Realty Executives Midwest
In today’s booming housing market, sellers have their pick of home offers. According to a study by Realtor.com, the median home listing price is up 15.6% compared to last year.
Now, more than ever, sellers have a chance to get more money for their homes. And while this is great for sellers, it leaves buyers asking: “How can I stand out in such a competitive market?”
One way buyers can stand out is with their offer. This isn’t the market for low offers, which is why buyers may think the only option is putting in a high offer. This often means going above the listing price. But what happens when the seller accepts that high offer and the home appraisal comes in far lower?
Before purchasing a house, a buyer’s lender will hire an appraiser to appraise a home. The goal of an appraisal is to ensure the price of the home matches or exceeds the home’s listing price. If it does, everything is fine. But if it doesn’t, things can get complicated.
If the appraisal is lower than the home’s price, a lender won’t approve the loan for that amount. For example, if the listing price is $300,000 but it appraisers for $250,000, the buyer now has to come up with the difference.
There are several reasons why a home with a high price tag might not appraise for as much. For one, bidding wars (like the ones we’re currently seeing) can cause listing prices to skyrocket, even if the home isn’t necessarily worth the price.
With that said, if the appraisal comes in too low, you have a few options:
How to avoid paying more?
Buyers should consider adding an appraisal gap coverage clause in their offer. To put it simply, appraisal gap coverage is when a buyer agrees to cover a certain amount of the difference between the offer price and the appraisal value – if, in fact, there’s an appraisal gap.
For example, let’s say you offer $200,000 on a home. In your appraisal gap coverage clause, you could say you’re willing to pay $10,000 over the appraised value. If the appraised value ends up being equivalent to the listing price, you don’t have to pay any extra money. But if the appraised value is under, be prepared to come to the table with more money.
The benefit of having an appraisal gap coverage clause is it shows the seller you’re serious about purchasing the home, without you having to offer an obscene amount of money. It also provides you with the option to cancel the contract, if there’s an appraisal gap.
Article Source: HousingWire
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Vacation Home Sales Surge During COVID-19 Pandemic
In the months after COVID-19 hit the United States, vacation home sales shot up, likely the combined result of low-interest rates, a desire to escape amid social distancing and lockdown, and an unprecedented ability to work from anywhere.
It’s part of a major cultural shift around work and homebuying in the United States. For real estate agents working in hot vacation home markets, it’s been a busy year.
“Now that people have that opportunity to work remotely, I think they’re really considering where they want to spend most of their time,” said Bethany Martinez, a Broker Associate and head of The Bemar Team at RelatedISG, a real estate firm in South Florida.
“That’s what I’m seeing. I’m seeing people come down here and say, ‘I can live in South Florida for six months out of the year, three months out of the year, because I can work from anywhere.’”
Pandemic Boost
In mid-2020, vacation home sales began to outperform total existing home sales, the result of “a pandemic boost,” the National Association of REALTORS® says. An estimated 109,100 homes intended for vacation use were sold in 2020 from July to September compared to 75,600 vacation homes sold during that same period in 2019, a 44% increase year over year. In comparison, total existing-home sales during July-September rose 13% year over year (1.72 million in 2020 vs. 1.52 million in 2019).
“The pandemic and low mortgage rates have increased the desirability and affordability of owning a vacation home,” NAR says in a blog discussing the data. “Buyers may be desiring a vacation home as a weekend getaway as urban-based leisure activities are still constrained by social distancing.
The ability to work from home means buyers who can work from home can spend more time at and enjoy their vacation home. Historically low mortgage rates have also made a home purchase more affordable while rising prices in past years have yielded larger home equity gains that can be tapped (through, say, a home equity loan) to use for a down payment.”
Vacation homes also sold more quickly than they had in the past. Of second homes where the sale closed during July-September 2020, 58% sold within one month, NAR says. That echoes a nationwide trend caused by low inventory: 71% of existing homes that closed in September were on the market for less than one month.
Vacation Homes & Rentals
Martinez also noted that an increasing number of people are interested in buying a second home that they can rent out while they’re away.
“They’re not just looking for themselves anymore,” she said. “They’re also looking for our advice to educate them on, ‘Well, if I want to own a home in South Florida, what do you think is the best area that I could rent out while I’m away?’”
Advising clients on buying a second home that they plan to rent out requires in-depth local knowledge, including knowing which cities or condo associations have restrictions on rentals from sites like Airbnb, Martinez said.
For example, the area where she works is especially condo-heavy, “so, we know what the rules and regulations are with condos,” she said. “We can already tell you, if you’re looking to rent this out short-term, 90% of the condos are not going to work.”
That’s why she has a list of condo associations that allow monthly or daily rentals.
“The legwork has already been done, because it helps save us time, too, when we’re working with clients,” she said.
When she’s working with a buyer, Martinez focuses on helping them find a home that will give them the lifestyle they’re seeking.
“South Florida is very, very large — there’s Miami-Dade County, there’s Broward County, there’s West Palm, there are so many parts to it, there are suburbs, there are cities,” she said. “So, it’s really just seeing like, ‘With the money that you want [to spend] and the lifestyle you want to live, where can I position you in South Florida, and how will that affect your lifestyle? Is it going to take you 10 levels up from where you are now, or maybe not?’ ... But when it comes to an investment standpoint, it’s an easy sale.”
Working in a Hot Vacation Home Market
Real estate agents who want to work with vacation homes should start by looking at what’s already happening in their city, Martinez says.
She recommends using tools such as AirDNA, which provides vacation rental data, to research your area. She also browses vacation rental websites such as Airbnb or Vrbo to see which areas are popular and how much it costs to rent properties there.
“It’s not rocket science, it’s just kind of learning what’s out there and getting familiar with the inventory,” she said. “If you know that there’s a really hot neighborhood located next to a city, or maybe a place where people like to go camping, and you see that people are already doing vacation rentals there, you can start marketing those areas.”
Above all, she encourages real estate agents to take advantage of new opportunities.
Part of her business is fixing and flipping properties to sell, and at one point, she had several properties that just weren’t selling for the price that she wanted.
“One of those properties ended up turning into an Airbnb property and now is generating so much income,” she said. “Right now, we’re in a low-inventory phase, so houses are selling like crazy. But at one point, we weren’t this busy, and there was a lot of opportunity for houses that maybe couldn’t sell but could be rented out as short-term vacation properties… It’s just always looking at the opportunity in things, and being able to create opportunity, even when there is none.”
We couldn’t have said it better ourselves — so get out there, do your research, and you too could turn your local vacation home market into your next real estate niche.
Article Source: The CE Shop
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Today’s housing market is full of unprecedented opportunities. High buyer demand paired with record-low housing inventory is creating the ultimate sellers’ market, which means it’s a fantastic time to sell your house. However, that doesn’t mean sellers are guaranteed success no matter what. There are still some key things to know so you can avoid costly mistakes and win big when you make a move.
When inventory is low, like it is in the current market, it’s common to think buyers will pay whatever we ask when setting a listing price. Believe it or not, that’s not always true. Even in a sellers’ market, listing your house for the right price will maximize the number of buyers that see your house. This creates the best environment for bidding wars, which in turn are more likely to increase the final sale price. A real estate professional is the best person to help you set the best price for your house so you can achieve your financial goals.
Today, homeowners are living in their houses for a longer period of time. Since 1985, the average time a homeowner owned their home, or their tenure, has increased from 5 to 10 years (See graph below):
This is several years longer than what used to be the historical norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you purchased or the house where your children grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from that sentimental value.
For some homeowners, that connection makes it even harder to separate the emotional value of the house from the fair market price. That’s why you need a real estate professional to help you with the negotiations along the way.
We’re generally quite proud of our décor and how we’ve customized our houses to make them our own unique homes. However, not all buyers will feel the same way about your design and personal touches. That’s why it’s so important to make sure you stage your house with the buyer in mind.
Buyers want to envision themselves in the space so it truly feels like it could be their own. They need to see themselves inside with their furniture and keepsakes – not your pictures and decorations. Stage, clean, and declutter so they can visualize their own dreams as they walk through each room. A real estate professional can help you with tips to get your home ready to stage and sell.
Today’s sellers’ market might be your best chance to make a move. If you’re considering selling your house, reach out to a local real estate professional to help you navigate through the process and prioritize these key elements.
Article Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
One of the biggest questions in real estate today is, “When will sellers return to the housing market?” An ongoing shortage of home supply has created a hyper-competitive environment for hopeful buyers, leading to the ultimate sellers’ market. However, as the economy continues to improve and more people get vaccinated, more sellers may finally be in sight.
The Home Purchase Sentiment Index (HPSI) by Fannie Mae recently noted the percentage of consumer respondents who say it’s a good time to sell a home increased from 61% to 67%. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, indicates:
“Consumer positivity regarding home-selling conditions nearly matched its all-time high.” (See graph below):
Fannie Mae isn’t the only expert group noticing a rise in the percentage of people thinking about selling. George Ratiu, Senior Economist at realtor.com, shares:
“The results of a realtor.com survey . . . showed that one-in-ten homeowners plans to sell this year, with 63 percent of those, looking to list in the next 6 months. Just as encouragingly, close to two-thirds of sellers plan to sell their homes at prices under $350,000, which would offer a tremendous boost to affordable housing for first-time buyers.”
If you’re considering selling your house, don’t wait for more competition to pop up in your neighborhood. Contact a local real estate professional today to explore the benefits of selling your house now before more homes come to the market.
Article Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year. In fact, Google reports that the search for “When is the housing market going to crash?” has actually spiked 2450% over the past month.
In addition, Jim Dalrymple II of Inman News notes:
“One of the most noteworthy things that came up in Inman’s conversations with agents was that every single one said they’ve had conversations with clients about whether or not the market is heading into a bubble.”
To alleviate some of these concerns, let’s look at what several financial analysts are saying about the current residential real estate market. Within the last thirty days, four of the major financial services giants came to the same conclusion: the housing market is strong, and price appreciation will continue. Here are their statements on the issue:
“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. … consumer surveys indicate that household buying intentions are now the highest in 20 years. … As a result, the model projects double-digit price gains both this year and next.”
“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”
“There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”
If you’re concerned about making the decision to buy or sell right now, contact your trusted real estate professional to discuss what’s happening in your local market.
Article Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Realty Executives agents are real estate experts. They have the education and expertise you need to navigate through the process of buying or selling a home. From listing at the right price to making the best offer, our Executives have witnessed the best - and most regrettable - decisions homeowners and homebuyers can make. Every day, they are immersed in every aspect of real estate that includes comparable home price analysis, property surveys, credit reports, open houses, HOA agreements, lenders, title companies, homeowners’ insurance, walk-throughs, terms of sale or purchase, repairs, concessions and closing documents. Let our accomplished Executives help navigate you through the process of buying or selling a home.
