It may not be the best time to sell, but it might not be the worst either. Recent economic forecasts suggest that the housing recovery could take years. As a seller who has a strong motivation to sell, do you try to sell now or hold on for a better market? First consider where you want to be in 10 years. How do you envision your lifestyle? Is your current home too big, too small, or in the wrong location? Homeowners intent on moving from one house to another can take advantage of low interest rates, if they are able to sell their current home. You'll probably sell for less than you would have several years ago, but you may get a deal on the home you buy.
However, if you don't plan on living in your next home for the next eight to 10 years, this might not be a good time to make a move.
For sellers who purchased in recent years, selling requires a huge readjustment in their expectations. Many probably will sell for less than they paid; in some cases, a lot less. If they highly leveraged the purchase, or refinanced and pulled out equity, they may need to contribute cash to close the deal.
Sellers who have no cash reserves and need to sell for less than the amount of the loans secured against the property will need lender approval to complete a sale. This is called a short sale. In this case, or with a foreclosure, sellers don't have the option of buying another home until their credit is restored, which takes about two to three years for a short sale and five years for a foreclosure.
Some listings in prime, high-demand markets come on the market and sell quickly, leaving other sellers in the area perplexed. Why isn't their home selling? Why aren't they receiving bids from multiple buyers?
Listings that sell quickly are priced right for the market. They are homes that will work long term for the buyers, which means 10 or more years; they don't need updating; they're in move-in condition; and, they are usually located in high-demand, low-inventory neighborhoods. Buyers are waiting for these prime listings and will move quickly when they come along.
HOUSE HUNTING TIP: It's frustrating for sellers whose listings don't receive an overwhelmingly positive response, especially if they put time and money into fixing them up for sale, and they thought they priced right for the market. Motivated sellers will need to accept the probability of a longer marketing period and a lower price.
Expect low offers if your home has been on the market awhile. It's natural for buyers to try to buy a home as inexpensively as possible to cover for the possibility of a further downturn in the market. Don't take it personally; counter any offer from financially qualified buyers who make a clean offer that's not encumbered with complicated contingencies.
It may take several offers and failed attempts to find the right buyer. It isn't easy for most sellers to reach a successful closing in this market. But those who stick it out can reach their goal. Waiting to sell could net you more for your home, but it's impossible to know when that better time will arrive. The market will be volatile. Good economic news will trigger a pickup in the market. Bad news will cause buyers to pull back.
THE CLOSING: To take advantage of a pickup in the market, your home needs to be on the market or ready to go on a moment's notice.
By Dian Hymer
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.
Tuesday, November 2, 2010
Resolving price vs. location debate
Location has been touted by housing experts as the most important factor to consider when buying a home. Does this adage still hold, or has price trumped location as the most important consideration?
Historically, home values were largely dependent on location. Homes near major metropolitan centers were more coveted, and more expensive, than similarly sized homes in outlying suburban areas.
The recent frenzy of distressed homebuying activity in places like Concord in the East San Francisco Bay Area and Riverside County in Southern California raises the question of whether a fire-sale mentality has permeated the residential housing market.
Most of the foreclosure-sale activity that occurred in the fourth quarter of 2009 was speculative. Investors bought at huge discounts from peak price levels in areas that are not, by traditional standards, thought to be prime locations.
The profitability of these investments will depend on the strength of the economic recovery. To fix up and flip a foreclosure for profit depends on demand from financially qualified buyers.
Foreclosures that are fixed up to rent require tenants with jobs who can afford to pay enough to cover the investor's expenses and hopefully generate cash flow. In a strained economy with high unemployment, this can be risky proposition.
HOUSE HUNTING TIP: Although buying cheap housing may be a good strategy for some investors, buyers searching for a home they'll occupy should not let price be the primary factor influencing which home they buy.
A home that won't work for the long term is not a good deal even though it's cheap if you'll have to move again in a few years. In fact, you could lose money using this approach, particularly if home prices haven't stabilized by then.
It's also not a good idea to buy a home that's not quite right for you just to take advantage of today's low interest rates. The winning strategy for today's home buyers is to buy and hold.
The homes with qualities that are in high demand are located near a major metropolitan center or have good public transportation to get there. They are close to shops, cultural venues, restaurants, parks, and have good public or private schools close by and good public services.
The location within a neighborhood, condominium complex, or cooperative can make a big difference in value. A home on a quiet cul-de-sac generally will sell for more than one in the same neighborhood that's on a busy street. Premiums are paid for homes with views, leveled-out private backyards and good natural light.
Be wary of listings that appear to be underpriced. They could be priced low to generate multiple offers, so they might sell for more than the list price and more than you can afford to pay. Or, there could be other reasons why they are listed at a lower price.
Often the lower-priced homes in an area don't sell for more because they have incurable defects. An incurable defect is something you can't change like a shared driveway, close proximity to a freeway or an entry to the home that's two flights of stairs up from the garage.
These homes may sell well in a hot sellers' market when buyers overlook defects because prices are rising rapidly. But, these homes can be hard to sell in a down market when buyers are less forgiving and are willing to wait for the right house.
THE CLOSING: Ideally, you want to buy a home that will be in demand in any market. If you can't afford to buy one that's in move-in condition, it's better to buy a home you can afford and that needs only minor improvements than one that looks great but has an incurable defect like an unworkable floor plan.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.
Historically, home values were largely dependent on location. Homes near major metropolitan centers were more coveted, and more expensive, than similarly sized homes in outlying suburban areas.
The recent frenzy of distressed homebuying activity in places like Concord in the East San Francisco Bay Area and Riverside County in Southern California raises the question of whether a fire-sale mentality has permeated the residential housing market.
Most of the foreclosure-sale activity that occurred in the fourth quarter of 2009 was speculative. Investors bought at huge discounts from peak price levels in areas that are not, by traditional standards, thought to be prime locations.
The profitability of these investments will depend on the strength of the economic recovery. To fix up and flip a foreclosure for profit depends on demand from financially qualified buyers.
Foreclosures that are fixed up to rent require tenants with jobs who can afford to pay enough to cover the investor's expenses and hopefully generate cash flow. In a strained economy with high unemployment, this can be risky proposition.
HOUSE HUNTING TIP: Although buying cheap housing may be a good strategy for some investors, buyers searching for a home they'll occupy should not let price be the primary factor influencing which home they buy.
A home that won't work for the long term is not a good deal even though it's cheap if you'll have to move again in a few years. In fact, you could lose money using this approach, particularly if home prices haven't stabilized by then.
It's also not a good idea to buy a home that's not quite right for you just to take advantage of today's low interest rates. The winning strategy for today's home buyers is to buy and hold.
The homes with qualities that are in high demand are located near a major metropolitan center or have good public transportation to get there. They are close to shops, cultural venues, restaurants, parks, and have good public or private schools close by and good public services.
The location within a neighborhood, condominium complex, or cooperative can make a big difference in value. A home on a quiet cul-de-sac generally will sell for more than one in the same neighborhood that's on a busy street. Premiums are paid for homes with views, leveled-out private backyards and good natural light.
Be wary of listings that appear to be underpriced. They could be priced low to generate multiple offers, so they might sell for more than the list price and more than you can afford to pay. Or, there could be other reasons why they are listed at a lower price.
Often the lower-priced homes in an area don't sell for more because they have incurable defects. An incurable defect is something you can't change like a shared driveway, close proximity to a freeway or an entry to the home that's two flights of stairs up from the garage.
These homes may sell well in a hot sellers' market when buyers overlook defects because prices are rising rapidly. But, these homes can be hard to sell in a down market when buyers are less forgiving and are willing to wait for the right house.
THE CLOSING: Ideally, you want to buy a home that will be in demand in any market. If you can't afford to buy one that's in move-in condition, it's better to buy a home you can afford and that needs only minor improvements than one that looks great but has an incurable defect like an unworkable floor plan.
Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author.
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