Seller’s Checklist: A Timeline to Prep Your Home for Sale

We’re still in a seller’s market, but that doesn’t mean your home is guaranteed to easily sell.¹ If you want to maximize your sale price, it’s still important to prepare your home before putting it on the market.

Start by connecting with a real estate agent as soon as possible. Having the eyes and ears of an insightful real estate professional on your side can help you boost your home’s appeal to buyers. What’s more, beginning the preparation process early allows you to tackle repairs and upgrades that can increase your property’s value.

Use the checklist below to figure out what other tasks you should complete in the months leading up to listing your home. While everyone’s situation is unique, these guidelines will help you make sure you’re ready to sell when the time is right. Of course, you can always call me if you’re not sure where to start or what to tackle first. I can help customize a plan that works for you.

AS SOON AS YOU THINK OF SELLING

Some home sellers want to plan their future move far in advance, while others will be required to pack up on very short notice. Whatever your circumstances, these first steps will help assure you’ll be ahead of the listing game.

●      Contact Your Real Estate Agent

I go the extra mile when it comes to servicing our clients, and that includes a series of complimentary, pre-listing consultations to help you prepare your home for the market.

Some sellers make the mistake of waiting until they are ready to list their home to contact a real estate agent. But we’ve found that the earlier I'm brought into the process, the better the result. That often means a faster sale—and more money in your pocket after closing.

I know what buyers want in today’s market, and I can help devise a plan to maximize your property’s appeal. I can also connect you with our trusted network of contractors, vendors, and service professionals, so you’ll be sure to get the VIP treatment. This network of support can alleviate stress and help ensure you get everything done in the weeks or months leading up to listing.

●      Address Major Issues and Upgrades

In most cases, you won’t need to make any major renovations before you list. But if you’re selling an older home, or if you have any doubt about its condition, it’s best to get me involved as soon as possible so I can help you assess any necessary repairs.

In some instances, I may recommend a pre-listing inspection. Although it's less common in a seller's market, a pre-listing inspection can help you avoid potential surprises down the road. We can discuss the pros and cons during our initial meeting.

This is the time to address major structural, systems, or cosmetic issues that could hurt the sale of your home down the line. For example, problems with the frame, foundation, or roof are likely to be flagged on an inspection report. Issues with the HVAC system, electrical wiring, or plumbing may cause the home to be unsafe. And sometimes outdated or unpopular design features can limit a home’s sales potential. 

Remember, when you’re dealing with major repairs or renovations, it’s best to give yourself as much time as possible. Given rampant labor and material shortages, starting right away can help you avoid costly delays.² Contact me so I can guide you on the updates that are worth your time and investment. 

1 MONTH (OR MORE) BEFORE YOU LIST

Once any large-scale renovations have been addressed, you can turn your attention to the more minor updates that still play a major role in how buyers perceive your home.

●      Make Minor Repairs

Look for any unaddressed maintenance or repair issues, such as water spots, pest activity, and rotten siding. This is the time to take care of those small annoyances like squeaky hinges, sticking doors, and leaky faucets, too. 

Many of these issues can be handled by going the DIY route and using a few simple tools. Tackle the ones you can and be sure to call a professional for the ones you’re not comfortable doing yourself. I can refer you to local service providers who can help.

Remember that it’s easy to overlook these small issues because you live with them. When you work with me, you get a fresh set of eyes on your home—so you don’t miss any important repairs that could make a big difference to buyers.

●      Refresh Your Design

This is a great time to think about some simple design updates that can make a significant impression on buyers. For example, a fresh coat of paint is an easy and affordable way to spruce up your home. One survey found that interior paint offered a 107% return on investment.³ For broad appeal, opt for warm, neutral colors.

And never underestimate the importance of good curb appeal. Homes with good curb appeal sell for 7% more, on average, than similar homes with an “uninviting exterior.”⁴ If weather permits, lay fresh sod where needed, plant colorful flowers, and add some new mulch to your beds. 

Even just repositioning your furniture can make a huge difference to buyers. A survey by the Real Estate Staging Association found that staged homes sold faster, and 73% sold over list price.⁵ I can refer you to a local stager or offer my insights and suggestions if you prefer the DIY route. 

●      Declutter and Depersonalize

Doing a little bit of decluttering every day is a lot easier than trying to take care of it all at once right before your home hits the market. A simple strategy is to do this one room at a time, working your way through each space whenever you have a bit of free time.

Start by donating or discarding items that you no longer want or need. Then pack up any seasonal items, family photos, and personal collections you can live without for the next few weeks. Bonus: This will give you a head start on packing for your move!

1 WEEK BEFORE YOU GO TO MARKET

With just one week before your home is available for sale, all major items should be crossed off your to-do list. Now it’s time to focus on the small details that will really make your home shine. Here are a few key areas to focus on during this last week.

●      Check-In With Your Agent

I’ll connect again to make sure we’re aligned on the listing price, marketing plan, and any remaining prep. I will be there every step of the way, ensuring you’re fully prepared to maximize the sale of your home.

●      Tidy Your Exterior

You’ve already done the major landscaping—now it’s time to tackle the last few details. Make sure your lawn is freshly mowed, hedges are trimmed, and flower beds are weeded.

In addition, now is the time to clean your home’s exterior if you haven’t already. Power wash your siding, empty the gutters, and wash all your windows and screens.

●      Deep Clean Your Interior

Your house should be deep cleaned before listing, including a thorough deodorizing of the home’s interior and steam cleaning for all carpets. Consider hiring a professional cleaning company to ensure the space smells and looks as fresh as possible.

In addition to cleaning, take some time to tidy up. Buyers will look inside your closets, pantries, and cabinets, so make sure they are neat and organized. Small appliances and toiletries should be cleared off the countertops.

DAY OF SHOWING

Now you’re all set to go and there are just a few small things you need to handle on the day of showings or open houses. Do a final walk-through and take care of these finishing touches to give potential buyers the best possible impression.

●      Pre-Showing Prep

Happy and comfortable buyers are more likely to submit offers! Make them feel at home by adjusting the thermostat to a comfortable temperature. Open any blinds and curtains throughout the house, and turn on all lights so buyers can see all the potential in your home. 

Then tidy up by vacuuming and sweeping floors, emptying (or hiding) trash cans, and wiping down countertops. In the bathrooms, close toilet lids and hang clean hand towels.

Don’t forget to secure firearms, jewelry, sensitive documents, prescription medications, and any other items of value in a safe or store them off-site.

Finally, it’s best to have pets out of the house during showings. If possible, you should also remove evidence of pets (litter box, dog beds, etc.), which can be a turn-off for some buyers.

DON’T WAIT TO PREP YOUR HOME FOR SELLING

If you want to get top dollar for your home, don’t put it on the market before it’s ready. The right preparation can make all the difference when it comes to maximizing the offers you get. The upgrades and changes you need to make will depend upon your home’s condition, so don’t wait to speak with an agent.

Call me if you’re thinking about selling your home, even if you’re not sure when. It’s never too early to seek the guidance of your real estate agent and start preparing your home to sell.

Sources:

1.     Fortune -
https://fortune.com/2022/02/08/should-i-buy-house-sellers-market-housing-real-estate-fannie-mae/

2.     Forbes -
https://www.forbes.com/advisor/home-improvement/labor-materials-shortage-impacts-renovations/

3.     PR Web -
https://www.prweb.com/releases/2012-homegain/home-improvement-survey/prweb9433460.htm

4.     Realtor Magazine -
https://magazine.realtor/daily-news/2020/01/27/how-much-does-curb-appeal-affect-home-value

5.     Real Estate Staging Association -
https://www.realestatestagingassociation.com/content.aspx?page_id=22&club_id=304550&module_id=164548

Hedge Against Inflation With These 3 Real Estate Investment Types 

The annual inflation rate in the United States is currently around 7.5%—the highest it has been since 1982.¹ It doesn’t matter if you’re a cashier, lawyer, plumber, or retiree; if you spend U.S. dollars, inflation impacts you.

Economists expect the effects of inflation, like a higher cost of goods, to continue.² Luckily, an investment in real estate can ease some of the financial strain.

Here’s what you need to know about inflation, how it impacts you, and how an investment in real estate can help.

WHAT IS INFLATION AND HOW DOES IT IMPACT ME?

Inflation is a decline in the value of money. When the rate of inflation rises, prices for goods and services go up. Therefore, a dollar buys you a little bit less with every passing day.

The consumer price index, or CPI, is a standard measure of inflation. Based on the latest CPI data, prices increased 7.5% from January 2021 to January 2022.¹ A little bit of inflation is considered healthy for the economy, but 7.5% in a single year is high.

How does inflation affect your life? Here are a few of the negative impacts:

●      Decreased Purchasing Power

I touched on this already, but as prices rise, your dollar won’t stretch as far as it used to. That means you’ll be able to purchase fewer goods and services with a limited budget.

●      Increased Borrowing Costs

In an effort to curb inflation, the Federal Reserve is expected to raise the federal funds rate. Therefore, consumers are likely to pay a higher interest rate on new mortgages, car loans, and variable-rate credit cards.³

●      Lower Standard of Living

Wage growth tends to lag behind price increases. According to Moody Analytics, when adjusted for inflation, average weekly earnings in January were down 3.1% from a year earlier.⁴ As such, life is becoming less affordable for everyone. Inflation can force those on a fixed income, like retirees, to make lifestyle changes and prioritize essentials.

●      Eroded Savings

If you store all your savings in a bank account, inflation is even more damaging. As of February 2022, the national average interest rate for a savings account is 0.06%, not nearly enough to keep up with inflation. And economists don’t expect that rate to go much higher.³ 

One of the best ways to mitigate these effects is to find a place to invest your money other than the bank. Even though interest rates are expected to rise, they’re unlikely to get high enough to beat inflation. If you hoard cash, the value of your money will decrease every year and more rapidly in years with elevated inflation.

REAL ESTATE: A PROVEN HEDGE AGAINST INFLATION 

So where is a good place to invest your money to protect (hedge) against the impacts of inflation? There are several investment vehicles that financial advisors traditionally recommend, including:

●      Stocks

Some people invest in stocks as their primary inflation hedge. However, the stock market can become volatile during inflationary times, as we’ve seen in recent months.⁵

●      Commodities

Commodities are tangible assets, like oil, livestock, and minerals. The theory is that the price of commodities should climb alongside inflation. But the classic choice–gold–hasn’t risen consistently during periods of inflation since the 1970s, according to data from Morningstar Direct.⁶

●      Inflation-Indexed Bonds

Treasury inflation-protected securities, or TIPS, are U.S. government-issued bonds that are indexed to the inflation rate. Bonds are considered low risk, but the returns they offer are generally low, as well.⁷

●      Real Estate
Real estate prices across the board tend to rise along with inflation and often rise faster than inflation.⁸ That’s one of the reasons demand for real estate is soaring right now.⁹

I believe real estate is the best hedge against inflation. Owning real estate does more than protect your wealth—it can actually make you money. For example, home prices rose nearly 17% from 2020 to 2021, 10% ahead of the 7% inflation that occurred in the same timeframe.¹⁰

Plus, certain types of real estate investments can help you generate a stream of passive income. In the past year, property owners didn’t just avoid the erosion of purchasing power caused by inflation; they got ahead.

TYPES OF REAL ESTATE INVESTMENTS

Though there are myriad ways to invest in real estate, there are three basic investment types that I recommend for beginner and intermediate investors. Remember that I can help you determine which options are best for your financial goals and budget. 

●      Primary Residence

If you own your home, you’re already ahead. The advantages of homeownership become even more apparent in inflationary times. As inflation raises prices throughout the economy, the value of your home is likely to go up concurrently. At the same time, you’ve locked in a set mortgage payment for the next 30 years, so you’ll be immune to rising rental costs.

If you don’t already own your primary residence, homeownership is a worthwhile goal to pursue.

Though the task of saving enough for a down payment may seem daunting, there are several strategies that can make homeownership easier to achieve. If you’re not sure how to get started with the home buying process, contact me. I can help you find the strategy and property that fits your needs and budget.

Whether you already own a primary residence or are still renting, now is a good time to also start thinking about an investment property. The types of investment properties you’ll buy as a solo investor generally fall into two categories: long-term rentals and short-term rentals. 

●      Long-Term (Traditional) Rentals

A long-term or traditional rental is a dwelling that’s leased out for an extended period. An example of this is a single-family home where a tenant signs a one-year lease and brings all their own furniture. 

Long-term rentals are a form of housing. For most tenants, the rental serves as their primary residence, which means it’s a necessary expense. This unique quality of long-term rentals can help to provide stable returns in uncertain times, especially when we have high inflation.

To invest in a long-term rental, you’ll need to budget for maintenance, repairs, property taxes, and insurance. You’ll also need to have a plan for managing the property. But a well-chosen investment property should pay for itself through rental income, and you’ll benefit from appreciation as the property rises in value. 

I can help you find an ideal long-term rental property to suit your budget and investment goals. Reach out to talk about your needs and our local market opportunities.

●      Short-Term (Vacation) Rentals 

Short-term or vacation rentals function more like hotels in that they offer temporary accommodations. A short-term rental is defined as a residential dwelling that is rented for 30 days or less. The furniture and other amenities are provided by the property owner, and today many short-term rentals are listed on websites like Airbnb and Vrbo. 

A short-term rental can potentially earn you a higher return than a long-term rental, but this comes at the cost of daily, hands-on management. With a short-term rental, you’re not just entering the real estate business; you’re entering the hospitality business, too.

Done right, short-term rentals can be both a hedge against inflation and a profitable source of income. As a bonus, when the home isn’t being rented you have an affordable vacation spot for yourself and your family!

Contact me today if you’re interested in exploring options in either the long-term or short-term rental market. Mortgage rates are expected to rise, so you’ll want to act fast to maximize your investment return.

I'M INVESTED IN HELPING YOU

Inflation is a fact of life in the U.S. economy. Luckily, you can prepare for inflation with a carefully managed investment portfolio that includes real estate. Owning a primary residence or investing in a short-term or long-term rental will help you both mitigate the effects of inflation and grow your net worth, which makes it a strategic move in our current financial environment.

If you’re ready to invest in real estate to build wealth and protect yourself from rising inflation, contact me. I can help you find a primary residence or investment property that meets your financial goals.

The above references an opinion and is for informational purposes only.  It is not intended to be financial advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources: 

1.     Bloomberg -
https://www.bloomberg.com/news/articles/2022-02-10/u-s-inflation-charges-higher-with-larger-than-forecast-gain

2.     CNN -
https://www.cnn.com/2022/01/01/economy/inflation-prices-2022-preview/index.html

3.     CNBC -
https://www.cnbc.com/2022/01/26/the-fed-sets-the-stage-for-a-rate-hike-heres-what-that-means-for-you.html

4.     Reuters -
https://www.reuters.com/business/us-consumer-prices-rise-strongly-january-weekly-jobless-claims-fall-2022-02-10/

5.     NBC News -
https://www.nbcnews.com/business/markets/market-slide-dow-falls-700-points-sp-enters-correction-territory-rcna13304

6.     CNBC -
https://www.cnbc.com/2021/12/20/gold-is-losing-its-status-as-an-inflation-hedge-two-traders-warn.html

7.     Morningstar -
https://www.morningstar.com/articles/1079158/why-are-inflation-protected-bond-funds-losing-money

8.     The Washington Post -
https://www.washingtonpost.com/business/2022/01/04/heres-how-inflation-could-affect-your-next-real-estate-move/

9.     Bloomberg -
https://www.bloomberg.com/news/articles/2022-01-24/is-real-estate-a-good-investment-hedge-against-inflation-what-the-experts-say

10.   CNN -
https://www.cnn.com/2022/01/20/homes/us-nar-home-sales-december-and-2021/index.html

There’s a lot to consider when selling your home, from the market and appraisals to where you’ll go next. Don’t forget, however, that design is also a key factor. It’s often one of the first things buyers notice when they walk into a home, and it’s also a detail that you, as a seller, can easily control.

According to Realtor.com’s 2022 housing market forecast, home for-sale inventory will increase from last year, as will the projected number of overall sales.¹ This means, if you’re looking to sell in the near future, now is the time to consider how you can stand out.

Updating your home design is one way to do that. Changes like new security features or upgraded siding can add value to your home now and be highlighted when you market it for sale later. To get the most out of your updates, focus on these popular home design features that will wow buyers in 2022.

Keep in mind, not all of these will work well in every house. If you plan to buy, list, or renovate a property, give me a call. I can help you realize your vision and maximize the impact of your investment.

Eco-Friendly Fixtures

Millennials account for the largest share of current homebuyers, according to the National Association of Realtors.² Sustainable living tops the list of priorities for this generation. A recent Deloitte survey found that nearly one-third of millennials initiate or deepen their consumer investment in products or services that help the environment—this also includes the houses they choose to live in.³

Here are a few eco-friendly design features that will be attractive to these millennial buyers in 2022. Bonus, they can net a significant return on investment (ROI) for you, as a seller, too.

●      Energy-Efficient Windows: Heat gain or loss from low-performance windows drives 25–30 percent of home heating and cooling costs, according to Energy.gov.⁴ Therefore, energy-efficient windows can help homeowners save money.

●      Low-Flow Water Fixtures: According to the EPA, replacing your shower head with one that’s labeled with WaterSense can save four gallons of water with each shower.⁵ Doing the same with your faucet can save 700 gallons per year. This leads to cost savings and environmental support.

●      Native Landscaping:  According to the American Society of Landscape Architects, 58 percent of members report increased client demand for native trees and plants as a means to combat biodiversity loss from climate change..⁶ Enhance the eco-friendly appeal of your home with some native plants in the front yard.

Wellness Retreat Nooks

The pandemic has had a significant impact on mental health. For example, in an effort to prioritize mental health, many people are relocating to quieter, more peaceful homes, with 22 percent of city dwellers planning a move to less congested residential areas, according to the Home Improvement Research Institute’s (HIRI) 2021 Insights Summit.⁷

However, no matter where you live, you can still intrigue buyers by jumping on this trend. At-home wellness amenities, which were once viewed as luxuries, are now on many homeowners’ must-have lists. Indoor spaces that function as a retreat for wellness and self-care have become extremely popular, according to HIRI.

Improve your quality of life in your home with reading nooks, spa-inspired bathrooms, and exercise or meditation spaces. Even if your house doesn’t have the square footage to section off an entire room for relaxation, making simple tweaks to natural light, air purifiers, and indoor plants can help you feel better in your home now while enabling future buyers to see the opportunity for their own space.

Calming Paint Colors

Paint colors that produce a calming atmosphere will also be a key selling point in 2022. Soft earth tones and natural hues will prevail this year, including various shades of blue, green,  brown, and beige. Recent research suggests steering clear of trendy paint colors in favor of a more classic palette to bring the feel of nature indoors in a subtle and soothing way.⁸

In fact, the same research found that buyers are often willing to pay an extra $4,698 for a house with a light blue bathroom or an extra $1,491 for a house with a dark blue bedroom. Another crowd-pleasing hue to refresh the walls with is BEHR’s 2022 paint color of the year, known as Breezeway.⁹

This shade of green with silver undertones was created to mimic sea glass. As the BEHR website describes it, Breezeway “evokes feelings of coolness and peace, while representing a desire to move forward and discover newfound passions.” 

Home Safety Features

Buyers want peace of mind more now than ever before. According to a 2021 survey from the American Institute of Architects, members report seeing an increase in the popularity of these home safety features¹⁰:

●      Emergency backup power generation

●      Accommodations for multiple generations

●      Wider accessible doorways and hallways

●      Home security monitoring equipment

●      Interior ramps and home elevator features

Consider how you can build home safety features like these into the design of your home to enhance your quality of life now and attract more buyers later. For example, you could install a backup generator in the garage and sell it with the house or update your major doorways to be wider.

Before making an investment in expensive home safety upgrades, contact me. I can help you determine what will deliver the greatest ROI for your location and goals.

Designated Work Spaces

It may come as no surprise that after the pandemic, 63 percent of homebuyers want their next house to feature room for a designated office, according to the National Association of Home Builders.¹¹ In addition, 70 percent of these buyers want the office to be at least 100 square feet (or a 10x10 room).   

If you can, consider turning a bedroom or a den into a work-from-home office. When designing the space, make it both functional and aesthetically pleasing. Position a desk near the window for natural light, install a bookshelf unit, arrange a few succulents on the work surface, and hang a few framed posters or a cork bulletin board on the wall. You want the space to foster productivity as well as be a place in your home you enjoy spending time.

When you get ready to sell, I can help you highlight your designated work space. Given the high demand for this design feature, it can help you interest more buyers and attract more competitive offers—if marketed creatively.

Luxury Kitchen Retouches

The kitchen has always been a main focal point of interior design, and that’s no different in 2022. Families will always need this space to come together in their own homes.

This year’s buyers want a kitchen with new upgrades and retouches, but you don’t have to renovate the entire kitchen to make an impact. If you’re not sure where to start, here are a few tips on how to create a kitchen that buyers will love without spending too much money on renovations:

●      Repaint the kitchen, keeping the calm and nature-inspired colors in mind that are most popular right now. Taking a kitchen from dark to light by painting cabinets and walls can make all the difference.

●      Update the hardware. These kitchen “accessories” stand out and add personality to an otherwise standard kitchen.

●      Update light fixtures to bring in more light while also adding a fresh look and feel to the space.

Unique Accent Walls

In a recent interview with the National Association of Realtors, Brian Santos, the director of education for Fresh Coat Painters, explains that bold, unique accent walls are trendy right now.¹² An accent wall gives a home character while maintaining the calming feel of natural- and neutral-colored walls.

Santos also explains that this is part of a design aesthetic that draws inspiration from the Roaring Twenties, and it’s likely to remain a sought-after home feature in 2022. Here are some bold colors to consider for your home’s accent walls:

●      Solid black

●      Jewel or metallic tones

●      Textured wallpaper

●      Painted ceilings

●      Built-in shelves

If you’re planning to sell in the next year, talk to me before adding an accent wall. Depending on your target buyer, it may be a design feature that actually hurts your home’s value. I can run a free Comparative Market Analysis on your home to help you understand what would resell best in your neighborhood.

Exterior Siding Updates

A new exterior siding refresh is one of the most affordable renovation projects you can do to help increase a home’s resale value. The average cost is just $12 per square foot, but higher-end material options can push costs closer to  $50 per square foot.¹³ What’s more, there are many siding materials available, from fiber-cement, brick, and wood to vinyl, metal, and stone.

While all these options can infuse the exterior with character and add curb appeal, fiber-cement and vinyl deliver the highest ROI. In fact, according to a 2021 Cost vs. Value Report, a vinyl siding replacement can boost resale value by $11,315 (68.3 percent cost recoup), and a fiber-cement siding replacement can boost resale value by $13,618 (69.4 percent cost recoup).¹⁴

Give your home this simple, affordable, and attractive facelift before putting it on the market. If you’re not sure how to get started yourself, I can connect you with a trusted vendor to guide you through the process.

Keep These Home Design Features on Your Radar in 2022

These design features can infuse personality into your home while helping to close the deal if you plan to sell in 2022. The average buyer knows just what they’re looking for in a space they plan to call home, so with some investment and foresight, you can give your house an edge over the competition—and boost resale value in the process.

However, you don’t need to make all these changes to attract more buyers. I can help you determine which design features you should add to your home by sharing insights and tips on how to maximize the return on your investment. I can also run a Comparative Market Analysis on your home to find out how it compares to others in the area, which will help us decide what changes need to be made. Contact me to schedule a free consultation!

Sources:

1.     Realtor -
https://www.realtor.com/research/2022-national-housing-forecast/

2.     National Association of Realtors -
https://www.nar.realtor/research-and-statistics/research-reports/home-buyer-and-seller-generational-trends

3.     Deloitte -
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/2021-deloitte-global-millennial-survey-report.pdf

4.     Energy.gov -      
https://www.energy.gov/energysaver/update-or-replace-windows

5.     EPA.gov -
https://www.epa.gov/watersense/about-watersense

6.     American Society of Landscape Architects -
https://www.asla.org/NewsReleaseDetails.aspx?id=60427

7.     Home Improvement Research Institute -
https://www.hiri.org/blog/4-major-home-wellness-trends-from-hiri-summit-speaker-dr-jie-zhao

8.     Zillow -
http://zillow.mediaroom.com/2021-07-15-Homes-With-Light-Blue-Bathrooms,-Dark-Blue-Bedrooms-Could-Sell-for-Up-to-4,698-More-Than-Expected

9.     Behr -
https://www.behr.com/colorfullybehr/behr-announces-2022-color-of-the-year-and-trends-palette/

10.   American Institute of Architects -
http://info.aia.org/AIArchitect/2021/0910/aia-interactive/index.html#

11.   National Association of Home Builders -
​​https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-what-home-buyers-really-want-march-2021.pdf?_ga=2.188050984.1824982414.1639512139-1247360189.1639512139

12.   National Association of Realtors -
https://www.nar.realtor/blogs/styled-staged-sold/hot-home-trend-the-accent-wall-is-back

13.   Forbes -
https://www.forbes.com/advisor/home-improvement/how-much-does-siding-cost-to-install/

A Return to ‘Normal’? The State of Real Estate in 2022

Last year was one for the real estate history books. The pandemic helped usher in a buying frenzy that caused home prices to soar nationwide by a record 19.9% between August 2020 and August 2021.¹

However, there were signs in the fourth quarter that the red-hot housing market was beginning to simmer down. In the month of October, only 60.3% of sales involved a bidding war—down from a high of 74.5% in April.² While this trend could be attributed to seasonality, it could also be a signal that the real estate run-up may have passed its peak.

So what’s ahead for the U.S. housing market in 2022? Here’s where industry experts predict the market is headed in the coming year.

MORTGAGE RATES WILL CREEP UP

Most economists expect to see mortgage rates gradually rise this year after hitting record lows in late 2020 and early 2021.³

Freddie Mac forecasts the 30-year fixed-rate mortgage will average 3.5% in 2022, up from around 3% in 2021.⁴

The Mortgage Bankers Association predicts that rates will tick up to 4% by the end of the year. "Mortgage lenders and borrowers should expect rising mortgage rates over the next year, as stronger economic growth pushes Treasury yields higher," said Mike Fratantoni, chief economist for the Mortgage Bankers Association at their 2001 Annual Convention & Expo in October.⁵

However, it’s important to keep in mind that even a 4% mortgage rate is low when compared to historical standards. According to industry trade blog The Mortgage Reports, “Between 1971 and December 2020, 30-year mortgage rates averaged 7.89%.”⁶ 

What does it mean for you? Low mortgage rates can reduce your monthly payment and make homeownership more affordable. Fortunately, there’s still time to lock in a historically-low rate. Whether you’re hoping to purchase a new home or refinance an existing mortgage, act soon before rates go up any further. We’d be happy to connect you with a trusted lending professional in our network. 

THE MARKET WILL BECOME MORE BALANCED

In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus and a shift to remote work triggered a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labor shortages hindered new construction.

This led to an extreme market imbalance that benefitted sellers and frustrated buyers. According to George Ratiu, director of economic research at Realtor.com, “Prices and sellers reached for the moon [last] year. It looks like we are now about to move back to earth.”⁷

Data from Realtor.com released in November showed that listing price reductions had more than doubled since February 2021. And the average days on market (an indicator of how long it takes a home to sell) has been slowly creeping up since June.⁷

What’s causing this change in market dynamics? The real estate market typically slows down in the fall and winter. But economists also suspect a fundamental shift in supply and demand.

At the National Association of Realtors’ annual conference last November, the group’s chief economist, Lawrence Yun, told attendees that he expects increased supply to come from an uptick in new construction—which is already underway—and an end to the mortgage forbearance program. “With more housing inventory to hit the market, the intense multiple offers will start to ease,” he said.⁸

Demand is also predicted to wane slightly in the coming year. Rising mortgage rates and record-high prices have made homeownership unaffordable for a growing number of Americans. And in a recent Reuters poll, nearly 80% of property analysts said they expect housing affordability to worsen over the next several years.⁹

What does it mean for you? If you struggled to buy a home last year, there may be some relief on the horizon. Increased supply and softening demand could make it easier to finally secure the home of your dreams. If you’re a seller, it’s still a great time to cash out your big equity gains! And with more inventory on the market, you’ll have an easier time finding your next home. Reach out for a free consultation so we can discuss your specific needs and goals. 

HOME PRICES LIKELY TO KEEP CLIMBING, BUT AT A SLOWER PACE

Nationally, home prices rose an estimated 16.8% in 2021.⁸ But the average rate of appreciation is expected to slow down in 2022.

Danielle Hale, chief economist at Realtor.com, told Yahoo! News, “Home asking prices have decelerated in the second half of 2021, with median listing price growth slipping from a peak of 17.2% in April to just 8.6% in October.”¹⁰ 

But experts disagree about how much more property values can continue to climb this year. Goldman Sachs predicts that home prices will rise by 13.5%, while Fannie Mae and Freddie Mac are forecasting a 7.9% and 7% rate of appreciation, respectively.² 

However, not all analysts are as bullish. The National Association of Realtors predicts a 2.8% rate of appreciation for existing homes and 4.4% for new homes, while the Mortgage Bankers Association expects the average home price to decrease by 2.5% by the end of the year.^10,2

According to Hale, “With prices near all-time highs and mortgage rates expected to rise, we expect this slowdown in prices to continue.”¹⁰

What does it mean for you? If you’re a buyer who has been waiting on the sidelines for home prices to drop, you may be out of luck. Even if home prices dip slightly (and most economists expect them to rise) any savings are likely to be offset by higher mortgage rates. The good news is that decreased competition means more choice and less likelihood of a bidding war. I can help you get the most for your money in today’s market.

RENTS WILL CONTINUE TO RISE

Along with home, gasoline, and used vehicle prices, rent prices rose dramatically last year. According to CoreLogic, in September, rents for single-family homes were up 10.2% nationally year over year.¹¹ And economists at Realtor.com expect them to climb another 7.1% in 2022.¹²

“Homes are expensive now...but for most people, the comparison that is most important is how that cost of homeownership is going to compare to the cost of renting,” Zillow Senior Economist Jeff Tucker told CNBC in November.¹³

Tucker also pointed out that rent is less predictable than a mortgage—and more likely to go up along with inflation.¹³

Real assets, like real estate, are often used as a hedge against inflation. That’s because property values typically rise with inflation.¹⁴ And when a homeowner takes out a mortgage, they lock in a set housing payment for the next 30 years.

In contrast, renters are at the mercy of the market—and they don’t gain any of the benefits of homeownership, like tax deductions, equity, or appreciation.

George Ratiu of Realtor.com told CNBC that he advises buyers to consider their budget and time frame. If they plan to stay in the home for at least three to five years, he believes it often makes sense to buy.¹³

Fortunately, it’s shaping up to be a better year for buyers. “I think 2022 has the promise of providing less competition, a lot more homes to choose from, and, as a result, a lot more approachable prices,” Ratiu said.¹³

What does it mean for you? Both property and rent prices are expected to continue rising. But when you purchase a home with a fixed-rate mortgage, you can rest assured knowing that your monthly mortgage payment will never go up. Whether you’re a first-time homebuyer or a real estate investor, I can help you make the most of today’s real estate market.

I'M HERE TO GUIDE YOU

While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, I can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood.

If you’re considering buying or selling a home in 2022, contact me now to schedule a free consultation. I’ll work with you to develop an action plan to meet your real estate goals this year.

Sources:

1.      Fortune -
https://fortune.com/2021/11/04/us-home-prices-real-estate-forecast-2022-outlook/

2.      Fortune -
https://fortune.com/2021/11/29/housing-market-real-estate-predictions-2022-forecast/

3.      Freddie Mac -
http://www.freddiemac.com/pmms/pmms30.html

4.      Freddie Mac - https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-strong-housing-market-will-continue-even-rates-and

5.      Mortgage Bankers Association -
https://www.mba.org/2021-press-releases/october/mba-annual-forecast-purchase-originations-to-increase-9-percent-to-record-173-trillion-in-2022

6.      The Mortgage Reports -
https://themortgagereports.com/61853/30-year-mortgage-rates-chart

7.      Realtor.com -
https://www.realtor.com/news/trends/has-housing-market-peaked/

8.      National Association of Realtors -
https://www.nar.realtor/newsroom/nars-yun-says-housing-market-doing-well-may-normalize-in-2022

9.      Reuters -
https://www.reuters.com/world/us/rise-us-house-prices-halve-next-year-affordability-worsen-2021-12-07/

10.    Yahoo! News -
https://www.yahoo.com/now/where-home-prices-headed-2022-130012748.html

11.    CNBC -
https://www.cnbc.com/2021/11/16/inflation-rent-for-single-family-homes-surged-10percent-in-september.html

12.    Realtor.com -
https://www.realtor.com/news/trends/what-to-expect-in-2022-housing-market/

13.    CNBC -
https://www.cnbc.com/2021/11/23/rising-inflation-hot-housing-market-what-you-need-to-know-about-buying-a-home.html

14.    Money -
https://money.com/inflation-2021-stocks-bitcoin-gold-reits-commodities/

New Build or Existing Home: Which One Is Right for You?  

Homebuyers today are facing a huge dilemma. There simply aren’t enough homes for sale.1

Nationwide, there were 1.27 million active listings in September, down 13% from the previous year. According to the National Association of Realtors, that’s about 2.4 months of inventory, which is far less than the six months that is generally needed to strike a healthy balance between supply and demand.2 

Given the limited number of available properties, if you’re a buyer in today’s market, you may need to expand your search to include both new construction and resale homes. But it can feel a little like comparing apples to oranges.

Let’s take a closer look at some of the factors you should take into account when choosing between a new build or an existing home. 

TIMEFRAME

How quickly do you want (or need) to move into your next home? Your timeframe can be a determining factor when it comes to choosing between a new build or resale.

New Build

If you opt for new construction, you may be surprised by how long you have to wait to get the keys to your new digs. Currently, many home builders are dealing with unique challenges brought on by the COVID-19 pandemic, including rising costs, labor and material shortages, and shipping delays. While historically it took around five to six months to build a home, many builders are now reporting construction timelines closer to a year or more.3

These issues have led some builders to cancel contracts or raise the price on unsuspecting homebuyers long after agreements were signed. Unfortunately, this scenario can throw a major wrench in your moving plans and significantly delay your timeline.

To minimize these types of surprises, it’s crucial to have a real estate agent represent you in a new home purchase. We can help negotiate better contract terms and advise you about the potential risks involved.

Existing Home

If you're in a hurry to move into your next residence, then you may want to stick to shopping for an existing home. 

You can typically move into a resale home as soon as you've closed the deal. The average time it takes to close a home purchase is around 51 days, but it can vary based on loan type and market activity.4

If you need to move even sooner, it’s sometimes possible to close faster, especially if you’re a cash buyer. In fact, many sellers prefer a quick closing, so it can give you an advantage in a competitive market. 

LOCATION

From commute to construction to amenities, there’s a lot to consider when choosing your next neighborhood.

New Build

With a brand-new home, you're more likely to move into a neighborhood that's located on the edge of town and is still undergoing development.5 This could mean a longer commute and ongoing construction for some time. 

However, new developments can also offer a lot of amenities that appeal to modern homebuyers. Water features, hike-and-bike trails, tot lots, and dog parks are just a few of the enhancements we’re seeing pop up in master-planned communities across the country. And some feature new schools and their own urban-like centers with restaurants, retail, and office space.6 

Existing Home

An existing home is more likely to be located close to town in a neighborhood with mature trees, established schools, and a deeply-rooted community. As a result, you may find the neighborhood's trajectory to be more predictable than an up-and-coming area. 

But the amenities may be lacking and the infrastructure dated when compared to newer communities. And while some homebuyers love the charm and eclectic feel of an older neighborhood, others prefer the sleek and cohesive look of a newer development.

MAINTENANCE

Are you a DIY enthusiast, or do you prefer a low-maintenance lifestyle? Set realistic expectations about how much time, effort, and money you want to devote to maintaining your next home.

New Build

When you build a home, everything is brand new. Therefore, in the first few years at least, you can expect less required maintenance and repairs. A 2019 survey found that millennials' homebuying regrets often came down to maintenance issues, rather than other concerns.7 So if you would rather spend your weekends exploring your new neighborhood than fixing a leaky faucet, you may be happier buying a turnkey build. 

That doesn't mean, though, that a new home will be entirely maintenance-free. In fact, depending on the builder, you could find yourself repairing more than you expected. Some home builders have reputations for shoddy construction and subpar materials, so it's important to choose one with a solid reputation. We can help you identify the quality builders in our area.

Existing Home

No matter how good a deal you got when you purchased it, you could come to regret buying an older home if it costs you heavily in unexpected maintenance and repairs. According to HomeAdvisor's yearly True Cost report, home renovations have grown more expensive in recent years. For example, installing a new HVAC system could cost you $5,371 on average. And you can expect to pay nearly double that amount ($9,375) for a new roof.8 

Fortunately, there are ways to prepare for these large expenditures. We always recommend that our buyers hire a certified home inspector, whether they buy a new or existing home. Once we have the inspector’s report, we can negotiate with the seller on your behalf for reasonable repairs or concessions.

ENVIRONMENTAL IMPACT

On a quest for greener living? If so, there are several factors to consider when deciding on your next home.

New Build

There’s a growing demand for energy-efficient housing, and many builders are rising to the challenge. Nearly 1 in 4 homes built in 2020 received a HERS (Home Energy Rating System) Index Rating by the Residential Energy Services Network. A HERS rating provides an index score that compares the newly-built home to those that were standard in 2006. The more energy-efficient the home is, the lower the score it receives.11

The average home rated in 2020 was 42% more efficient than those built in 2006 and 72% more efficient than a typical home built in the 1970s.11 So if energy efficiency is a top priority, a new home with a low HERS rating may be a good choice. You can also look for one that’s ENERGY STAR Certified, which means it meets a series of strict efficiency guidelines set by the Environmental Protection Agency. In 2020, only 7.9% of homes built in the U.S. received this designation.12 

Existing Home

Of course, a basic tenet of sustainable living is: reduce, reuse, recycle. And since a resale home already exists, it automatically comes with a lower carbon footprint. Research has also shown that remodeling or retrofitting an older home is often greener than building one from scratch.13 

With some energy-conservation effort and strategic upgrades, environmentally-conscious consumers can feel good about buying an existing home, as well.

DESIGN

Open floor plan? Kitchen island? High ceilings? Must-have design features could drive your decision to build or buy resale.

New Build

With a new home, you can bet that everything will look shiny and perfect when you move in. Builders tend to put a lot of emphasis on visual details and follow the latest design trends. For example, newly-built homes are likely to feature an open floor plan, central kitchen island, and 9+ foot ceilings, which are must-haves for many modern buyers. They are also unlikely to feature carpet on the main level or laminate countertops, both of which have lost mass appeal.14 

However, some buyers complain of the cookie-cutter feel of new homes since they are often built with a similar aesthetic. That doesn't mean, though, that you can't incorporate your own style. We can help you negotiate custom features and upgrades to personalize the space and make it feel like your own.

Existing Home

In some of the most coveted neighborhoods, an older home with classic styling and character can be highly sought after. But unless the previous homeowners have invested in tasteful updates, an existing home is also more likely to look dated. 

While some buyers prefer the traditional look and character of an older home, others crave something more modern. If that’s the case, we can help you find a resale home that leaves enough room in your budget to renovate it to your liking.

WHICHEVER PATH YOU CHOOSE, I CAN HELP

When it comes to choosing between a new build or an existing home, there’s no one-size-fits-all answer. There are numerous factors to consider, and you may have to make some compromises along the way. But the homebuying process doesn’t have to feel overwhelming.

I’m here to help. And in many cases, our homebuyer guidance and expertise are available at no cost to you! That’s because the home seller or home builder may compensate me with a commission at closing.

Some new-construction homebuyers make the mistake of visiting a builder’s sales office or even purchasing a home without their own real estate representative. But keep in mind, the builder’s agent or “sales consultant” has their best interests in mind—not yours. 

I am knowledgeable about both the new construction and resale home options in the Bay Area, and I can help you make an informed decision, negotiate a fair price, and avoid mistakes that can cost you time and money. So give me a call today to schedule a free, no-obligation consultation—and let’s start searching for your next home!

Sources:

1. Reuters https://www.reuters.com/world/us/us-existing-home-sales-fall-august-inventory-declines-2021-09-22/
2. National Association of Realtors https://www.nar.realtor/newsroom/existing-home-sales-ascend-7-0-in-september
3. KFVS 12 https://www.kfvs12.com/2021/09/22/covid-19-pandemic-affects-delivery-rate-building-materials/
4. Rocket Mortgage https://www.rocketmortgage.com/learn/time-to-close-on-a-house
5. Real Assets Adviser https://irei.com/publications/article/master-planned-communities-changing-u-s-housing-trends-favor-investors-can-benefit/ 
6. Builder Online https://www.builderonline.com/land/development/5-master-plan-trends-home-buyers-gravitate-toward-today_o
7. Bankrate https://www.bankrate.com/real-estate/homebuyer-regret-survey-may-2021/
8. Home Advisor https://www.homeadvisor.com/r/true-cost-report/ 
9. Roofing Calculator https://roofingcalculator.com/news/how-long-do-roofs-last 
10. Plumbing and Mechanical Engineer https://www.pmengineer.com/articles/94873
11. National Association of Home Builders https://nahbnow.com/2021/10/nearly-1-in-4-new-homes-in-2020-was-hers-rated/
12. EnergyStar https://www.energystar.gov/newhomes/energy_star_certified_new_homes_market_share
13. Advanced Materials Research https://www.researchgate.net/publication/271358381_Comparative_Study_of_New_Construction_and_Renovation_Project_Based_on_Carbon_Emission 
14. National Association of Home Builders https://nahbnow.com/2020/04/most-likely-and-unlikely-features-in-a-new-single-family-home/

Imagine the first place you lived as a young adult. Now imagine trying to fit your life today into that space. Not pretty, right?

For most of us, our housing needs are cyclical.¹ A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase.

While your home-buying journey may not look like your neighbor’s or friend’s, broad trends can help you understand what to keep in mind as you house hunt. No one wants to regret their home purchase, and taking the time now to think about exactly what you need can save a lot of heartache later.

The Newly Married or Partnered Couple

The financial and legal commitment of marriage has provided a springboard to homeownership for centuries, though these days more couples are buying homes without exchanging rings. In the last few decades, changing demographics have shifted the median age of first marriage and buying a first home into the late 20s and early 30s, planting most newly married or partnered buyers firmly in the millennial generation.^2,3 But no matter your age, there are some key factors that you should consider as you enter into your first home purchase together.

Affordability is Key

There’s no doubt about it—with high student loan debt and two recessions in the rearview mirror, many millennials feel that the deck is stacked against them when it comes to homeownership. And it’s not just millennials—Americans of all ages are facing both financial challenges and a tough housing market. But stepping onto the property ladder can be more doable than many realize, especially in today’s low mortgage rate environment.

While many buyers are holding out for their dream home, embracing the concept of a starter home can open a lot of doors.⁴ In fact, that’s the route that most first-time homebuyers take—the average home purchase for a 20-something is about 1,600 square feet. While the average size increases to around 1,900 square feet for buyers in their 30s, it’s not until buyers reach their 40s that the average size passes 2,000 square feet.⁵

Chosen carefully, a starter home can be a great investment as well as a launchpad for your life together. If you focus on buying a home you can afford now with strong potential for appreciation, you can build equity alongside your savings, positioning you to trade up to a larger home in the future if your needs change.⁶

Taking Advantage of Low Mortgage Rates

Mortgage rates are historically low, making now the perfect time to purchase your first home together. A lower interest rate can save you tens of thousands of dollars over the life of your loan, which can significantly increase the quality of home you can get for your money.

But what if both halves of a couple don’t have good credit? You may still have options. First, boosting a credit score can be easier than you think—simply paying your credit cards down below 30% of your limit can go a long way. But if that’s not enough to boost your score, you might consider taking out the mortgage in only the better-scoring partner’s name. The downside is that applying for a mortgage with only one income will reduce your qualification amount. And if you take that route, make sure you understand the legal and financial implications for both parties should the relationship end.

Commute and Lifestyle Considerations

Whether you’ve lived in a rental together for years or are sharing a home for the first time, you know that living together involves some compromises. But there are certain home features that can make life easier in the future if you identify them now. The number of bathrooms, availability of closet space, and even things like kitchen layout can make a big difference in your day-to-day life and relationship.

Your home’s location will also have a significant impact on your quality of life, so consider it carefully. What will commuting look like for each of you? And if you have different interests or hobbies—say, museums vs. hiking—you’ll need to find a community that meets both your needs. Need some help identifying the ideal location that fits within your budget? We can match you with some great neighborhoods that offer the perfect mix of amenities and affordability.

The Growing Family

Having kids changes things—fast. With a couple of rowdy preteens and maybe some pets in the mix, that 1,600 square foot home that felt palatial to two adults suddenly becomes a lot more cramped. Whether you’ve just had your first child or are getting to the point where your kids can’t comfortably share a bedroom any longer, there’s plenty to consider when you’re ready to size up to a home that will fit your growing family.

The Importance of School Districts

For many parents, the desire to give their kids the best education—especially once they are in middle and high school— surpasses even their desire for more breathing room. In fact, 53% of buyers with children under 18 say that school districts are a major factor in their home buying decisions.⁷ Of course, better funded (and often higher ranking) schools correspond to higher home prices. However, when push comes to shove, many buyers with kids prefer to sacrifice a bit of space to find a home in their desired location.

But when you’re moving to a new community, it can be tough to figure out what the local schools are actually like—and online ratings don't tell the whole story. That’s why talking to a local real estate agent can be a gamechanger. We don’t just work in this community; we know it inside and out.

Lifestyle Considerations

For many families, living space is a key priority. Once you have teenagers who want space to hang out with their friends, a finished basement or a rec room can be a huge bonus (and can help you protect some quieter living space for yourself).

A good layout can also make family life a lot easier. For example, an open plan is invaluable if you want to cook dinner while keeping an eye on your young kids playing in the living room. And if you think that you might expand your family further in the future, be sure that the home you purchase has enough bedrooms and bathrooms to accommodate that comfortably.

Functionality

Try to think about how each room will fit into your day-to-day. Are you anticipating keeping the house stocked to feed hungry teenagers? A pantry might rise to the top of the list. Dreading the loads of laundry that come with both infants and older kids (especially if they play sports)? The task can be much more bearable in a well-designed laundry room. Imagine a typical day or week of chores in the house to identify which features will have the biggest impact.

Chances are, you won’t find every nice-to-have in one home, which is why identifying the must-haves can be such a boon to the decision-making process. We can help you assess your options and give you a sense of what is realistic within your budget.

The Empty Nesters

When we talk about empty nesters, we usually think about downsizing. With kids out of the house, extra bedrooms and living space can quickly become more trouble than they’re worth. While the average buyer under 55 trades up to a larger home, buyers over 55 are more likely to purchase a smaller or similarly sized but less expensive home. Even in the highest age groups, the majority of home purchases fall in the single-family category. According to research by the National Association of Realtors, by the time buyers reach their 70s, the median home size drops to 1,750 square feet.⁵ But there’s plenty for empty nesters to think about besides square footage.

Maintenance and Livability

What factors are driving your decision to move? Identifying those early in the process can help you narrow down your search. For example, do you want to have space for a garden, or would you prefer to avoid dealing with lawn care altogether? What about home maintenance? In many cases, a newer home will require less maintenance than an older one and a smaller one will take less time to clean. You may also want to consider townhomes, condos, or other living situations that don’t require quite as much upkeep.

Lifestyle Considerations

Many empty nesters have retired or are nearing retirement age. This could be your chance to finally pursue hobbies and passions that were just too hard to squeeze into a 9-5. If you’re ready to move, consider how you’d like to spend your days and seek out a home that will help make that dream a reality. For some, that might mean living near a golf course or a beach. For others, being able to walk downtown for a nice dinner out is the priority. And with more time to spend as you wish, proximity to a supportive community of friends and family is priceless.

Ability to Age in Place

Let’s face it—we can’t escape aging. If you’re looking for a home to retire in, accessibility should be front-of-mind.⁸ This may mean a single-story home or simply having adequate spaces on the first floor to rearrange as needed. While buying a home that you plan to renovate from the start is a viable option, being forced into renovations (because of the realities of aging) a few years down the road could seriously dig into your nest egg. Location matters, too—if your family will be providing support, are they close by? Can you easily reach necessities like grocery stores and healthcare? While it’s tempting to put it out of our minds, a few careful considerations now can make staying in your home long-term much more feasible.

Finding the Right Home for Right Now

One thing is for sure—life never stands still. And your housing needs won’t, either. In the United States, the median duration of homeownership hovers around 13 years.⁹ That means many of us will cycle through a few very different homes as we move through different life stages. At each milestone, a careful assessment of your housing options will ensure that you are well-positioned to embrace all the changes to come.

Whatever stage you’re embarking on next, we’re here to help. Our insight into local neighborhoods, prices, and housing stock will help you hone in on exactly where you want to live and what kind of home is right for you. We’ve worked with home buyers in every stage of life, so we know exactly what questions you need to ask. Buying a home—whether it’s your first or your fifth—is a big decision, but we’re here to support you every step of the way.

We support the Fair Housing Act and equal opportunity housing.

Sources:

1.     Freddie Mac http://www.freddiemac.com/blog/homeownership/20190104_homebuying_lifecycle.page

2.     PRB https://www.prb.org/usdata/indicator/marriage-age-women/snapshot/

3.     Experian https://www.experian.com/blogs/ask-experian/research/average-age-to-buy-a-house/#:~:text=Buying%20a%20first%20home%20will,by%20real%20estate%20marketplace%20Zillow

4.     Nerdwallet https://www.nerdwallet.com/article/mortgages/starter-home-forever-home

5.     NAR 2020 Home Buyers and Sellers Generational Trends Report https://cdn.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf

6.     Investopedia https://www.investopedia.com/personal-finance/what-look-starter-home/

7.     NAR 2019 Moving With Kids
https://www.nar.realtor/research-and-statistics/research-reports/moving-with-kids

8.     Kaiser Health News https://khn.org/news/baby-boomers-aging-aging-in-place-retrofit-homes/

9.     National Association of Realtors https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes#:~:text=As%20of%202018%2C%20the%20median,varies%20from%20area%20to%20area

Can I Buy or Sell a Home Without a Real Estate Agent?

Today’s real estate market is one of the fastest-moving in recent memory. With record-low inventory in many market segments, we’re seeing multiple offers—and sometimes even bidding wars—for homes in the most sought-after neighborhoods. This has led some sellers to question the need for an agent. After all, why spend money on a listing agent when it seems that you can stick a For Sale sign in the yard then watch a line form around the block?

Some buyers may also believe they’d be better off purchasing a property without an agent. For those seeking a competitive edge, proceeding without a buyer’s agent may seem like a good way to stand out from the competition—and maybe even score a discount. Since the seller pays the buyer agent’s commission, wouldn’t a do-it-yourself purchase sweeten the offer?

We all like to save money. However, when it comes to your largest financial asset, forgoing professional representation may not always be in your best interest. Find out whether the benefits outweigh the risks (and considerable time and effort) of selling or buying a home on your own—so you can head to the closing table with confidence.

SELLING YOUR HOME WITHOUT AN AGENT

Most homeowners who choose to sell their home without any professional assistance opt for a traditional “For Sale By Owner” or a direct sale to an investor, such as an iBuyer. Here’s what you can expect from either of these options.

For Sale By Owner (FSBO)

For sale by owner or FSBO (pronounced fizz-bo) offers sellers the opportunity to price their own home and handle their own transaction, showing the home and negotiating directly with the buyer or his or her real estate agent. According to data compiled by the National Association of Realtors, approximately 8% of homes are sold by their owner.¹

In an active, low inventory real estate market, it may seem like a no-brainer to sell your home yourself. After all, there are plenty of buyers out there and one of them is bound to be interested in your home. In addition, you’ll save money on the listing agent’s commission and have more control over the way the home is priced and marketed.

One of the biggest problems FSBOs run into, however, is pricing the home appropriately. Without access to information about the comparable properties in your area, you could end up overpricing your home (causing it to languish on the market) or underpricing your home (leaving thousands of dollars on the table).²

Even during last year’s strong seller’s market, the median sales price for FSBOs was 10% less than the median price of homes sold with the help of a real estate agent.¹ And during a more balanced market, like the one we experienced in 2018, FSBO homes sold for 24% (or $60,000) less than agent-represented properties.³ This suggests that, while you may think that you’ll price and market your home more effectively yourself, in fact you may end up losing far more than the amount you would pay for an agent’s assistance.

Without the services of a real estate professional, it will be up to you to get people in the door. You’ll need to gather information for the online listing and put together the kind of marketing that today’s buyers expect to see. This includes bringing in a professional photographer, writing the listing description, and designing marketing collateral like flyers and mailers—or hiring a writer and graphic designer to do so.

Once someone is interested, you’ll need to offer virtual showings and develop a COVID safety protocol. You’ll then need to schedule an in-person showing (or in some cases, two or three) for each potential buyer. In addition, you’ll be on your own when evaluating offers and determining their financial viability. You’ll need to thoroughly understand all legal contracts and contingencies and discuss terms, including those regarding the home inspection and closing process.

While you’re doing all of this work, it’s likely that you’ll still need to pay the buyer agent’s commission. So be sure to weigh your potential savings against the significant risk and effort involved.

If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.

iBuyer

iBuyers have been on the scene since around 2015, providing sellers the option of a direct purchase from a real estate investment company rather than a traditional direct-to-consumer sales process.⁴ iBuyer companies tout their convenience and speed, with a reliable, streamlined process that may be attractive to some sellers.

The idea is that instead of listing the home on the open market, the homeowner completes an online form with information about the property’s location and features, then waits for an offer from the company. The iBuyer is looking for a home in good condition that’s located in a good neighborhood—one that’s easy to flip and falls within the company’s algorithm.

For sellers who are more focused on speed and convenience, an iBuyer may offer an attractive alternative to a traditional real estate sale. That’s because iBuyers evaluate a property quickly and make an upfront offer without requesting repairs or other accommodations.

However, sellers will pay for that convenience with, generally, a far lower sale price than the market will provide as well as fees that can add up to as much or more than a traditional real estate agent’s commission. According to a study conducted by MarketWatch, iBuyers netted, on average, 11% less than a traditional sale when both the lower price and fees are considered.⁵ Other studies found some iBuyers charging as much as 15% in fees and associated costs, far more than you’ll pay for a real estate agent’s commission.⁶

In a hot market, this can mean leaving tens of thousands of dollars on the table since you won’t be able to negotiate and you’ll lose out on rising home prices caused by low inventory and increased demand. In addition, iBuyers are demonstrably less reliable during times of economic uncertainty, as evidenced by the halt of operations for most iBuyer platforms in early 2020.⁶ As a seller, the last thing you want is to start down the road of iBuying only to find out that a corporate mandate is stopping your transaction in its tracks.

If you choose to work with a real estate agent, you can still explore iBuyers as an option. That way you can take advantage of the added convenience of a fast sale while still enjoying the protection and security of having a professional negotiating on your behalf.

BUYING YOUR HOME WITHOUT AN AGENT

According to the most recent statistics, 88% of home buyers use a real estate agent when conducting their home search.¹ A buyer’s agent is with you every step of the way through the home buying process. From finding the perfect home to submitting a winning offer to navigating the inspection and closing processes, most homebuyers find their expertise and guidance invaluable. And the best part is that, because they are compensated through a commission paid by the homeowner at closing, most agents provide these services at no cost to you!

Still, you may be considering negotiating your home purchase directly with the seller or listing agent, especially if you are accustomed to deal-making as part of your job. And if you are familiar with the neighborhood where you are searching, you may feel that there is no reason to get a buyer’s agent involved.

However, putting together a winning offer package can be challenging. This is especially true in a multiple-offer situation where you’ll be competing against buyers whose offers are carefully crafted to maximize their appeal. And the homebuying process can get emotional. A trusted agent can help you avoid overpaying for a property or glossing over “red flags” in your inspection. In addition, buyer agents offer a streamlined, professional process that listing agents may be more likely to recommend to their clients.

If you decide to forego an agent, you’ll have to write, submit, and negotiate a competitive offer all on your own. You’ll also need to schedule an inspection and negotiate repairs. You’ll be responsible for reviewing and preparing all necessary documents, and you will need to be in constant communication with the seller’s agent and your lender, inspector, appraiser, title company, and other related parties along the way.

Or, you could choose to work with a buyer’s agent whose commission is paid by the seller and costs you nothing out of pocket. In exchange, you’ll obtain fiduciary-level guidance on one of the most important financial transactions of your life. If you decide to go it alone, you’ll be playing fast and loose with what is, for most people, their most important and consequential financial decision.

SO, IS A REAL ESTATE AGENT RIGHT FOR YOU?

It is important for you to understand your options and think through your preferences when considering whether or not to work with a real estate professional. If you are experienced in real estate transactions and legal contracts, comfortable negotiating under high-stakes circumstances, and have plenty of extra time on your hands, you may find that an iBuyer or FSBO sale works for you.

However, if, like most people, you value expert guidance and would like an experienced professional to manage the process, you will probably experience far more peace of mind and security in working with a real estate agent or broker.

A real estate agent’s comprehensive suite of services and expert negotiation skills can benefit buyers and sellers financially, as well. On average, sellers who utilize an agent walk away with more money than those who choose the FSBO or iBuyer route.^3,5 And buyers pay nothing out of pocket for expert representation that can help them avoid expensive mistakes all along the way from contract to closing.

According to NAR’s profile, the vast majority of buyers (91%) and sellers (89%) are thrilled with their real estate professional’s representation and would recommend them to others.¹ That’s why, in terms of time, money, and expertise, most buyers and sellers find the assistance of a real estate agent essential and invaluable.

QUESTIONS ABOUT BUYING OR SELLING? WE HAVE ANSWERS

The best way to find out whether you need a real estate agent or broker is to speak with one. We’re here to help and to offer the insights you need to make better-informed decisions. Let’s talk about the value-added services we provide when we help you buy or sell in today’s competitive real estate landscape.

Sources:

1.     National Association of REALTORS https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers

2.     Washington Post https://www.washingtonpost.com/business/2020/12/09/factors-consider-when-determining-whether-use-an-agent-buy-or-sell-home/

3.     National Association of REALTORS https://www.nar.realtor/blogs/economists-outlook/selling-your-home-solo-to-save-money-you-ll-actually-make-less-than-you-think

4.     Seattle Times https://www.seattletimes.com/business/real-estate/redfin-is-first-major-ibuyer-to-sell-in-seattle

5.     MarketWatch https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11

6.     Forbes https://www.forbes.com/sites/nataliakarayaneva/2020/03/19/billion-dollar-real-estate-businesses-ibuyer-suspended/?sh=c7f59f921747

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While many areas of the economy have contracted, the housing market has stayed remarkably strong. But can the good news last?

When COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the shift. Record-low interest rates caused some lenders to call a halt to new underwriting, and homeowners debated whether or not to put their houses on the market. However, those first days of uncertainty ushered in a period of unprecedented demand in the U.S. real estate market, which ended the year with increasing average home prices (up 13.4% from the previous year) and shrinking days on market (13 fewer than in 2019).1

Now, as the spring market approaches, you may be wondering whether the good times can continue to roll on. If you’re a homeowner, should you take advantage of this opportunity? If you’re a buyer, should you jump in and risk paying too much? Below we answer some of your most pressing questions.

How is today’s market different from the one that caused the 2008 meltdown?

At the beginning of the pandemic, fears of an economic recession and an ensuing mortgage meltdown were top of mind for homeowners all across the country. For many buyers and sellers, the two seemed to go hand in hand, just as they did in the 2008 economic crisis.

In reality, however, the conditions that led to 2008’s recession were very different from those that triggered the current downturn—and this time, the housing market is the source of much of the good news.2 This is in line with historical patterns, as housing prices traditionally hold steady in the face of recession, with homeowners staying put and investors putting their money into bricks and mortar to ride out uncertainty in the stock market. 

This time around, because of lessons learned in 2008, banks are better funded, homeowners are holding more accrued equity, and, crucially, much of the economic activity is focused on financial factors outside the housing market. As many industries quickly pivoted to work-from-home, early fears of widespread job loss-related foreclosures have failed to materialize. Federal stimulus payments and the Paycheck Protection Program also helped to offset some of the worst early effects of the shutdown.

Are we facing a real estate bubble?

A real estate bubble can occur when there is a rapid and unjustified increase in housing prices, often triggered by speculation from investors. Because the bubble is (in a sense) filled with “hot air,” it pops—and a swift drop in value occurs. This leads to reduced equity or, in some cases, negative equity conditions.

By contrast, the current rise in home prices is based on the predictable results of historically low interest rates and widespread low inventory. Basically, the principle of supply and demand is working just as it’s supposed to do. In addition, experts predict a strong seller’s market throughout 2021 along with increases in new construction.3 This should allow supply to gradually rise and fulfill demand, slowing the rate of inflation for home values and offering a gentle correction where needed.

Effects of low interest rates

According to Freddie Mac, rates are projected to continue at their current low levels throughout 2021.4 This contributes to home affordability even in markets where homes might otherwise be considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.

Effects of low inventory

Continuing low inventory is another reason for higher-than-average home prices in many markets.5 This should gradually ease as an aggressive vaccination rollout and continuing buyer demand drive more homeowners to move forward with long-delayed sales plans and as new home construction increases to meet demand.6

Aren’t some markets and sectors looking particularly weak?

One of the big stories of 2020 was a mass exodus from attached home communities and high-priced urban areas as both young professionals and families fled to the larger square footage and wide-open spaces of suburban and rural markets. This trend was reinforced by work-from-home policies that became permanent at some of the country’s biggest companies.

Speculation then turned to the death of cities and the end of the condo market. However, it appears that rumors of the demise of these two residential sectors have been greatly exaggerated. 

With the first vaccine rollouts, renters have begun returning to major urban centers, attracted by the sudden rise in available inventory and newly discounted rental rates.7 In addition, buyers who were previously laser-focused on a single-family home responded to tight inventory by taking a second look at condos.8 While nationwide condo prices continue to lag behind those of detached homes, they’ve still seen significant price increases and days on market reductions year over year.

In addition to these improvements, the 2020 migration has spread the economic wealth to distant suburban and rural enclaves that normally don’t benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, they’ll revitalize the economies of their adopted communities for years to come.

How has COVID affected the “seasonal” real estate market?

Frequently, the real estate market is seen as a seasonal phenomenon. However, the widespread shutdowns in March 2020, coming right at the beginning of the market’s growth cycle in many areas, has led to a protracted, seemingly endless “hot spring market.”

While Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020’s historic numbers, the outlook overall is positive as we embark on the 2021 spring selling cycle.9 Duncan anticipates an additional lift in the second half of 2021 as buyers return to business as usual and look to put some of their pandemic savings to work for a down payment. Thus we could be looking at another longer-than-usual, white-hot real estate market.

How will a Biden administration affect the real estate market?

Projected policy around housing promises to be a boost to the real estate market in many cases.10 While some real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. In addition, Biden-proposed policy pinpoints low inventory as a primary driver of unsustainable home values and is geared toward more affordability through investments in construction and refurbishment.

Overall, according to most indicators, the real estate news looks overwhelmingly positive throughout the rest of 2021 and possibly beyond. Pent-up demand and consumer-driven policies, along with a continued low-interest-rate environment and rising inventory, should help homeowners hold on to their increased equity without throwing the market out of balance. In addition, the increase in long-term work-from-home policies promises to give a boost to a wide variety of markets, both now and in the years to come.  

STILL HAVE QUESTIONS? WE HAVE ANSWERS

While economic indicators and trends are national, real estate is local. We’re here to answer your questions and help you understand what’s happening in your neighborhood. Reach out to learn how these larger movements affect our local market and your home’s value. 

Sources:
Realtor.com https://www.realtor.com/research/december-2020-data/

New York Magazine https://nymag.com/intelligencer/2020/06/why-this-economic-crisis-wont-be-as-bad-as-2008.html

Washington Post https://www.washingtonpost.com/business/2021/01/11/2021-housing-market-predictions/

Freddie Mac http://www.freddiemac.com/research/forecast/20210114_quarterly_economic_forecast.page?

Wall Street Journal https://www.wsj.com/articles/housing-market-stays-tight-as-homeowners-stay-put-11611226802?mod=re_lead_pos1

Marketwatch https://www.marketwatch.com/story/new-home-construction-activity-soars-to-highest-level-in-over-a-decade-as-builders-rush-to-produce-single-family-homes-2021-01-21

Forbes https://www.forbes.com/sites/noahkirsch/2021/01/14/signs-of-a-rebound-new-york-city-rent-prices-are-climbing-back

Washington Post https://www.washingtonpost.com/business/2021/01/07/condo-sales-rebound-amid-dwindling-inventory-houses/

Mortgage Professional America https://www.mpamag.com/news/fannie-mae-chief-economists-forecast-for-us-economy-housing-market-in-2021-244045.aspx

Inman https://www.inman.com/2020/11/09/what-a-joe-biden-presidency-means-for-real-estate-and-housing/

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