Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
If you are interested in discussing any of the topics on this blog, or the details of your specific real estate situation, call or e-mail me!
Sellers are certainly enjoying themselves these days. Perhaps because it wasn't too many years ago that sellers were having a difficult time selling their homes. My oh my how the tables have turned.
PRICES ARE UP - this is good for sellers, as they are likely to sell their home for more than they would have a year or so ago.
INVENTORY IS DOWN - this is good for sellers, as they have fewer homes to compete against in the current market.
DEMAND IS UP - this is good for sellers, as there are more buyers potentially interested in buying their home as compared to a year ago.
TIME ON MARKET IS DOWN - this is good for sellers, as they are likely to sell their home more quickly than they would have a year ago.
If you will be selling your home to buy another, there are a lot of numbers floating around....
Above you will see a spreadsheet I put together to help you think about some of these numbers as you are evaluating if and when you will make a move to a new house.
In yellow, are all of the inputs you will need to provide, or that you and I can determine together, such as your current payment, your home's current value, your mortgage payoff, whether you will be putting any additional money into the transaction, etc.
In green, I have identified your potential future mortgage payment and the net change in your monthly payment.
All of the numbers without a background color will automatically calculate for you.
What follows is an astute comment from Bob after my recent post on home inspections....
Scott, sometimes the impression is left (by the agents in some cases, but more likely just by the sellers hearing anecdotes) that the seller is somehow obligated to repair any deficiencies found by the home inspector. My mother was told she would HAVE to repair this, that, or the other thing, as if it were some kind of law that the house you sell has to be in "like new" condition. If the agent who is representing the seller lets someone put language in the contract obligating the seller to anything other than another potential round of negotiations after the inspection, then they have failed their fiduciary responsibility to their client. Likewise, they should be educating their clients that the contract is not completed until the buyer has the information to make a wise decision about the purchase, and when the amendments come in for the seller to fix stuff, they have a powerful, one-word tool they can use to protect themselves. The word "no".Bob is, indeed, correct -- the standard home inspection contingencies used in this area (I can't speak for other areas) do not place any obligations on the seller to make any repairs.
A buyer makes a decision to buy a home based on the information available to them at the time that they make the offer. They then will often conduct a home inspection to learn more about the condition of the property. If they discover material defects, they can (reasonably) ask the seller to address those detects --- BUT --- the seller does not have to agree!
Now, of course, if there are some major issues revealed during the home inspection, and the buyer requests that the seller address them, and the seller uses Bob's powerful one-word tool of saying "no" -- then the buyer, of course, can decide not to proceed with the purchase. But the point here is that nothing in the home inspection process requires a seller to make any repairs.
Home staging is the act of preparing your home for sale by making it appealing to the highest number of potential buyers, thereby selling a property more swiftly and for more money.
According to the National Association of Realtors Profile of Home Buyers and Sellers, over 81% of buyers find it "easier to visualize the property as their future home" when it is staged.
If we decide your home would benefit from the assistance of a staging consultant before being listed for sale, I will arrange to have Melanie Woodard set up a time to meet with you at your home. She will provide prepare you with a full staging report with a variety of recommendations for improving the staging of your home.
Find out more about the full process of selling your home by visiting....
While every home sale is different -- with unique contingencies based on the needs and situations of the buyer and seller -- there are three main hurdles that most buyers and the houses they are purchasing must clear to make it to closing.
So -- where is your contract in this process? Have you cleared 1, 2 or 3 of the hurdles, thus far? There will be plenty of other details to attend to, but these are the three main areas of focus. Evaluating the property condition, the property value, and the buyer's finances....
INSPECTION - This is an evaluation, by a home inspector, of the condition of the house. Clearing this hurdle typically involves requesting that the seller make some repairs to the house (or negotiate further on price) based on new information about the property condition discovered during the inspection process.
APPRAISAL - This is an evaluation, by an appraiser hired by the purchaser's lender, of the value of the house. If the property appraises for the contract price (or higher), all is well -- otherwise, the buyer and seller may need to renegotiate the contract price based on the appraised value.
LOAN APPROVAL - This is an evaluation, by a lender (and their underwriters) of the purchaser's financial situation. The lender must confirm that the buyer has the income to support the mortgage payment required for purchasing the home.
Again - there are many other smaller hurdles (for example, a termite inspection) and larger hurdles (for example, a home sale contingency) that may need to be cleared in your purchase (or sale) of a home -- but these three main hurdles (inspection, appraisal, loan approval) are the three main mileposts during the contract-to-closing process that we'll be focused during the transaction.
Updated numbers above! Does anything surprise you? It doesn't surprise me.
Marketing your home should follow the lead of where buyers are looking for homes -- but even more importantly, where they are finding their homes.
Preparing your home to go on the market can be challenging (and tiring), and often sellers-to-be need a second (or third) set of eyes to provide suggestions about where to focus their time and energy. There are many different theories about how to best prepare your home to be on the market and viewed by buyers --- and ways of expressing those theories.
Distractions are the things that keep a prospective buyer from focusing on your house. That might be knick knacks, or family photos, or refrigerator magnets, or an overflowing pantry, or fascinating artwork, or an abundance of indoor plants, or a strange odor, or brightly colored wall hangings. Whatever it is --- if a buyer is focusing on one (or more) of these items, they're not focusing on your house. They're reading all of the Far Side comics on the fridge instead of marveling at the granite countertops, tile back splash, recessed lighting, and stainless steel appliances. They're amazed at how you fit 234 board games into the coat closet instead of taking in the quality workmanship of the trim detail in the foyer, and the mountain views out the picture window in the family room. As you prepare your home to go on the market, close your eyes for a few moments when standing at the entrance to each main living area. Then, open your eyes, and take note of where your eyes are immediately drawn. Or, walk slowly through the space (or ask a friend to help) seeing where your eyes (and your mind) linger.
Objections are those correctable physical characteristics of your home that give a buyer a reason to mark your home off their list, or to move it down a notch in their preferences. Perhaps it is that the vinyl siding needs to be power washed, or that three bi-fold closet doors need to be adjusted, or that there is poor lighting in the kitchen, or that the deck needs staining. There are oftentimes small home maintenance items that should be attended to before putting your home on the market. There are two potential dangers of having these items unresolved --- first, a buyer might become too overwhelmed by the work that they need to do to the home once they move in, and second, a buyer might extrapolate from what they can see to imagine what they cannot. A classic example of this is the dirty furnace filter that makes a buyer assume that the HVAC system has never been serviced, is in a terrible state of disrepair, and will need to be replaced immediately.
As you're preparing your house to go on the market, I'm happy to provide you with another set of eyes and to give you some new perspectives on how to best prepare your home to be shown to buyers. When you're ready, just give me a call (540-578-0102) or send me an e-mail (scott@HarrisonburgHousingToday.com). Also, don't fret about having your home in perfect "show condition" before you call me --- I'm happy to give you some guidance and feedback while you're still in the process of preparing your home to go on the market.
Many sellers list their homes in the Spring or Summer, which is often ideal for the timing of their move, and aligns well with when most buyers are in the market.
However -- some houses are very difficult to be seen (and photographed) in the Spring and Summer because of large trees in the front yard.
So -- if you're thinking of selling this Spring or Summer, and you have trees (especially large house-obscuring trees) we should discuss taking some exterior photos SOON rather than waiting until later when we can't see your house at all.
Certainly, the grass isn't as green as it could be right now, and the flowers aren't blooming -- but it could be nice to see your house in the main view of your future real estate listing -- rather than just a tree.
So -- 2016 is over, and 2017 has come. Let's use the data above to draw a few conclusions about what 2016 home sales mean for buyers and sellers in 2017....
Ready to buy or sell? Have questions? Just send me an email at scott@HarrisonburgHousingToday.com or call me at 540-578-0102.
And here are two handy references to prepare yourself to buy or sell a home....
In some ways, NO, you should NOT take your house off the market -- because there is a historically LOW number of homes for sale right now.
And yet, still, some folks will take their homes off the market for the winter. Our local MLS requires a house to be off the market for 90 days before the "Cumulative Days on Market" statistic resets. So, if you take your house off the market today, you could put it back on the market on the first Monday in March (March 6, 2017) and have that statistic reset.
During these 90-ish days of being off the market, we will want to talk about price, condition and marketing....
As a home seller, you will face rejection left and right -- many prospective buyers will come view your house and most of them will decide not to buy it. But how, as a seller, do you make sense of that feedback?
I often hear the following types of feedback after a showing:
This type of feedback (size, location, floor plan) is difficult to do much with as a seller. You likely aren't going to build an addition to your house, nor will you physically move the house, nor will you reconfigure the floor plan. Sometimes the feedback is just a mild objection to be overcome -- did you realize that the unfinished bonus room could be finished quite inexpensively (size) and that the new South East connector will make your commute quite short (location)? Oftentimes, however, if you receive feedback about size, location or floor plan there isn't much you can do about it as a seller.
I also, however, will hear the following types of feedback after a showing:
This type of feedback (price, condition, marketing) is completely in your control as a seller. Many buyers will not make an offer if they think your list price is too far from reality -- adjusting your pricing may be just what you need to either generate more showings, or have a chance of the showings turning into offers. I almost included AGE as a factor outside of a seller's control, but it's much more about condition -- how well has a property been maintained, and is it in top showing shape so that buyers don't feel overwhelmed by short-term cosmetic updates and long-term maintenance needs? Finally, if a house has not been marketed thoroughly and effectively, it will likely have a much longer "days on market" than other properties, worrying buyers that perhaps they shouldn't buy the home because nobody else has in the last ten months.
Read more about, think more about, and learn more about selling your house at SellingAHomeInHarrisonburg.com.
Sellers are usually quite shocked, dismayed or disheartened to receive a low offer on their house, for example, an offer of $365K on a $415K listing. But it is important to remember that even that low offer really is a compliment!
If you have not yet had an offer on your house (that is listed at $415K) and you receive an offer of $365K, that doesn't necessarily mean your house is only worth $365K, nor does it necessarily mean that you should accept $365K or something close to it. It does, however, mean something quite exciting --- somebody wants to buy your house!!!
Of course, negotiations won't always work out with low offers -- but recognize a low offer for what it is -- a buyer who wants to buy your house, and perhaps the first buyer who has declared as much through a written offer!
If there is any way to put a deal together with those buyers, you ought to pursue it, as it's hard to know when the next buyer will work up the courage to tell you that they want to buy your house!
I believe this question is best answered by evaluating when buyers make an actual buying decision -- which is when they sign a contract. The data above shows when buyers sign contracts -- calculated by averaging data from the three most recent years.
As can be seen, the busiest buying season is March through August when an average of 123 buyers per month make a buying decision.
The remaining six months of the year (September through February) show anywhere between 50% and 77% as many buyers as the average of 123 per month seen in the busiest six months of the year.
So -- listing your home on November 1st (for example) is not a terrible idea -- we'll see 64% as many buyers signing contracts in November as compared to the average busy month. That said, in the following month (December) we're likely to only see half as many buyers as compared to the average month
My house is next to the railroad tracks, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the railroad tracks.
My house has an unbelievably steep driveway, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the steep driveway.
My house is needs many cosmetic updates, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the need for cosmetic updates.
Guess what --- unless you're going to move the railroad tracks (or the house), flatten the driveway, or make all of the cosmetic updates -- it really is an issue of price!
If you're getting consistent feedback about your house that is unrelated to price, in almost all cases, you need to adjust the price to accommodate for that specific issue.
If the price is lower then buyers might actually buy despite the specific issue that they were complaining about.
Buyers are finding fewer and fewer options of homes to purchase in Harrisonburg and Rockingham County as inventory levels continue to decline. The graph above shows the number of homes for sale in early September for each of the past eight years.
There are 44% fewer homes for sale now as compared to at the peak of inventory levels in 2010. Even looking over the past year, there has been a 12% decline in inventory.
These low inventory levels are frustrating buyers in many price ranges, giving them limited options of homes to purchase and SOMETIMES creating multiple offer situations.
If you are getting ready to sell your home, it is important to understand the dynamic of how many other home sellers you will be competing against, so we will want to take a look at inventory levels in your particular segment of the market.
Only 39.3% of sellers have paid for a part the buyer's closing costs on home sales that have closed thus far in 2016. This marks a decline from the 47.7% of sellers who paid buyer closing costs last year. However....
As shown above, the amount of closing costs that sellers are paying is certainly increasing. The average amount of closing costs paid by a seller (when a credit was provided at all) has increased from $4,150 (in 2015) to an average of $4,328 in 2016. Also of note....
As shown above, of the sellers who are paying buyer closing costs, it is most common for them to pay between $4K and $6K towards the buyer's closing costs.
So....if, as a seller, you are asked to pay the buyer's closing costs -- you are not alone (40-ish percent of sellers do) and you will likely be asked to pay $4K - $6K.
It has been hard to see the overall trajectory of showings this Spring/Summer as compared to last Spring/Summer since we have had both better and worse months of showings.
Let's summarize a bit....
Mar/Apr/May 2016 as compared to Mar/Apr/May 2015 = 10% increase
Jun/Jul/Aug 2016 as compared to Jun/Jul/Aug 2015 = 11% increase
So, while each individual month might be better or worse than the next, it seems that showings are, overall, increasing this year as compared to last year.
There were 1,125 home sales during 2015 In Harrisonburg and Rockingham County....thus, an average 94 sales per month.
There are currently 563 homes on the market.
Thus, within 6 months (563 / 94) everybody's house will have sold, right? Kind of like I have illustrated it below?
Isn't that wonderful news? Within 6 months, everybody's house will have sold!
But wait -- each month, while there are homes selling (perhaps 94) there are also new listings (perhaps 94)....
Thus, inventory always stays (roughly) the same, aside from seasonal ups and downs and long term shifts in inventory levels.
So.....the big question, do all of the houses get in line and sell in an orderly fashion? If there are 6months of homes on the market, certainly the first ones to sell are those that have been on the market for 5 months, right? Because all homes patiently wait in line and let homes that have been on the market longer sell first, right? First come, first serve?
Nope, things don't work that way in the real estate market. You don't get "your turn" when it comes to selling your house. Some houses that sell this month will have been on the market for less than a month. Some, just for two or three months. And yes, some of the homes that are currently on the market have been sitting there watching sales go by for months or even years.
So, if your house is on the market, make sure you're not thinking that you will just wait your turn, and that eventually it will be your house's turn to sell. Think about (or talk to me about) what you can do to make sure your home IS one of the next 94 to sell, and doesn't continue to wait around......as the waiting could go on forever!
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