Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive the maximum value for your house?
Here are two keys to ensure that you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counterintuitive, but let’s look at this concept for a moment. Many homeowners think that pricing their homes a little OVER market value will leave them with room for negotiation. In actuality, this just dramatically lessens the demand for your 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 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 Stovall Team
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 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 Stovall Team. This will guarantee that you maximize the price you get for your house.
These (Mortgage) Rates are on Fire!
Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year. Since the housing collapse 10 years ago, the U.S Federal Reserve has maintained a loose monetary policy, keeping interest rates low and providing easy access to credit. But with the economy nearing full employment and corporate America raking in record profits, the Fed’s policy is tightening. After years of a fixed 30-year mortgage interest rate below 4 %, that rate is now 4.5% What impact will rising rates have on house values? Well, many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop. However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate. Anxiety over rising interest rates was one of the factors that caused the recent stock market swings, and it’s only a matter of time before rising rates seep into the housing market. For prospective homebuyers, rising rates might put some pressure on finding a home sooner than later, as rates are unlikely to get better than they are now. A sense of urgency would be justified because the lower the rate a homebuyer can lock into, the easier it’ll be to make a monthly payment. For a homeowner with a variable-rate mortgage, rising rates would lead to suddenly higher mortgage payments. CoreLogic built a model to project what a typical monthly mortgage payment would be if the rates rose by 0.85 percentage points over the next year, which it calculated by averaging multiple rate increase forecasts, including from Freddie Mac, Fannie Mae, and the Mortgage Bankers Association.
The model assumes a 2.6% rise in real home prices. Taking this into account, the typical monthly mortgage payment would rise from $804 to $910, a 13.3 percent increase. However, when the projection is adjusted for inflation, it’s still 36.4 percent below the all-time high of $1,263 set in June 2006. And for further context of the rate itself, even a dramatic rate increase wouldn’t put it near all-time highs. It’s hard to imagine now, but in the early 1980s, the fixed 30-year mortgage rate was about 18 percent. By the 1990s, it fell to about 10 percent and has steadily fallen ever since. In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples shown. Most are projecting an increase of approximately 1% by the end of the year. The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.
How a rate hike will affect home values and the market as a whole is murkier. The tax bill passed in December has numerous implications for housing that may not be fully realized for years to come. Bottom Line When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span. Now, more than ever, who you work with matters! Our primary goal is to deliver the highest level of service available to each and every one of our clients. We strive to make each of our listings the best they can be. Is now the time for you to make your move? Call me today at 714.343.9294 Visit stovallteam.com
Sources: Micah Stovall, Bloomberg Business Journal, National Association of Realtors