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Should We Let Buyers View Your Home Before It Hits The Market? |
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Q: Should we let a buyer (or two or three) look at your house before it is listed for sale? A: Usually... no... though it depends on your goals. Despite higher mortgage interest rates, there are still lots of buyers in the market (more than there are sellers) and thus we still have a shortage of houses available for sale in many/most price ranges in Harrisonburg and Rockingham County. This shortage of housing inventory means that there will still probably be a good bit of buyer interest in your home when it is listed for sale. During the first week that your house is listed for sale there are likely to be quite a few showings - many with buyers who have been searching for a home for months and have not been successful in buying a home because of competition from other buyers. Here's why this early, steady flow of eager buyers is great for you as a seller...
All of this happens, though, because your house is simultaneously available to all local buyers and thus they feel the pressure of competing with other potential buyers. When a seller is preparing their home for sale, they will sometimes hear through a neighbor or co-worker that there is someone interested in their home that would like to come view it before it hits the market. Should you allow for that? In most cases, in my opinion, probably not. Letting a buyer (or buyers) view your home before it is officially on the market might result in that buyer making an offer before your house is on the market, thus not giving you the opportunity to see how much other interest existed. One buyer making an offer without other buyers possibly coming in with their offers simultaneously almost always leads to offer terms that are not as favorable to you. Why would the only buyer to have seen your house (because it is not yet listed for sale) include an escalation clause in their offer? Why would they waive a home inspection? They wouldn't. It's the competition from other buyers that causes them to do so. So, as exciting as it is to hear that someone is interested in your house even before it is listed for sale -- you are almost always going to sell your house with more favorable terms if you list it for sale and expose it to the broadest possible pool of buyers currently in the market to buy. The main exceptions I can think of are...
So -- if you're getting ready to sell, and you hear from a buyer that they are interested in viewing the house before you list it for sale -- considering telling them "I'm so sorry, but I want to wait until the house is on the market..." and letting them know the date that you anticipate that it will be hitting the market. | |
Building Your Lists Of Definitely Yes, Definitely No, Maybe When Preparing Your Home To Sell |
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Walking around and through your house together can be help us build three lists related to preparing your house to go on the market... [1] Definitely Yes [2] Definitely No [3] Maybe The first two lists are usually the easiest to compile. There are usually some things that you should DEFINITELY do to prepare your home for the market and some things that you DEFINITELY don't need to do to prepare your home for the market. Then, there are usually a variety of items that go on the maybe list. What you end up doing from the "maybe list" will likely depend on... [1] Your time frame for getting the house on the market. [2] The resources you have available (time, know how, money) to get the jobs done before your house goes on the market. [3] The amount of buyer demand in your segment of the market. If you are looking to get your home on the market quickly and you don't have the time, know how or money to get things on the "maybe list" completed and there is an abundance of buyer demand in your segment of the market... then maybe you don't address very many of the items on the maybe list. If you plan to get your home on the market sometime in the next few months, and you have the time, know how and/or money to get things completed and there aren't as many buyers looking to buy in your corner of the market... then you probably should address most of the items on the maybe list. This all starts with walking around and through your home and having a conversation about all of the above. If you're looking to sell your home this summer, the best time to have this conversation would be now or soon. | |
Different Segments Of Our Local Market Are Performing Differently. This Is Normal. |
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Over the past few years almost every house, in any location, at any price point, would have double digit showings and multiple offers and would likely sell over the asking price. This is still happening (10+ showings, multiple offer, selling over list price) for many new listings... but not all. Plenty of other new listings are having 1 - 5 showings, receiving only one offer, and selling at the list price. Which houses have tons of interest and which have less interest can be related to all sorts of things these days... [1] property type [2] property location [3] price range [4] appropriateness of pricing [5] age and condition [6] marketing Is it normal for different segments of our local market to be performing... differently? Yes, it is quite normal. As always, this means that the pricing, preparations of your home, and marketing of your home are very important as we see different segments of the local market in flux. | |
In The Real Estate World, It Is Almost Time For Kids To Go Back To School |
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Yes, I know, I know, the school year hasn't even ended yet. So why am I already thinking about when school aged kids are going to be going BACK to school in the Fall!?! Well, because buying a home is not an overnight process. Neither is moving into a home. If you are planning to sell your home in the next six months -- and you think some of the buyers who might have interest in your home would have school aged kids -- consider this... June 1, 2023 - we put your house on the market June 10, 2023 - we have the house under contract (could be faster, could be slower) July 31, 2023 - closing on your house (typically 45 - 60 days) Mid/Late August - school starts So, as you can see, if a buyer is going to buy your home -- and move in before the next school year starts -- they need your house to be on the market soon! | |
The Probability Of Selling Your Home Is Still Hovering Around 99 to 100 Percent |
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Will I be able to sell my home? Almost certainly, YES! For the past few years, the probability of selling one's home (just about any home!) has been extraordinarily high. Will it sell? Yes, almost certainly. Now, of course... this has to fit within the context of pricing, preparation/condition, and marketing... but most homes sold. This has not always been the case. Five or more years ago there wasn't a guarantee that every home would sell... though I suppose some would argue that at SOME price EVERY home would sell. That said... right now, we are still very much in a time when it is extremely probable, highly likely, nearly certain... that your home will sell. So if we don't have to wonder WHETHER your house WILL sell, these then are the questions we'll be focused on... 1. How should I price my home? 2. What do I need to prepare my home for the market? 3. How should my home be marketed? We may very well get back to a (normal!) time again when it is not as certain that every house will sell (quickly and at a favorable price) but until/unless we get there... home sellers can keep on enjoying this strong seller's market. | |
Run The Numbers On Selling And Then Buying A Home |
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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. Click here to download this worksheet as an editable Excel file. | |
No, You Do Not Need To Round Your List Price Up To Give Yourself Room To Negotiate |
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Let's say that after we review the market analysis of your home together we decide your home is likely worth $550,000 in the current market. Being a reasonable home seller you decide you would like to try to sell your house to someone for $550,000. Seems like a solid plan. So, which is the correct list price? a) $575,000 b) $565,000 c) $549,000 or $550,000 d) $525,000 The answer is... C. I think the answer is always C!? In the current market (in most price ranges, in most locations, with most houses) you don't generally need to round your list price up to give yourself room to negotiate with a buyer. Buyers in today's market will come see your house if it is for $565K or $575K, but they likely won't make an offer. Thus, if you believe your home is worth $550K, and you hope to sell for $550K... in many cases, the best list price will be $550K... or maybe $549K. Clearly, this can't be one size fits all for all properties, in all price ranges, locations, etc.-- but the point I'm driving at here is important -- you shouldn't feel the need to round up your list price (in the current market) in order to get the price you really hope to have a buyer pay for your home. | |
Higher Mortgage Interest Rates Are Making Would Be Home Buyers More Thoughtful About Offers |
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Back when mortgage interest rates were 3% - 3.5%... 10:00 AM - new listing hits the market 10:10 AM - drive by 10:11 AM - text Realtor to set up showing 1:30 PM - walk through the house 1:55 PM - get kicked out by the next buyer in line to see it 2:30 PM - make an offer on the house (90% chance you'll make one) Home buyers didn't have to think very hard at all about whether to make an offer on a house they liked because their mortgage payment would be pretty darn low given historically low mortgage interest rates at the time. Now a days, with mortgage interest rates of 6% - 6.5%... 10:00 AM - new listing hits the market 12:15 PM - drive by 12:30 PM - text Realtor to set up showing (next day) 10:00 AM - walk through the house 4:00 PM - talk through the mortgage payment details with lender (next day) 9:00 AM - make an offer on the house (33% chance you'll make one) Buying a $350K house (for example) is a big decision! Buying a $350K house can seem like a smaller decision with 3.5% mortgage interest rates. It's only a $1600/month mortgage payment given a 20% down payment. Buying a $350K house can seem like a really big decision with 6.5% mortgage interest rates. It's a $2,115/month mortgage payment given a 20% down payment. As noted in the comparison above, buyers are still making decisions relatively quickly -- but they're thinking things through a bit further -- and they're not always choosing to make an offer. These higher mortgage interest rates do impact the market, even though they haven't caused home prices to drop in Harrisonburg and Rockingham County. | |
Home Sellers Still Are Not, For The Most Part, Accepting Home Sale Contingencies |
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As we make our way through the spring real estate market, plenty of folks are getting geared up to buy a home. Some of those would-be home buyers also need to sell their current home. No worries, right? We can just make an offer to buy contingent on you selling your home. Right? Right??? Maybe not. There still seem to be MANY, MANY more buyers in the market to buy than there are homes available for them to purchase. As such, home sellers are not, for the most part, accepting home sale contingencies. An offer with a home sale contingency technically means the seller has their house under contract -- but does it really matter? The sale won't head to closing unless some other house (your house) also goes under contract. If you are selling a home this year, I am likely going to tell you that you won't have to accept an offer with a home sale contingency. If you are buying a home, the same logic applies, a seller is unlikely to have to accept an offer with a home sale contingency. Case in point... there are 266 houses under contract right now in Harrisonburg and Rockingham County in the HRAR MLS. Of those...
* These are houses marked as "Pending" in the MLS ** These are houses marked as "Active with Kickout" in the MLS So... if you're looking to buy, and you need to sell, we need to talk through the logistics of how you can accomplish that in this competitive market where most other buyers are likely making offers on houses without home sale contingencies. | |
Homes Are Selling Quickly, Often At Or Above The Asking Price, But... |
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Homes are selling quickly... often at or above the asking price... but... ...that doesn't mean you can put any price on your home and successfully sell quickly and at or above the list price. -- Let's say you own a townhouse and you are getting ready to sell it. Three other townhouses on your street sold for $250K in the past two months. If you list your home for $250K or $255K (or possibly even $259K) you'll likely find early success in securing a buyer for your home at or above the list price. If you list your home for $275K you are much less likely to quickly secure a contract with a buyer at or above your list price. If you list your home for $299K you are very (very) unlikely to quickly secure a contract with a buyer at or above your list price. -- If you own a home that you think might be worth $450K and we discover that other recent buyers have paid $460K and $470K for similar homes... great! A list price of $459K or $465K or $470K will likely result in an early, strong offer. A list price of $489K is much less likely to result in an early, strong offer. A list price of $510K probably won't get you very far at all. -- So, yes, many or even most buyers are paying very close to the list price -- the list price -- or above the list price -- BUT that's because most home sellers price their homes appropriately for the market. | |
Start Monitoring Listings And Sales In Your Market Segment A Few Months Before Selling Your Home |
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Will you be selling a home in the ___ neighborhood later this spring or summer? Will you be selling your home in the low $_00's later this spring or summer? If you plan to sell soon (but not quite yet) it can serve you well to start monitoring listings and sales in your market segment now. Watch for the next few listings in your neighborhood, or price range, to hit the market for sale... 1. What does the list price tell you about the value of your home? 2. How quickly does the new listing go under contract? Then, watch for closed home sales in your neighborhood, or price range... 3. What does the sales price tell you about the value of your home? If you'll be selling soon, starting to tune in and watch the most recent happenings in your segment of the market can help you make even better decisions about pricing and selling your home when the time comes. | |
Home Sellers Often Sell Homes Perfect For First Time Buyers... To Investors |
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Over the past few years, townhouses in or near the City of Harrisonburg between $175K and $250K have been a hot commodity! This type of property is perfect for first time home buyers... ...but... ...this type of property has also been quite attractive to investors. And, what is a seller to do when receiving the following three offers on their townhouse... [1] An offer from an intended owner occupant contingent on the buyer financing 95% of the purchase price. [2] An offer from an investor contingent on the buyer financing 75% of the purchase price. [3] A cash offer from an investor. If all other terms (price, contingencies) were equal, most sellers would find the third offer to be most preferable, followed by the second offer. The first offer would be the least favorable to most sellers. For many or most sellers, the amount of a buyer's downpayment (5%, 25%, 100%, etc.) is often a proxy for certainty of successfully making it to closing. If a buyer already has the cash to buy the property - wonderful! If a buyer has 25% of the purchase price as a downpayment - still pretty good! If a buyer only has 5% of the purchase price as a downpayment - not as ideal. And as you can imagine from the information outlined above, so long as there are investors making offers on properties that would be perfect for first time buyers.... the investors will probably be the ones securing the contract to buy said property. So what? For Sellers - This is not a problem at all. Having a variety of offers from which to choose is... ideal! For Investor Buyers - This is great. It's nice having a leg up over some of the other competing buyers. For First Time Buyers - This stinks. I'm renting a townhouse now... and you're telling me I can't manage to buy a townhouse because I'm competing against investor buyers who are going to buy townhouses and then rent them out to people such as myself? Ugh. How do we break the cycle? Indeed... if there were a desire to make this dynamic / situation "work better" for first time buyers... how would it be done? [1] Individual sellers could certainly opt to sell their townhouse to first time buyers with less favorable (less certain) financing. [2] Investors could (maybe?) eventually decide to stop buying as many properties as rental properties if prices (or interest rates) are or become too high to make that type of an investment feasible. [3] The City could provide a financial incentive to sellers of properties under $250K (for example) if they sold them to first time buyers. ;-) It's hard to imagine this one happening but it could be an interesting strategy for the City to utilize to attempt to increase home buying opportunities for first time buyers. | |
One Of The Best Market Indicators Right Now Is How Quickly Houses Similar To Your Home Are Going Under Contract |
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Are you getting ready to list your home for sale this spring? Are you trying to figure out how to price your home? Step one - as usual - is to look backwards, at past sales, to see how much buyers have paid for houses similar to your home over the past six (or more) months. But another market indicator that we shouldn't overlook is... ...how quickly houses similar to your home are going under contract. FOR EXAMPLE... If we look around at past sales and we find that buyers have recently paid $410K, $415K and $420K for houses similar to your home... ...we might plan to list your home for $415K or $419K or $425K. Let's say we're super optimistic and we're planning to list your home for $425K. But, then, if you're not putting your home on the market for a few weeks, we should carefully monitor similar houses coming on the market for sale. If we see... [1] Three similar houses come on the market for $420K, $425K and $429K, each of which go under contract in a matter of days... then we should be encouraged to stick with our plan of pricing your home at $425K. [2] Three similar houses come on the market for $410K, $412K and $415K, all each of which are still available for sale after being on the market for two weeks... then we might want to consider a list price of $415K or $419K instead of $425K. So, with pricing these days, we need to look backwards at past sales, but we also need to see how quickly buyers are contracting to buy houses similar to your home. Let me know if you're ready to start thinking through potential pricing (and timing) for selling your home this spring. | |
Buyer Demand Exceeds Supply In Varying Degrees By Price Range |
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As one might expect, there are more buyers able to and interested in buying a home for $200K than for $300K... and more buyers able to and interested in buying a home for $300K than for $400K. You get the picture. As such, we currently find buyer demand exceeding supply in varying degrees by price range. These numbers are completely made up, but are likely not too far off base given recent listings or transactions I have been a party to or have heard about in our local market... SHOWINGS IN WEEK ONE, BY PRICE RANGE:
If you're seeing more showings than outlined above, your house may be slightly more popular than the average house based on its location and condition - or you might have priced it "just right" for the current market. If you're seeing fewer showings than outlined above, your house maybe slightly less popular than the average house based on it's location and condition - or you might have priced it "a bit too high" for the current market. Again, the data above is completely fictional (not based on actual showing data) but is included to paint a general picture of the differing amounts of buyer demand in different price ranges in the current market. | |
Detached Resale Home Sales Decline 39% In Two Years, Down To... Pre Covid Norm |
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First, a definition... Detached Resale Home Sales = not townhouses, not duplexes, not condos, not new homes Now, then, an observation... Detached Resale Home Sales have declined 39% over the past two years when looking at first 2.5 (ish) months of the year. Oops, wait, another observation... Detached Resale Home Sales have dropped all the way down to... pre covid norms. In the three years leading up to Covid (2017, 2018, 2019) we saw home sales between January 1 and March 13 totaling 99, 101 and 103 home sales for each of the above referenced years. But then, the three most recent years showed a very different pace of sales... Jan 1 - Mar 13 of 2020 = 136 sales! Jan 1 - Mar 13 of 2021 = 164 sales! Jan 1 - Mar 13 of 2022 = 136 sales! But, then, back to what seems to have been the pre-Covid norm... Jan 1 - Mar 13 of 2023 = wait for it... 100 sales So, two things seem to be true right now... There are significantly (!!!) fewer detached, resale homes selling right now compared to how many we saw during the same timeframe over the past three years. But, yet, the number of detached, resale homes selling right now is quite normal per the historical trends before Covid started messing with the housing market. Prospective home buyers in 2023 should thus realize that... [1] There will likely be a historically normal number of homes that you could buy this year... if we ignore the three most recent years. [2] There will be far fewer options of homes to buy this year compared to last year and the year before. [3] There may very well be more competition from other buyers for that smaller number of homes that will be available for purchase. As you can see through all of this -- the decline in home sales is very much due to a restrained supply (only so many sellers willing to sell) rather than a restrained demand (only so many buyers wanting to buy). | |
What A Great Time To Sell Your Million Dollar Home |
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It's been a good time to sell a million (+) dollar home lately. After only three million dollar sales over three years (2018-2020) we have seen 19 million dollar sales over the past two years. Wow! Check out what people have been paying $1,000,000 for lately here. If you're ready to sell your home for one million dollars... let me know. ;-) | |
This (Late February, Early March) Can Be A Magical Time To List Your Home For Sale |
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The first day of spring is March 20th. The spring real estate market is often seen as kicking off in mid to late March, or certainly by the first part of April. So, what about this timeframe we're in right now -- late February and early March? Is this a decent time to list one's home for sale? It can actually be quite a magical time to list your home for sale... 1. You will have very little competition from other sellers, as many sellers will choose to wait another month or more to list their home for sale. 2. You will potentially have pent up demand from lots of home buyers that have not found anything to buy over the past few months when there have been very few new listings from which to choose. Homes that hit the market in this pre-spring timeframe often get lots of attention and sell with very favorable terms. So, while your flowers may not have started blooming yet, and your grass might not be as green as it will be in another month, there can be some specific and magical benefits to getting your house on the market sooner rather than later! | |
Real Estate Has Seemed Like An Abnormally Liquid Asset Over The Past Few Years |
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What is a liquid asset? Per Investopedia... "A liquid asset is an asset that can easily be converted into cash in a short amount of time." ...and further... "Liquid assets are often viewed as cash, and likewise may be called cash equivalents because the owner is confident the assets can easily be exchanged for cash at any time." ...and finally... "Generally, several factors must exist for a liquid asset to be considered liquid. It must be in an established, liquid market with a large number of readily available buyers. Ownership transfer must also be secure and easily facilitated." Real estate is generally understood to NOT be a liquid asset... as it can take time to sell real estate, the value for which a property will sell is not always certain, selling quickly to convert real estate to cash might result in a lower sales price, etc. But... over the past few years real estate has certainly SEEMED like a liquid asset for many property sellers. You want to sell your house? No problem. What to sell it quickly? We can make that happen. For an amazingly high price? Yep, that will happen too. So, while real estate was not (over the past few years) and is not (now) a liquid asset, it certainly seemed like it was to many property owners. Will this dynamic continue on into 2023 and 2024?
So, real estate -- which is definitely NOT a liquid asset -- might start to feel slightly less liquid over the next year or two based on the trends noted above. Or, maybe not. Maybe just about every home will continue to sell, without question, very quickly, at a very favorable price. The key takeaway here, as a buyer (or homeowner) is to remember that real estate is NOT a liquid asset. Don't buy a house today, paying any price, waiving all contingencies, if you might want to sell it again in 3, 6, 9 or 12 months. There are significant transactional costs of selling (and buying) a home and it is not a liquid asset - so it cannot always be quickly converted back into cash in your pocket. | |
Should Home Sellers Expect Offers With Home Sale Contingencies? |
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You're getting ready to list your home for sale. You aren't desperate to sell, and you don't need a lightning fast sale... but you want things to move along at a steady pace. Should you expect to receive offers with a home sale contingency? It's not thrilling to think about a home sale contingency as a home seller... you'd just be trading in needing to sell your home... for needing someone else to sell their home. Is it reasonable to hope to or plan to only consider offers without a home sale contingency? Good news, home sellers (and bad news contingent home buyers) as current local housing market conditions still favor home sellers. As such, most home sellers are not finding it necessary to consider offers with home sale contingencies. Typically, if a home seller were to accept a contract with a home sale contingency, they would do by also adding a "kickout clause" that would allow them to continue to market their property to other buyers and to kick out the primary (home sale contingent) buyer if a new (not home sale contingent) buyer makes an offer. As such, one way to evaluate whether home sellers are readily accepting contingent contracts is to evaluate how many listings fall into each of the following two categories in the HRAR MLS. Pending - this means the property is under contract, in almost all cases without a home sale contingency, and certainly, without a kickout clause as per the status below. Active with Kickout - this typically means the property is under contract, but has a kickout clause, likely because the buyer still needs to sell their home in order to buy the listing. Here's how things currently shake out as of 2/19/2023... Pending = 231 properties Active with Kickout = 2 properties So, indeed, most home sellers do not seem to be finding it necessary to accept an offer with a home sale contingency. | |
Now Could Be An Ideal Time To Sell A Residential Rental Property! |
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If you own a rental property in the City of Harrisonburg or in Rockingham County, perhaps a townhouse or duplex or small single-family home, this could be an ideal time to sell the property. If you would like to explore the possibility of selling a property that you have been renting out for the past few years, let’s talk about timing and logistics. You will likely be selling the property at a very favorable price with very favorable contract terms and as an added bonus you will be helping out what seems to be a continued backlog of owner occupied buyers who are still trying to buy a home and settle down in the Harrisonburg area. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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