Fannie Mae Agrees: Hire a Pro to Sell Your House

Fannie Mae Agrees: Hire A Pro to Sell Your House | Keeping Current Matters

Do you really need an agent to sell your house in today’s market? Here’s what Fannie Mae suggests to sellers on the Know Your Options section of their website:

“Select how you’ll market and list the home (e.g., with a real estate agent or for sale by owner). There are pros and cons to each, but unless you are experienced at selling homes, it usually makes financial sense to get professional help—homes sold by agents typically sell at a higher price and spend less time on the market. An agent will also help you determine the best pricing for the house, they’ll market the home, and they’ll be your advocate throughout the process.”

Let’s go over the points they made:

  • Homes sold by agents typically sell at a higher price
  • Homes sold by agents typically spend less time on the market
  • An agent will help you determine the best pricing for the house
  • An agent will market the home
  • An agent will be your advocate throughout the process

If Fannie Mae says using an agent probably makes sense, perhaps you should interview an agent before putting your house up for sale.

A Home’s Cost vs. Price Explained

A Home’s Cost vs. Price Explained | Keeping Current Matters

In real estate there is a difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home.

Let us explain.

Recently, we reported that a nationwide panel of over one hundred economists, real estate experts and investment & market strategists projected that home values would appreciate by approximately 4% from now to the end of 2015.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will be 5.0% by the end of next year.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

The Cost of Waiting A Year | Keeping Current Matters

Don’t Wait! Move Up to the Home You Always Wanted

Don't Wait! Move Up to the House You've Always Wanted | Keeping Current Matters

Now that the housing market has stabilized, more and more homeowners are considering moving up to the home they have always dreamed of. Prices are still below those of a few years ago and interest rates are still below 5%.

However, sellers should realize that waiting to make the move while mortgage rates are increasing probably doesn’t make sense. As rates increase, the price of the house you can buy will decrease.

Here is a chart detailing this point:

Buyer's Purchasing Power | Keeping Current Matters

New Construction = New Competition

New Construction = New Competition | Keeping Current Matters

For the last several years, home sellers had to compete with huge inventories of distressed properties (foreclosures and short sales). The great news is that the supply of these properties is falling like a rock in the vast majority of housing markets (only 8% of homes sold in August). Many homeowners are now thinking of selling as the impact of this substantially discounted competition has disappeared.

However, every seller of an existing residential property must realize that there is a new form of competition hitting the market: newly constructed homes.

According to the National Association of Home Builders (NAHB), new-home sales topped 500,000, in August, for the first time since 2008.

“This jump in sales activity is in line with our latest surveys, which indicate builders are seeing increased traffic and more serious buyers in the market for single-family homes,” said Kevin Kelly, chairman of the NAHB.

Broken down regionally, new home sales rose:

  • 50% in the West
  • 29.2% in the Northeast
  • 7.8% in the South
  • and were unchanged in the Midwest

Bottom Line

If you are thinking of selling, perhaps you should do it now to avoid additional competition coming to the market.

Should I Rent My House Instead of Selling It?

Should I Rent My House Instead of Selling It? | Keeping Current Matters

A recent study has concluded that 39% of buyers prefer to rent out their last residence rather than sell it when purchasing their next home.

The study cites that many homeowners were able to refinance and “locked in a very low mortgage rate in recent years. That low rate, combined with a strong rental market, means they can charge more in rent than they pay in mortgage each month… so they are going for it.”

This logic makes sense in some cases. Residential real estate is a great investment right now.

However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for. Are you ready to be a landlord?

Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.

10 Questions to ask BEFORE renting your home

  1. How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
  2. Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
  3. Have you interviewed experienced eviction attorneys in case a challenge does arise?
  4. Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
  5. Will you allow pets? Cats? Dogs? How big a dog?
  6. How will you actually collect the rent? By mail? In person?
  7. Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up?
  8. Do you have a list of craftspeople readily available to handle these repairs?
  9. How often will you do a physical inspection of the property?
  10. Will you alert your current neighbors that you are renting the house?

Bottom Line

Again, renting out residential real estate historically is a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.

Why You Should Sell Your House Now!

Why You Should Sell Your House Now! | Keeping Current Matters

School is back in session, the holidays are right around the corner, you might not think that now is the best time to sell your house.  But with inventory below historic numbers and demand still strong, you could be missing out on a great opportunity for your family.

1. Demand is Strong

Foot traffic refers to the number of people out actually physically looking at home right now. The latest foot traffic numbers show that there are more prospective purchasers currently looking at homes than at any other time in the last twelve months which includes the latest spring buyers’ market. These buyers are ready, willing and able to buy…and are in the market right now!

As we get later into the year, many people have other things (weather, holidays, etc.) that distract them from searching for a home. Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing supply is still under the historical number of 6 months’ supply. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will continue to increase over the next few months. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the 2014 housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. Any delay in the process is always prolonged during the winter holiday season. Getting your house sold and closed before those delays begin will lend itself to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate in the low 4’s right now. Rates are projected to be over 5% by this time next year.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Finding the Right Agent is Crucial

Finding the Right Agent is Crucial | Keeping Current Matters

The information delivered by your neighborhood real estate agent in the past is now available on the internet. You no longer need agents for information regarding which homes are for sale or what houses in your neighborhood sell for. You can easily find that information online. This information itself is no longer what you need from your real estate professional. However, you still need someone to deliver a thoughtful analysis of this information.

“There’s a large gap between information and actionable knowledge.”

In other words, information by itself is essentially useless.

What’s truly important is being able to understand, analyze, and use the information for the best outcome. And that’s what a real estate professional’s job has become!

What you really want is someone who can…

  • Analyze all the available information
  • Connect the dots and let you know if now is a good time to buy or the right time to sell
  • Take the time to explain your options—simply and effectively

You now need a real estate agent who truly understands the market and can help you feel confident that you are making the right decisions for you and your family.