level for a while and continue to adjust up,” says Danielle Hale, managing director of housing research for the National Association of Realtors®. “Mortgage rates rarely move in a straight line. They could be in the 4.6% to 4.8% range by the end of the year.”

What does that have to do with home sellers? Well, potential buyers who are armed with that knowledge might hustle to close on a home before a rate hike.

What if you’re nowhere near ready to put your house on the market? That’s OK. Even if rates nudge up by the end of 2017, they’re still expected to be low enough to seduce buyers. The tipping point is when rates reach 5%, experts say. That’s when they could put the brakes on the robust real estate market.

“If they go above 5%, we’re going to see home prices come down,” says Trevor Levin, a real estate agent with Nourmand & Associates in Los Angeles.

Reason No. 2: Inventory is shrinking

Remember in Econ 101, when you learned that low supply and high demand lead to rising prices? The same is true—in spades—for residential real estate. When inventory shrinks, available homes become more valuable. As Martha Stewart would say, that’s a good thing for sellers.

Let’s put it in perspective: In 2007, just before the housing crash, existing home inventory peaked at 4.04 million homes for sale, according to NAR data. Fast-forward to November 2016: There were only 1.85 million homes for sale, 9.3% lower than the year before—and a whopping 54% lower than the 2007 peak.

“Quite simply, sellers this year have the least competition,” Smoke says.

And get this: Not only are there fewer homes for sale, but the time those homes have spent on the market has decreased year over year as well. If priced correctly, the typical home should move quickly, Smoke says. And that’s another boon for sellers.

“Many potential sellers don’t want to think about having to prep a home for showings and deal with an indefinite period of having to keep things in perfect shape,” he says. “Fast-moving inventory limits that pain.”

Reason No. 3: Home prices are rising

Lower inventory and greater demand have pushed up home prices. The median existing-home price in November 2016 was $234,900, up 6.8% from November 2015, when it was $220,000, according to the NAR. And that’s no fluke. That was the 57th consecutive month of year-over-year gains.

Higher prices particularly benefit the seller whose property value plunged during the recession, sometimes to less than he owed. Thanks to rising prices, many homeowners whose property was underwater can now sell without suffering a big loss.

“2017 will be a rare ‘balanced market’ for buyers, because even though mortgage rates are edging up, many sellers have recovered enough equity to be able to afford to sell,” says Colby Sambrotto, president and CEO of USRealty.com.

Reason No. 4: Job markets are strengthening

As unemployment decreases and wages (finally) increase, consumer confidence will climb. Increased confidence will spur buyers to jump into the market—which is, you guessed it—more good news for sellers.

These pieces of the puzzle create a “virtuous cycle,” Smoke says. It’s not a term he coined, but it’s one he hasn’t had a chance to use in many years.

“These things are all connected,” Smoke says. “If people are confident, they’re more likely to buy big-ticket items like houses and cars. And then they spend more money on other things. It reinforces the economy, creating a virtuous cycle.”

The only ‘bad’ news for sellers

If you sell your home today, you mostly likely will buy another. Then, all the economic factors that worked in your favor as a seller will work against you as a buyer.

Sellers have a few options. You can rent for a while, and hope that prices come down in the future. But whatever you save on the price of a house you could surrender when mortgage rates climb to 6%—as predicted for 2019 and 2020, Smoke says.

The take-home lesson: Don’t wait, because mortgage rates won’t.

“There are opportunities for a seller-turned-buyer who wants to downsize in this market,” Smoke says. “You can lock in financing rates that you’ll never see again, and very likely make the trade-off work.”

Back to Top

5 Ways to Score a Lower Mortgage Payment

On November 21, 2016   /   Home Buying  
Tags: , ,
score a lower mortgage payment

By: Cathie Ericson

Has your mortgage left you so short on cash, you plan to eat Kraft mac ‘n’ cheese every night for the next 30 years? We feel your pain. That’s why most lenders scrutinize your financials and will only loan you as much as you can afford. But here’s the problem: Circumstances change. Layoffs happen, roofs need repairs, cars get into accidents, people get sick, and an endless number of other unforeseen setbacks can take a bite out of your budget. So if you’re scraping by every month, you may want to consider these totally legit tactics to score a lower mortgage payment so you don’t have to suffer.

Refinance

This one’s a no-brainer.  Haven’t you heard? Interest rates are at an all-time low, and lower interest means lower monthly mortgage payments! Let’s say you took out a 30-year fixed-rate mortgage for $250,000  in January 2014 at 4.43% (the going rate at the time, according to Freddie Mac).

If you refinanced today at 3.5%, you would save approximately $48,141 over the term of the loan (assuming closing costs of approximately $3,000). Or, to really make you run out and refinance, let’s call it about $125 extra in your pocket per month right this minute. It’s like getting a raise without even having to work harder.

If you switch to a 20-year mortgage, on the other hand, your monthly payment would more or less stay the same, but you’d be paying for 10 fewer years, saving you almost $120,000 in interest over the life of the loan. That’s a nice chunk of change!

Ditch your mortgage insurance

If your down payment totaled less than 20% of your home’s value, most lenders will require that you pay mortgage insurance. That will cost you around $225 a month on a $250,000 house if you only put down 5%. To eliminate this extra burden, you can always try scrounging together enough money to reach that 20% threshold, but there’s another (far easier) way as well: If your property has appreciated 20% and it’s been two or more years since you bought it, you can have the mortgage insurance removed without having to refinance. “In our current economy, it’s probable that within two years, you should be in position to have 20% equity,” says Frank Fuentes, vice president of multicultural lending for New American Funding.

Combine the two above for max savings

The recent home value increases, combined with today’s lower interest rates, can give borrowers a double whammy in terms of savings, says Joe Tishkoff of Skyline Home Loans.

For example, if a home was purchased for $350,000 with 5% down, the borrower would have gotten a mortgage for $332,500.

A year and a half ago, interest rates were approximately 1% higher than they are now… plus, let’s say the home has appreciated in value and is now worth $385,000. A borrower would save approximately $350 to $375 a month by refinancing at today’s rates and by reducing or eliminating mortgage insurance commensurate with the home’s higher value. “That amounts to an 18% payment reduction, which buyers haven’t seen in the last decade,” Tishkoff points out.

Look for an interest-only loan

With this type of loan, the borrower has the flexibility to only pay interest for the first 10 years of the 30-year loan, which makes the monthly payment substantially lower than if you were paying principal and interest. These loans are ideal for borrowers whose income may be sporadic, since they can make lower payments each month, yet make additional payments in months when they have better cash flow, says Daniel Vaturi, a mortgage loan originator with FM Home Loans.

For example, with a 3.5% rate on a $250,000 loan, a standard 30-year fixed rate loan with principal and interest would come to $1,122.61 per month But with an interest-only loan, the mandatory payment would fall to $729.17 monthly for the first 10 years. Of course, after that period, you will have to make higher payments—how much is something you will negotiate—but if you anticipate that your job situation will stabilize and/or you will be making a better income by then, this tradeoff could very well be worth it.

Get an ARM vs fixed rate mortgage

While the vast majority of people select a 30-year fixed rate loan, in reality, few people hold a mortgage that long, says Bruce Ailion, Realtor and attorney for RE/Max Town and Country in Atlanta. A short-term adjustable rate mortgage (ARM), which is fixed for 3, 5, 7 or 10 years and then adjusts, will have a lower starting rate, so you will save money in the early years. “If you are planning to stay less than 10 years, there’s no reason to pay a premium to have a rate locked in for the time you will not have the loan,” Ailion points out. However, he cautions that choosing an ARM requires some projected clarity of your future plans, and a willingness to accept the consequences if you guessed wrong. “Most people opt for certainty; they sleep better at night knowing their payment does not change,” says Ailion. “Still, they could likely save serious money with an ARM.”

Want to see how much your mortgage payments will change with these strategies? Plug your numbers into realtor.com’s mortgage calculator to find out how much you’ll save.

Back to Top

5 Things to Consider When Shopping for a Refinance Deal (It’s Not as Scary as It Sounds!)

On October 24, 2016   /   Home Buying, Selling a Home  
Tags: , ,
refinance mortgage

By: Cathie Ericson

Shopping for a mortgage can be about as much fun as going to the dentist. And after going through it once, the thought of doing it all over again with a mortgage refinance might feel more akin, in fact, to getting a root canal. A long, complicated root canal.

We know it’s not the kind of thing anybody wants to do. But refinancing can be lucrative; we’re talking major cash—right in your pocket. In fact, American homeowners are missing out on at least $13 billion a year by not refinancing their mortgages. And, just like when you did it the first time, it pays to shop around. Sure, your current lender might be the best bet. But if you don’t look at other options, you could be leaving money on the table.

Here are some things to consider when shopping for a mortgage refinance—and some tips to make it as painless as possible. (You’re on your own with the root canals, however.)

  1. Do you really need a mortgage refinance?

Of course this is the first question to answer. And it’s likely you do, since mortgage rates are currently hovering around all-time lows.

We’ve got a handy calculator that can show how much money you can save if you lower your rate by even as little as half a percentage point. Say, for example, you’ve got a $300,000 mortgage. With a 3.5% rate, you’d be paying roughly $1,450 each month. Lower that rate by a mere half percentage point, to 3.0%, and your payment dips to $1,387. Of course, you would gladly accept an extra $100 a month, plus you’d pay about $22,000 less in interest over the life of the loan.

  1. Should you stay with your current lender?

You already have a mortgage, and it seems so easy to just stick with that provider. And that can be a great option, says Bob Melone, loan officer at Radius Financial Group in Boston, provided you’re happy with their service.

“Often I find that people think about refinancing because they get a letter in the mail or hear a radio ad, and their ears perk up at the amazing rates that are quoted,” Melone says. “But what borrowers fail to realize is that getting those quoted rates might require something crazy like 50% equity in the home and a near-perfect credit score. By starting the conversation with your existing lender, you can sort through conflicting information with someone who is giving it to you straight.”

  1. Should you find someone new?

Maybe you feel that your current lender isn’t doing enough to woo you. And perhaps there’s someone else out there who could give you what you want—which is, in most cases, a lower rate.

This is especially true if you’re currently working with a big bank.

“A consumer would be smart to consider a direct lender who services their own loans,” says Luis Hernandez, branch manager and loan originator for New American Funding in Chicago.

That means that whoever is processing your refinance is also going to work with you through the life of your loan. In addition, he adds, direct lenders might be able to offer a zero-closing cost refinance, since they’re interested in developing long-term relationships with clients.

Worried about the deluge of paperwork that a new lender might require? The stack of paperwork is likely to be similar even if you stay with your existing lender.

  1. How do you find the right lender for a refinance?

With so many lender options available, how do you know where to begin? Melone recommends talking to a local real estate agent whom you trust.

“They not only know whose rates may be the most competitive, but also who the better mortgage loan officers are—those who will take the time to talk you through the details of the loan you are considering,” he says.

And although we’re advising you to shop around, beware of casting too wide a net. Limit your search to two to three lenders to avoid becoming overwhelmed.

“If you get a good feeling from them, I would stop there, because they are giving you enough of an overview of what’s out there without completely confusing you,” he says.

  1. What should you look for in a mortgage refinance?

“Most lenders will provide you with a detailed report so you can see what the fees are and can compare apples to apples,” Hernandez says. Here’s what you should pay attention to:

  • Rates:Since rates fluctuate daily, you should ideally make your queries to various lenders on the same day.
  • Closing costs: Compare the fees with what you’ll save, to make sure you’re at least breaking even. For example, if closing costs are $3,000, and you’re saving $100 a month, it will take 30 months to break even.
  • Closing time: You want to make sure that your rate is “locked” (meaning that it can’t go up) for a sufficient amount of time between application and closing—probably around 45 days. “Your rate lock is even more important on a refinance than a purchase,” Melone notes. When you purchase a home, you’re liable to buy it even if rates tick up, but with a refinance, a higher rate could mean that it no longer makes sense.
  • APR: Everyone talks about interest rates, but fewer people talk about APR, or annual percentage rate. But this can be a more accurate way to compare the total cost of loans. APR combines the interest rate with the closing costs to create the total cost of a loan, expressed as a percentage. While not every closing cost is captured in this number—the credit report, appraisal, title insurance and inspection fees might be extra—it will include such biggies as origination fees and mortgage insurance.
  • Terms: Make sure the lender outlines the terms and what will happen if it sells your loan. “Terms are unlikely to change even if they sell it, but it’s wise to ask,” Melone says.

Like what you see? Ask for a “loan estimate,” the official document that binds a lender to the terms for 10 days.

And with that, your shopping is done. All that’s left is to decide is how you’ll spend that “raise” you’ve earned.

Back to Top