When I list a home for sale, one of the first questions I am asked it how fast their home will sell. It’s no secret that an overpriced home takes longer to sell and perhaps less that the market value. In a high demand market, a correctly priced home could sell within 10 to 21 days.
What Makes a House Sell Quickly?
Sometimes there is no logical reason for the length of time it takes to sell a house. It could be sheer luck as in “right place, right time.” A house could come on the market on the very day a specific buyer is looking to buy. However it is more likely, how long it takes depends on three factors:
Price range makes a difference. Lower price ranges sell faster than higher price ranges simply because there are more buyers who can afford these homes. Before I list a home, I do a thorough market analysis of the homes (active and sold) in your area to determine a correct price range.
Location, location, location! It is true – if a home is located in a high demand neighborhood, there will be more demand for the home. If it’s located on the wrong side of the tracks near a toxic dump, it might never sell.
Homes in great shape that are clean and up to date sell much faster than homes that need repairs or are cluttered.
Market Determines How Long it takes a House to Sell
In seller’s markets, homes tend to sell faster because there are fewer sellers and more buyers. When you have multiple buyers trying to buy the same home it can result in a bidding war with offers above list price. It’s not unusual for a home to sell in a seller’s market in less than a week.
In buyer’s markets, buyers have more choices and can take their time. If the home isn’t exactly what they want, a buyer will pass on it and keep looking. If you are a seller in a buyer’s market, patience is key.
Summer is here and a new crop of buyers are shopping for a new home—Are you one of them? If so, you want to be well prepared to get that home you have always wanted.
“Pre-qualified” sure sounds good, but in fact, it doesn’t ensure that homeowners or realtors will consider your offer. Getting “pre-approved” for a bank loan will signal to an informed seller that your offer is within your means and should be given serious consideration which can tip things in your favor in a tight housing market. Pre-approval is more difficult now than in the past, so, beginning the process early allows you to be prepared to make an offer that will be considered seriously when you find your dream property.
When signing mortgage papers, get any help needed to understand what you are agreeing to, including all of the terms, closing costs, and fees. Take the time to understand the difference between the various types of mortgages including fixed rates, adjustable rates and balloon payments as well as the benefits and costs of different loan terms such as 15 and 30 year mortgages. Also, be sure to explore if you qualify for discounts or credits based on income, being a first-time buyer, or a veteran.
Higher credit scores garner lower mortgage rates and monthly payments. Financial experts recommend reviewing your credit report to identify and remedy any erroneous entries prior to making major purchases to ensure you attain the highest credit score possible. In addition, since applying for credit can lower your credit score, prospective home buyers should avoid applying for additional credit during the year prior to buying (and through closing) your new property. Credit scores of 750 and above often get the best rates, and while you can get a mortgage loan with scores below 650, you will generally have higher costs. A little planning and preparation can reap significant financial rewards.
Know Your Budget
A safe “rule of thumb” for mortgage payments is that it should not exceed 28% of your gross monthly income. This ensures you have enough discretionary income available for upkeep, maintenance, and insurance. Buying within your means will also help in the event of any unforeseen circumstances. While plenty of lending institutions are willing to give you a higher mortgage, be mindful of all the costs of owning your home, your other financial commitments as well as the cost of pursuing your hobbies and interests.
Online calculators can help you estimate monthly payments on homes you are considering, and you can see how those payments compare to your current payments. If you plan on buying a home with larger payments than you pay now, think about putting the difference into a savings account each month to confirm the higher payments are realistic. An added benefit is these funds will be available to apply toward a down-payment or closing fees when you are ready to purchase your new property.
Location, Location, Location
Decide where you want to live, both in terms of general areas and specific geographic requirements. This is as important as the actual house you buy, it will affect your commute, schools, your neighbors, and where you shop and do business. This preparation might be more difficult if you come from further away, however, a real estate agent who gets to know you will help steer you in the right direction. Some locations have specific issues – parking, grounds fees, or other specifics that come with living in a certain locale and a realtor that knows your desires will be able to evaluate any issues accordingly when searching for properties.
You can build your knowledge of an area by reading the local newspaper, visiting local stores and schools, dining at local restaurants, and shopping at a local supermarket.
When do you want to move? Often, buying a home is a game of hurry up and wait — except when it’s not. Sometimes buyers or sellers want to move quickly, and want expedite the process. Be up front with your moving schedule, and willingness/ability to be flexible. While you may or may not be able to impact the schedule, the more prepared you are with the logistics of the sale; the better off you will be in the long run. Paperwork takes time, and depends on how fast the bank and other institutions move, and how much additional information is needed. Following up with lenders, escrow officers, and your agent can be critical to ensure that documents move through the system in a timely fashion.
Timing affects moves in multiple ways, from the moving of possessions, to completing repairs, to enrolling in schools. Moving on the fly can cost more than those with a little planning. Establish a timeline. If you plan in advance for the home purchase and for the actual move, you gain time to shop around for the best deals on everything from mortgages to moving vans. Additionally, advanced planning and research enables you to move faster on things if you need to move up closing dates or shift schedules for any reason.
Terms of Endearment
Are the terms that you agree to going to work for you? Negotiate terms you can love as you finalize the sale/purchase of a home. While everything might not be exactly what you want, know the terms you are agreeing to. If you compromise in one area, you might be able to use that compromise to get something in another area.
For example, if the owner needs extra time in the home after closing, and you don’t have to move right away, you can agree to a rental agreement so that they can stay a bit longer while you are orchestrating your own move. In exchange, you might let them know that you will be having some repairs made while they are renting and before you move in. This can all be spelled out in the terms of sale.
How Handy are You?
Biting off more than you can chew with a fixer-upper can come back to haunt you in the end. Properties that require extensive work might also require more time and money for the move, and any building permits you might need to get. Purchasing a home in good repair or one in which the seller has recently replaced the roof, carpets, and flooring may come with a higher price, but it might still be worth it if you don’t intend to make those repairs yourself.
On the other hand, if you want your home to be your new project, come prepared with what it will take accomplish various tasks in your new area. Doing some things in climates that differ from your own might surprise you — projects that include roofing, heating and cooling can differ substantially between regions.
If you purchase a home with remodeling in mind, take a cursory look into permits before assuming that you can do what you want to. The permitting issues of communities and towns, time-frames around getting those permits and inspections, and costs involved, can all vary. Be certain that the permissions needed for the desired improvements are within your budget and schedule, on top of the cost of materials and labor. There might also be special restrictions if this is in an apartment or community.
It isn’t every day that you shop for a home, but when we do, its best to do it with us much knowledge and preparation as possible. Doing your homework can be daunting and challenging, but on that closing date, you’ll be glad you followed through and got the best home you could get.
Agents often argue that in our digital world, open houses are a waste of time. The majority of people who attend are nosy neighbors, ‘looky-loos,’ or other types of tire-kickers. Instead, their argument goes, serious buyers today don’t want to wait for an open house. When someone likes a home’s online photos, he or she will make an appointment to see the property during the week. So is it time to close the book on open houses? Not at all.
Why our parents needed open houses
A generation ago, the Internet, with its virtual tours, high-resolution photos and online floor plans, didn’t exist. Our parents relied on real estate agents to preview properties for them or to present them with the basic details of homes to consider: how many bedrooms and bathrooms, in which school district, on how much land, and so on. Buyers needed to get inside of as many homes as possible to learn the market and identify what would work for them — and not work. Today, buyers can easily vet potential homes by looking at photos and floor plans online through Zillow or using tools like Google Street View. But there’s only so much you can glean from that. By visiting a home, you can see how the online floor plan actually looks in the ‘real’ world. You can see details you’d probably miss looking at photos. You can get a feel for the property and compare your reactions to the home to others you’ve visited.
People can turn into serious buyers through open houses
Serious buyers don’t materialize in a puff of smoke; they become serious over time. Many spend a good deal of time looking at properties online or at open houses on their own before even engaging an agent. They spend months or even a year actively looking with their agents. Buyers need to become educated about the market, the types of homes available in their area, as well as what to expect in their price range. Open houses give buyers a no-pressure environment in which to deepen their education about the local market, so they can make a more informed decision. A buyer may use an open house as a first showing of the property. But when buyers become serious about a home, an open house provides them another opportunity to spend time in the home, to get to know it better, without the confines of a 15-minute private appointment.
The convenience factor
Open houses are also a lot more convenient for the seller. Rather than having to clean the home and vacate it 10 times during the week, a Saturday or Sunday open house allows as many people as possible to take their time and view the home thoroughly. While a lot has changed in real estate in the past decade, open houses are a tradition that still makes a lot of sense. If nobody held open houses, buying and selling homes would be quite different. The same listing agents who complain about open houses would be frustrated by having to constantly run around town, showing properties to buyers who probably aren’t serious. Sellers would have to live on eggshells 24/7 to accommodate countless private appointments. If nothing else, open houses can help weed out the tire kickers so that when you make an appointment to show your home, chances are it’s with a serious buyer.
Open houses help sellers gauge the market’s response
Opening up your house to the masses is the best way to get a feel for how the market responds to your home. A good listing agent will want to see as many buyers come through as possible to gauge their reactions to the home. Are people walking in and out quickly? Or are they hanging around? What questions are they asking? What are their biggest hang-ups or concerns? This is the kind of valuable information you can’t get online. Ultimately, the same reasons for holding an open house 40 years ago are the same reasons you should do it today. In a sense, it’s like going to the movies. Sure, you can download or stream movies at home to your heart’s content. But there’s something about seeing a movie on a big screen, in a theater full of people, that will always make the experience richer and more meaningful.
Zillow Blog, by Brendon Desimone
Have you ever wondered what it is like to be in a reality TV show? My clients, Kyle and Tasha Johnson and sister Shayna Simmons and I had that opportunity on the cable television network TLC’s show My First Home! This 30-minute show follows potential home buyers through the emotional highs and lows of trying to buy their first home. What was the experience like? In the TV and movie business you really do hurry up and wait while the crew sets up the cameras and lights. The “stars” are responsible for several changes of clothes during filming every day. The episode called “Three’s A Crowd?” will be broadcast May 3rd at 12:30 p.m. Pacific time on TLC. Tune in to find out more about the show, contact me for more answers to your questions, watch a sneak peek at goo.gl/uHhyby, or better yet attend the Minnesota premier of the event on May 10th. Contact me for event information.