5 things all sellers should know

There are a lot of misconceptions about how selling your house works.  I think a lot of that is because we agents don’t take the time to explain things.  Nobody really understands what we do and I think just like math homework, we should “Show our work.”

So, here are the answers to the most typical questions/comments I get from sellers:

  1.  Don’t we need a lot of wiggle room between the list price and what we think the sale price will be?  No, especially in Fayette Co.  Most agents price their listings close to the market value.  Outside of Fayette County, it is more common to have more wiggle room.  If you have a $230k house that you list for $250k so you have room to negotiate and most sellers are pricing closer to market value, buyers will not be expecting you to have so much wiggle room.  They will be comparing your $230k house with other homes listed for $250k and your house will not be appealing to them.
  2. If my houses sells quickly, does that mean we sold it for too cheap?  Not at all.  Often that means that you had one of the best houses available in your price range.  Even when the market was terrible, it was common for the best houses to sell quickly.  The value of your house and how long it took to find a buyer are not related.  The value of your house is determined by what a buyer will pay.  We figure that out by examining the sales in your area to see what buyer’s have recently been willing to pay.  We are in a time where there are more buyers than there are sellers.  It is pretty typical for most houses to sell quickly.
  3. My house has been on the market for a while and not sold, I think you should do more to advertise it.  If a house isn’t selling, it is due to the price or the condtion of the house.  Very rarely, especially in a seller’s market, do I see a house not sell due to the marketing.  Sure, there is a difference between a good presentation and bad, but let’s face it, when there are more buyers than sellers, buyers will come see a poorly presented house just like they will one that was presented well.  Also, exposure is never an issue these days.  Once a agent puts the house on the local MLS, it is automatically fed to Zillow, Trulia, realtor.com and every other site with listings.  Within 24 hours of your house hitting the market, you can google your address and see pages of websites it is on.  Often when I have had somebody tell me this, I will look on zillow and see that hundreds of people have viewed the listing.  I will also remind them that none of the buyer’s who have come to see their house made an offer.  The big question is why did none of them buy the house?  Price and/or condition.  All an agent can do is attract somebody to the front door.  Once they go inside, the house has to do the rest.  Being a Realtor isn’t about making somebody buy a house they don’t want.  It is about making your house appealing enough for somebody to buy.
  4. I don’t want to paint my house because I don’t know what color my buyer will want.  I often hear this from sellers after I have suggested they paint due to the house needing it or because they have wild colors that I think will turn off most buyers.  Fresh paint is THE biggest return on investment when selling.  Buyer’s don’t have vision.  Just watch HGTV and you will notice that.  People walk into a house before the renovation and just can’t visualize what it is going to look like at the end of the show.  Let’s say it will cost $3k to paint your house.  Odds are it is going to sell for $5k less if you don’t.  The color you pick is whatever is trendy at the moment because everybody likes it.
  5. The list price you suggest is too low.  My house has________________.  It is common for sellers to want to add value for the features their house has that other houses in the area do not.  You have a covered patio and the others houses don’t.  It adds value.  You have granite counter tops and other houses don’t.  They add value.  But, determining value is done by comparing your house to others that have sold in your area.  Agents and appraisers make adjustments for how your house is better or worse than the houses that have sold.  Sellers tend to not realize when those “Other” houses are better than their own house, and we need to make adjustments for that too.  Think of it like balancing your checkbook.  You’ve got deposits and debits.  Once you’ve added and subtracted those, you know your balance.

 

 

Why rising rates won’t stop the market

Rates just hit 5%.  They haven’t been that high in many years.

It sounds like the sky is falling but it is not.

Many first time buyers are freaked out over this since they got used to lower rates.

When I bought my first house, I bragged to my friends that I was getting a 6.5% rate.  I locked as soon as they fell from 6.625%.  Most of my friends who had owned their houses for a few years had rates over 7%.

Several years later, I refinanced my third house when rates dropped to 5%.  I could not believe at that time how low that rate seemed.  I currently have a 3.375% rate on that house.

I’ve watched rates go up and down.  The market change from a seller’s market to a buyer’s market to a seller’s market.  If there is one thing I have learned is that the market keeps going.  There are always first time buyers.  There are always people getting transferred, married, divorced, retiring, and running out of space.  Those things will always happen.  The market is really about life and all the stages and events of it.

Something else I have noticed is that the market tends to pause when there is a big change, whether that change is interest rates, rising prices, dropping prices, etc.  It’s like we say “Now isn’t a good time to do this because it is different that it was.”  Then life happens, we get used to the “New” normal and we buy and/or sell.

We are in one of those times now.  Mortgage applications are down slightly, sales are down slightly.  We are entering what is believed to become a balanced market, meaning the number of buyers will be about the same as the number of sellers.  This won’t last too long because like I said, people will get used to 5%.  It will become the new normal.  The market will go on just as life goes on.

When will there be more houses for sale?

The simplest answer to this is when sellers feel like moving…..so I guess it boils down to what will it take for that to happen?

Many people who have been in their houses for more than 5 years either got a super low interest rate or refinanced to get one.  It is hard to give up something like a 3.5% rate and buy your next house at the top of the market and do a 5% mortgage.  Right now, all that free equity from appreciation isn’t enough to make somebody want to give that up.

But, eventually there will be a tipping point.

Let’s say you bought a house 5 years ago for $200k.  You put down 5% and got a 3.5% rate for 30 years.  The principal and interest part of your loan is about $900 a month.  Flash forward to today.  The house is probably worth $240k.    You owe about $173k on it and have about $67k in equity.

You decide you want to buy a $300k house.  You finance about $235k after you get the equity out of your last house.  You get a 5% rate.  The principal and interest part of your loan is now $1200 a month.

Maybe you don’t want to spend $300 more each month?

What will it take to make you list your old house?

Maybe another $40k equity in your old house?  Assuming rates stay about the same and the price of the $300k house you want appreciates less than the $240k house you have, this $40k is what it will take to keep your payment about the same each month.  It will take about 3 years for that to happen between appreciation and what you are paying down each month in principal.

We all bemoan higher interest rates, but lets keep in mind that the reason we don’t like higher rates is because they make the mortgage payments higher.  People have a certain amount they can/will spend each month on housing.  People will always try to stuff as much house into that payment as they can.  I think the day sellers can move up to a nicer house and not pay that much more will be when we see more for sale signs in yards.