Since the economic downturn of 2008, the real estate market has been challenging for REALTORS and buyers and sellers. For those who have cash for a home purchase, or can obtain a mortgage, there has never been a better time to buy property. Real Estate is, and will remain for some time, a buyer’s market.
Sellers are still adjusting to this shift, and need to be realistic about what this means when they are preparing their home for the market Dallas Home Buyers.
I am going outline both the home buyer and home seller perspectives in this article so that both sides can gain a clearer view of the tenor of the present market.
Home Buyers: What are They Looking for in the Current Real Estate Market?
Since buyers are now a select group with sample choices, they can afford to be picky about the properties they purchase. Today, I find that many of my buyers want to walk into instant equity in the home they purchase. There are opportunities to buy short sales or foreclosed properties where the purchaser can walk into equity – providing the property is in good shape. Most of the time these types of home purchases will need updates and / or repairs.
Home buyers wishing to obtain ‘instant equity’ in a home purchase needs to prepare themselves in two ways. First, a down payment of 5-20% will be required depending on the type of loan they qualify for. Home buyers also need to make certain their credit scores are high enough to obtain lending approval.
Those buyers who prefer to purchase properties that are not bank owned will want to make that purchase based on a current appraised value. A savvy home buyer will look for a property in pristine conditions. This type of buyer will most likely expect to move in and not have to perform any work on the property. These types of expectations are especially true for real estate purchases where individuals are downsizing from larger to smaller homes.
Even though some states may not require it, buyers will insist upon home inspections before purchase. I advise my home buyers not to get too caught up on the cosmetics of a property (i.e. rugs need to be replaced, holes in the dry wall, wood rot on the railing). These minor issues with a home are easily fixable. I encourage home buyers to focus on structural integrity of the home instead. This means the plumbing, electric, heating, air conditioning and roofs must be in good condition. These aspects of a home affect the integrity of the property, and require time consuming and costly repairs. Remember that some FHA and VA loans will not approve mortgages unless the home is structurally sound.
Nowadays, home buyers cannot count on owning a home and selling it a year or two later. A home purchaser should plan on owning the property for three years or longer, even if it has to be turned into a rental property. Today’s real estate purchaser has many more demands than a buyer did three or more years ago.
Home Sellers: It’s Time for a Reality Check
On properties for sale where I am the listing agent, I advise my sellers to return to the traditional strengths of a property. If a seller truly wants to sell, he or she must evaluate current pricing, location and condition.
Pricing a Property for Sale
There is no doubt about it: price is the defining criterion of real estate transactions today. Most cities and counties have raised assessments over the past five years. Presently, these assessments are often equivalent to current appraised values. This is not good news for many property owners, who have lost equity in their home.
In many real estate markets, short sales and foreclosures are sold near the property listed, and appraisers have to use these comparable sales in approximating the value of a home. Sellers should NOT be surprised if an agent asks them to price their property below the current assessed values. Fulfilling this pricing request will be necessary if there are multiple foreclosures or distressed properties in their neighborhood or homeowners have sold their properties at lower than market value out of necessity.
When I ask a home seller to lower his or her price, he or she is often inclined to take this personally. It is just like I told the seller, his or her children are ugly and the grandchildren will be ugly, too. Home sellers: it is time for a reality check. Don’t take the suggestion to lower a selling price personally! I know when a house is priced correctly because there is a peak in interest measured by an increase in inquiries and showings. If a home has been on the market for three months or more, and it hasn’t been shown, it is probably overpriced.
Selling a Home in a Convenient or Popular Location
Don’t over improve a home for the neighborhood. Home sellers must remember this cardinal rule of real estate: your home does not need to be the biggest and best, but it is certainly beneficial to be around the biggest and best. If a property is close to a metropolitan area.