6 Reasons Why Selling Your House on Your Own Is a Mistake
- Your Safety Is a Priority
Your family’s safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings, but your family’s health and well-being too.
- A Powerful Online Strategy Is a Must to Attract a Buyer
Recent studies from NAR have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumped to 93%. Today, those numbers have grown exponentially.
- There Are Too Many Negotiations
Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:
- The buyer, who wants the best deal possible
- The buyer’s agent, who solely represents the best interest of the buyer
- The inspection companies, which work for the buyer and will almost always find challenges with the house
- The appraiser, if there is a question of value
As part of their training, agents are taught how to negotiate every aspect of the
real estate transaction and how to mediate the emotions felt by buyers looking
to make what is probably the largest purchase of their lives.
- You Won’t Know if Your Purchaser Is Qualified for a Mortgage
Have a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment.
- FSBOing Has Become More Difficult from a Legal Standpoint
The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
- You Net More Money When Using an Agent
Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.
A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure.
The more buyers that view a home, the greater the chance a bidding war will take place.
People often ask if now is a good time to buy a home, but nobody ever asks when a good time to rent is. Regardless, we want to make certain that everyone understands that today is NOT a good time to rent.
The Census Bureau recently released their 2017 first quarter median rent numbers. Here is a graph showing rent increases from 1988 until today:
As you can see, rents have steadily increased and are showing no signs of slowing down. If you are faced with making the decision of whether or not you should renew your lease, you might be pleasantly surprised at your ability to buy a home of your own instead.
One way to protect yourself from rising rents is to lock in your housing expense by buying a home. If you are ready and willing to buy, meet with a local real estate professional who can help determine if you are able to today!
Blog Via Keeping Current Matters
With housing prices appreciating at levels that far exceed historical norms, some are fearful that the market is heading for another bubble. To alleviate that fear, we just need to look back at the reasons that caused the bubble ten years ago.
Last decade, demand for housing was artificially propped up because mortgage lending standards were way too lenient. People that were not qualified to purchase were able to obtain a mortgage anyway. Prices began to skyrocket. This increase in demand caused homebuilders in many markets to overbuild.
Eventually, the excess in new construction and the flooding of the market with distressed properties (foreclosures & short sales), caused by the lack of appropriate lending standards, led to the housing crash.
Where we are today…
1. If we look at lending standards based on the Mortgage Credit Availability Index released monthly by the Mortgage Bankers Association, we can see that, though standards have become more reasonable over the last few years, they are nowhere near where they were in the early 2000s.
2. If we look at new construction, we can see that builders are not “over building.”Average annual housing starts in the first quarter of this year were not just below numbers recorded in 2002-2006, they are below starts going all the way back to 1980.
3. If we look at home prices, most homes haven’t even returned to prices seen a decade ago. Trulia just released a report that explained:
“When it comes to the value of individual homes, the U.S. housing market has yet to recover. In fact, just 34.2% of homes nationally have seen their value surpass their pre-recession peak.”
Mortgage lending standards are appropriate, new construction is below what is necessary and home prices haven’t even recovered. It appears fears of a housing bubble are over-exaggerated.
Is 2017 the Year to Move Up to Your Dream Home? If So, Do It Early!
If you are considering moving up to your dream home, it may be better to do it earlier in the year than later. The two components of your monthly mortgage payment (home prices and interest rates) are both projected to increase as the year moves forward, and interest rates may increase rather dramatically. Here are some predictions on where rates will be by the end of the year:
“While full employment and rising inflation are signs of a strong economy, they also have the potential to push mortgage rates and house prices up. The higher rates and higher prices create significant affordability concerns, which may continue to characterize the housing market for the rest of 2017.”
“By the time we get to the fourth quarter of this year, we will still be under 5 percent – we are thinking 4.7 percent…Something north of 5 percent by the time we get to 2018, and by the time we get to 2019, we show fourth-quarter rates hitting 5.5 percent.”
“Despite some regional disparities, title agents and real estate professionals do not expect increasing mortgage rates to have a significant impact on the housing market this spring. Continued good economic news, increasing Millennial demand and confidence that buyers will remain in the market even if rates exceed 5 percent bode well for 2017 real estate.”
“We will probably see rates higher at the end of year, around 4.5%.”
If you are feeling good about your family’s economic future and are considering making a move to your dream home, doing it sooner rather than later makes the most sense.
There are some experts questioning whether the current pace of residential home sales is maintainable. Are too many people buying homes like in 2004-2006? Are we headed for another housing crisis? Actually, if we look closely at the numbers, we can see that we are looking at a very healthy real estate market.
Why the concern?
Some are looking at the last four years of home sales and comparing them to the three years just prior to the housing bubble. Looking at the graph below, we can understand that thinking.
However, if we go further back in history, we can see the real picture. After taking out the “boom & bust” years, the pace of sales is growing at quite a natural pace.
And new home sales are way below historic numbers. Dave Liniger, Re/Max CEO explains:
“We expect a seasonal uptick in sales this time of year and March certainly met and somewhat exceeded that expectation. We don’t anticipate the tightening inventory to ease up in most markets until new home construction can catch up to its pre-recession pace. Until then, sellers will enjoy a fast-paced market and buyers will need to work with their agents to get in the right home.”
The current pace of residential home sales definitely seems maintainable.
Who’s Mortgage are you Paying?
It is important to realize that unless you are living rent-free with your parents, you are paying a mortgage. Either your own or your landlord’s.
If you are serious about your finances you should certainly own your own home. Owning your home will not make your rich over night. When renting you are paying someone else’s mortgage and making someone else rich.
As a home owner, your mortgage payment is a form of “forced savings”. This allows you to build equity in your home that can be used later in life. When renting, you are guaranteeing the landlord as the person with that equity.
Another benefit of owning your home is that with a fixed rate mortgage, you will have the certainty & stability of knowing what your mortgage payment will be for the next 30 years unlike rents rates which are continuing to rise.
Whether you are looking for a primary residence for the first time or are considering purchasing a second home, now is the time to buy!
How does an interest rate change affect you?
$1,000 Payment 30 year Loan
3.5% loan amount – $222,200
4.5% loan amount – $197,400
1% Change in rate is a 10% change in buyer’s price!
Interest rate history for past several months
1st Quarter 2016 – 3.6%
2nd Quarter 2016 – 3.6%
3rd Quarter 2016 – 3.4%
4th Quarter 2016 – 3.9%
1 Quarter 2017 – 4.2%
Stats that prove the Real Estate Market is Getting Stronger
Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade.
Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape.
- Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006.
- The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.
- Home prices are well within historic norms. Prices have increased substantially over the last several years; however, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels for 1987-1999.
- Demand for housing, as measured by new household formations, is growing. The Urban land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market.
Greenville Pitt Association of Realtors
2012 Compared to 2013
Listing Price Average $143,750 $143,334
Selling Price Average $134,248 $136,815
List to Sell Percentage 94% 96%
Average Days of the Market 170 156
Summary – Average Sales price increased 1.5% from 2012 to 2013
The Average Sales price to list price in 2012 was 94%. This increased in 2013 to 96%.