5 Steps to Finding Your Next Home

5 Steps to Finding Your Next Home

Whether you’re a first-time buyer or a seasoned homeowner, shopping for a new home can feel daunting. In fact, 56% of buyers said that “finding the right property” was the most difficult step in the home buying process.1

Buying a home is a significant commitment of both time and money. And a home purchase has the power to improve both your current quality of life and your future financial security, so the stakes are high.

Follow these five steps to assess your priorities, streamline your search, and choose your next home with confidence.

STEP 1: Set Your Goals and Priorities

The first step to finding your ideal home is determining WHY you want to move. Do you need more space? Access to better schools? Less maintenance? Or are you tired of throwing money away on rent when you could be building equity? Pinpointing the reasons why you want to move can help you assess your priorities for your home search. 

Don’t forget to think about how your circumstances might change over the next few years. Do you expect to switch jobs? Have more children? Get a pet? A good rule of thumb is to choose a house that will meet your family’s needs for at least the next five to seven years.Be sure to set your goals accordingly.

 

STEP 2: Determine Your Budget

Many financial professionals recommend following the “28/36 Rule” to determine how much you can afford to spend on a home. The rule states that you should spend no more than 28% of your gross monthly income on housing expenses (e.g., mortgage, taxes, insurance) and a maximum of 36% of your gross monthly income on your total debt obligations (i.e., housing expenses PLUS any other debt obligations, like car loans, student loans, credit card debt, etc.).3

Of course, the 28/36 rule only provides a rough guideline. Getting pre-qualified or pre-approved for a mortgage BEFORE you begin shopping for homes will give you a much more accurate idea of how much you can borrow. Add your pre-approved mortgage amount to your downpayment to find out your maximum purchasing potential.

STEP 3: Choose a Location

When it comes to real estate, WHERE you choose to buy is just as important as WHAT you choose to buy.

Do you prefer a rural, urban, or suburban setting? How long of a commute are you willing to make? Which neighborhoods feed into your favorite schools? These decisions will impact your day-to-day life while you live in the home.

Another important factor to consider is how the area is likely to appreciate over time. Choosing the right neighborhood can raise the profit potential of your home when it comes time to sell. Look for communities that are well maintained with high home-ownership rates, low crime rates, and access to good schools, desired retail establishments, and top employers.4

 

STEP 4: Decide Which Features You Need (and Want) in a Home

Start with the basics, like your ideal number of bedrooms, bathrooms, and square footage. Do you prefer a one-story or two-story layout? Do you want a swimming pool?

Keep in mind, you may not find a home with all of your “wants,” or even all of your “needs” … at least not at a price you can afford. The reality is, most of us have to make a few compromises when it comes to buying a home.

Some buyers will opt for a longer commute to get a larger, newer home in the suburbs. Others will sacrifice hardwood floors or an updated kitchen so that their kids can attend their desired school. 

If you’re faced with a tough choice about how or what to compromise in your home search, return to STEP 1. What were your original goals and motivations for moving? Reminding yourself of your true priorities can often provide the clarity that you need.

 

STEP 5: Meet with a Real Estate Agent

A good real estate agent can remove much of the stress and uncertainty from the home search process. From setting goals to securing a loan to selecting the best neighborhood to meet your needs, we will be there to assist you every step of the way.

And no one has more access to home listings, past sales data, or market statistics than a professional agent. We can set up a customized search that alerts you as soon as a new listing you might like goes live. Better yet, we get notified about many of the hottest homes even BEFORE they hit the market.

You might guess that the VIP service we provide is very expensive. Well, the good news is, we can represent you throughout the entire home buying process at NO COST to you. It’s true; the home seller pays a buyer agent’s fee at closing. So you can benefit from our time, experience, and expertise without paying a dime. It’s no wonder 87% of buyers choose to purchase their home with the help of an agent.1

And although we’ve listed it here as STEP 5, the reality is, it’s never too early (or too late) to contact an agent about buying a home. Whether you plan to buy today, next month, or next year, there are steps you can (and should) be taking to prepare for your purchase.

Call us today to schedule a free consultation!

 

The above references an opinion and is for informational purposes only.  It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

 

Sources:

  1. NAR 2019 Home Buyers & Sellers Generational Trends Report – https://www.nar.realtor/sites/default/files/documents/2019-home-buyers-and-sellers-generational-trends-report-08-16-2019.pdf
  2. Architectural Digest – https://www.architecturaldigest.com/story/this-is-how-long-you-should-live-in-your-house-before-selling-it
  3. Investopedia – https://www.investopedia.com/terms/t/twenty-eight-thirty-six-rule.asp
  4. Money Talks News – https://www.moneytalksnews.com/20-clues-youre-buying-home-the-right-neighborhood/

Everything You Need to Know About iBuyers

Understanding iBuyers and Instant Cash Offers

Technology is changing the way we do almost everything, and real estate transactions are no exception. In fact, a new crop of tech companies wants to revolutionize the way we buy and sell homes. iBuyer startups like Opendoor, Offerpad, and Properly are rapidly expanding into new territories, and now established players, like Zillow, are starting to get in on the action. Also known as Direct Buyers, these companies use computer algorithms to provide sellers with a quick cash offer to buy their home. While the actual market share of iBuyers remains small, their big advertising budgets have helped create a noticeable buzz in the industry. This has left many of our clients curious about them and how they work. In this article, we explain their business model, weigh the pros and cons of working with an iBuyer, and share strategies you can use to protect yourself if you choose to explore this new option to buy or sell your home.

FIRST, HOW DOES THE iBUYER PROCESS WORK? While each company operates a little differently, the basic premise is the same. A seller (or seller’s agent) completes a brief online form that asks questions about the size, features, and condition of the property. Some also request digital photos of the home. The iBuyer will use this information to determine whether or not the home fits within their “buy box,” or set of criteria that matches their investment model. They are generally looking for houses they can easily value and “flip.” In most cases, their ideal property is a moderately priced, single-family home located in a neighborhood with many similar houses. The property shouldn’t require any major renovations before listing.1 These qualities make it easier to assess value (lots of comparable sales data) and help to reduce risk and minimize carrying costs. Once the iBuyer has used their algorithm to determine the amount they are willing to pay, they will email an offer to the seller, usually within a few days. The offer should also disclose the company’s service fee, which is typically between 7% and 12% of the purchase price.2 If the seller accepts, an in-person visit and inspection are scheduled. The iBuyer will ask for a reduction in price to cover any defects they find during the process. Once the sale closes, they will make the necessary updates and repairs and then resell the home on the open market.

WHAT ARE THE PROS AND CONS OF SELLING TO AN iBUYER? Of course, the biggest benefit of selling your home to an iBuyer is convenience. For some homeowners, the stress and disruption of preparing and listing their home can feel overwhelming. And what busy family with kids and pets wouldn’t want to skip the hassle of keeping their house “show ready” for potential buyers? Additionally, many sellers like the predictability of a cash buyer and the flexibility to choose their closing date. However, this added convenience does come at a cost. An iBuyer is an investor looking to make a profit. So their purchase offer is usually below true market value. When you tack on service fees of up to 12% and deductions for updates and repairs, studies show that sellers who work with iBuyers net a lower amount than those that list the traditional way.3 In fact, a MarketWatch investigation found that transactions involving iBuyers net the seller 11% less than if they would have sold their home with an agent on the open market.2

WHAT ARE THE PROS AND CONS OF BUYING FROM AN iBUYER? Buying a home from an iBuyer is a lot like buying a home from any investor. The pros are that it’s usually clean, neutral, and moderately updated. You’ll often find fresh paint and modern finishes. And because it’s uninhabited (no one is living there), you don’t have to work around a seller’s schedule to see the home. However, there are some pitfalls to avoid when working with iBuyers. Speed is of the essence, so sometimes the renovations are rushed and the quality can suffer. Also, their investment margins don’t leave much room for negotiating a price reduction or additional repairs. That leaves buyers —who have already invested hundreds of dollars in an inspection—little recourse if any issues are uncovered.4 That’s one of the reasons we always recommend viewing properties with an agent. During your visit, a real estate professional can point out any “red flags” at the home, provide background information about the neighborhood, and help you assess its true market value. That way, you don’t invest time and money in a high-risk or overpriced property. Safety is also a concern. Some companies allow buyers to access their homes via a smartphone app. While it may seem convenient, it provides an easy way for squatters and others to enter the home illegally.5 Luckily, since most iBuyers (and traditional sellers) pay a buyer agent’s commission, you can benefit from the guidance and expertise of a real estate professional … at no cost to you!

HOW CAN I PROTECT MYSELF IF I CHOOSE TO WORK WITH AN iBUYER? While it may seem like the “quick and easy” way to go, working with an iBuyer can present some unique challenges. For example, they are notorious for presenting a strong initial purchase offer and then whittling it down with a long list of costly updates and repairs once they complete their inspection.2 And unlike a traditional buyer who is incentivized to make a deal work, iBuyers can easily walk away if you don’t meet their demands. Just like you wouldn’t go to court without a lawyer, you shouldn’t enter into a real estate transaction without an advocate to represent you. Having a professional agent on your side can be especially important when negotiating with an iBuyer. Remember, they employ sophisticated representatives and a team of lawyers who are focused on maximizing their profits, not yours. You need someone in your corner who has the skills and knowledge to ensure you get a fair deal and who understands the terms of their contracts, so you don’t encounter any unpleasant surprises along the way. Overall, we think the emergence of new technology that helps to streamline the real estate process is exciting. And if we believe a client can benefit from working with an iBuyer, we present it as an option. But there is—inevitably—a cost to the convenience. After all, most iBuyers eventually list the properties they acquire on the open market, which is still the best place to find a buyer if you want to maximize the sales price of your home.

Sources:

  1. The Dallas Morning News – https://www.dallasnews.com/business/real-estate/2019/07/11/so-called-ibuyer-real-estate-firms-pitch-programs-to-buy-your-house-help-you-hunt-for-another/
  2. MarketWatch – https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11
  3. Forbes – https://www.forbes.com/sites/alyyale/2019/08/16/study-shows-ibuyers-cost-home-sellers-thousands-is-convenience-worth-the-price/#697ac0c42269
  4. US News & World Report – https://realestate.usnews.com/real-estate/articles/what-to-expect-when-buying-a-home-from-an-ibuyer
  5. Inman – https://www.inman.com/2019/09/11/police-arrest-couple-found-squatting-in-opendoor-home-with-their-kids/

National Snapshot: What’s Ahead for Housing?

Housing Market

The U.S. unemployment rate is at a 50-year low, and consumer confidence remains high. In fact, the University of Michigan’s latest Surveys of Consumers found that Americans have their most positive personal finance outlook since 2003.1

However, if you follow national news, you’ve probably heard speculation that we could be headed toward a recession. Global trade tensions and a slow down in the GDP growth rate has sparked volatility in the stock market, leading to economic uncertainty.

Given these differing signals, you may be wondering: How has the U.S. housing market been impacted? Where is it headed? And more importantly … what does it mean for me?

 

MORTGAGE RATES ARE NEAR HISTORIC LOWS

In August, Freddie Mac reported that the average 30-year fixed mortgage rate hit its lowest level since November 2016, falling to 3.6%, down a full percentage point from a year earlier.Variable mortgage rates also fell when the Federal Reserve cut interest rates at the end of July for the first time since 2008.3

This was welcome news for many in the real estate industry. Freddie Mac predicts that low interest rates and a robust job market will help the housing market remain strong despite the threat of recession. 

“There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”2

 

What does it mean for you?

If you’re looking to buy a home, now is a great time to lock in a low mortgage rate. It will shrink your monthly payment and could save you a bundle over the long term. Or if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.

 

PRICES CONTINUE TO RISE AT A MODEST PACE

According to the S&P CoreLogic Case-Shiller Indices, housing prices continue to rise. But the rate at which prices are rising is slowing down. For May 2019, the National Home Price Index rose by 3.4%, down from 3.5% the previous month.4

Of course, national averages often don’t present the whole picture. Some markets have seen modest declines, while other areas are witnessing double-digit increases. The key differentiating factor in most cases? Housing affordability.5

Since 2012, home prices have increased at about three times the pace of wages, according to National Association of Realtors chief economist Lawrence Yun.6

“Housing unaffordability will hinder sales irrespective of the local job market conditions,” said Yun. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”5

But what about all this talk of a recession? Will we see housing values plummet like they did in 2008? Economists say no.

If we look at history, the real estate crash experienced during the Great Recession isn’t typical.

The recent Housing and Mortgage Market Review report from Arch Mortgage Insurance provides data to support this. “What we found is that the next recession is likely to be far less severe on the housing market than the last one. It’s not that this time is different; it’s that last time was really different from historic norms.”6

“A large decline in national home prices is unlikely in the next recession,” Arch economists write. “A persistent housing shortage should help cushion home price declines.”6

 

What does it mean for you?

If you have the ability and desire to buy a home now, don’t let the threat of a recession hold you in limbo. The market is cyclical, and it will experience ups and downs. But over the long term, real estate has consistently proven to be a good investment.

 

 

STARTER INVENTORY REMAINS TIGHT WHILE LUXURY MARKET SOFTENS

As we’ve seen in the past, it’s become a tale of two sectors.

The low-end of the market remains highly competitive as buyers compete for affordable housing. A lack of new construction during the last recession led to an undersupply of starter homes. This trend continues—despite growing demand—due to a lack of skilled workers, rising land and material costs, and a slow permitting process in many areas.7

The result? There’s a shortage of homes for sale that Americans can actually afford to buy.

The luxury market, on the other hand, has softened. Economic uncertainty, changes to tax laws, and rising prices have slowed demand. Plus, to recoup their higher costs, builders flocked to this segment—causing an overabundance of supply in some areas.

“If you’re selling an entry level home, you’re probably still looking at a pretty competitive market in most places,” according to Danielle Hale, chief economist at Realtor.com. “But if you’re selling a more expensive home you probably have to adjust your expectations.”8

 

What does it mean for you?

Move-up buyers, you’re in luck! If you’re ready to trade in your starter home for something more luxurious, you may get the best of both sectors. We’re still witnessing strong demand for entry-level homes, giving sellers the upper hand. At the same time, buyers of high-end homes are finding a greater selection (and more negotiating power) than they’ve had in years.

 

INVESTORS ARE BUYING HOMES AT RECORD LEVELS

There’s one group that hasn’t been slowed down by lack of affordability or economic uncertainty: investors.

According to CoreLogic, investors are purchasing homes at a record pace. In 2018, the share of U.S. homes bought by investors reached 11.3%—the highest level since the company began tracking nearly 20 years ago.9

Notably, this increased activity wasn’t led by institutional investors, but instead by small and individual investors focused on the starter-home segment.Declining interest rates and an uncertain stock market has led investors to flock to real estate as they seek out greater stability and higher returns.

“With declining mortgage rates … they’re searching for a better return for their money,” said NAR chief economist Lawrence Yun.10

 

What does it mean for you?

If you’re looking for a way to “recession proof” your money, you might want to consider investing in real estate. People will always need a place to live, and (unlike the stock market) a rental property can provide a steady source of cash flow during uncertain economic times.

 

WE’RE HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood. 

If you have specific questions or would like more information about how market changes could affect you, please contact us to schedule a free consultation. We’re here to help you navigate this shifting real estate landscape.

 

Sources:

  1. University of Michigan Surveys of Consumers – http://www.sca.isr.umich.edu/
  2. Freddie Mac – https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-drop-significantly?_ga=2.29332539.689041222.1565464527-928629548.1565464527
  3. CNN – https://www.cnn.com/2019/07/31/business/fed-rate-cut-july-meeting/index.html
  4. S&P Dow Jones Indices – https://us.spindices.com/documents/indexnews/announcements/20190730-965771/965771_cshomeprice-release-0730.pdf?force_download=true
  5. National Association of Realtors – https://www.nar.realtor/newsroom/metro-home-prices-increase-in-91-of-metro-areas-in-second-quarter-of-2019
  6. Forbes – https://www.forbes.com/sites/alyyale/2019/04/18/with-a-recession-looming-is-now-the-time-to-sell-your-home/#7d3a21665bce
  7. CNN – https://www.cnn.com/2019/08/09/economy/mortgages-home-buyers/index.html
  8. Forbes – https://www.forbes.com/sites/carolinefeeney/2019/07/01/halfway-into-2019-how-is-the-housing-market-holding-up/#7e656e3ec5d8
  9. CoreLogic – https://www.corelogic.com/blog/2019/06/special-report-investor-home-buying.aspx
  10. Fox Business – https://www.foxbusiness.com/economy/investors-snapping-up-homes-at-record-levels

5 Step Strategy for Downsizing Your Home

Why downsizing make sense… In our “bigger is better” culture, there’s an expectation that each home should be larger and grander than the last. But life changes like divorce, kids leaving for college, or even the simple act of growing older can prompt us to find a smaller home that better suits our shifting needs and lifestyle.

In fact, the advantages of downsizing are being increasingly recognized. A “tiny house movement” has gained passionate advocates who appreciate the benefits of living simply at any age and stage of life. Not only does a smaller home typically cost less, it also takes less time and effort to maintain.1

Whatever your reasons are for downsizing, the process can seem overwhelming. That’s why we’ve outlined five steps to guide you on your journey. And in the end, we hope you’ll find that less is more … more comfort, more security, and more time and energy to spend on the activities and the people that you love.

5 STEPS TO DOWNSIZING SUCCESS

  1. Determine Your Goals and Limitations

The first step is to figure out your goals for your new living environment. Do you want to live closer to family? Are you hoping to cut down on home maintenance? Are you looking for a community with certain amenities?

You should also consider any limitations that will impact the home you choose. For example, are stairs an issue? Do you need access to medical care? In the case of divorce, are there child-custody issues you need to take into account?

Estimate how long you plan to stay in your new home. Do you expect your needs to change during that time?

Make a “wish list” of features and prioritize them from most to least important. If you’d like any assistance with this process, give us a call! We’d be happy to sit down with you for a free consultation. We can also help you assess the value of your current home so you can set a realistic budget for your new one.

  1. Find the Perfect New Home

Once you’ve established your “wish list,” we can begin the search for your new home. As local market experts, we know the ins and outs of all the top communities in our area. We can help you determine the neighborhood and type of home that will best fit your wants and needs.

From family neighborhoods to retirement communities, we serve clients in all stages of life. If you or a loved one are in need of extended support, we can also share our knowledge of the assisted living facilities in town and help you identify those that offer the optimal level of care.

Are you planning to relocate out of town? We can refer you to a trusted real estate professional in your target area who can help you with your search.

  1. Sell Your Current Home

If you’re ready to sell your current home, we’ll begin the process of preparing to list it as we search for your new one.

We have a special interest in helping homeowners who are facing major life transitions, and we offer a full-service real estate experience that aims to remove as much of the stress and hassle of selling your home as possible. We also understand that many of our clients choose to downsize for financial reasons, so we employ tactics and strategies to maximize the potential sales revenue of your home.

We do this by employing our proven three-part approach, which focuses on optimum preparation, pricing, and promotion. As part of that plan, we invest in an aggressive marketing strategy that utilizes online and social media platforms to connect with consumers and offline channels to connect with local real estate agents. This ensures your property gets maximum exposure to prospective buyers.

  1. Sort and Pack Your Belongings

Even before you find your new home, you can begin preparing for your move. A smaller home means less space for your furniture and other possessions, so you will need to decide what to keep and what to sell or donate. Sorting through an entire house full of belongings will take time, so begin as early as possible.

Parting with personal possessions can be an extremely emotional process. Start with a small, unemotional space like a laundry or powder room and work your way up to larger rooms. Focus on eliminating duplicates and anything you don’t regularly use. If you have sentimental pieces, family heirlooms, or just useful items you no longer need, think about who in your life would benefit from having them. For large collections, consider keeping one or two favorite pieces and photographing the rest to put in an album.2

Make sure the items you keep help you achieve the goals you outlined in Step 1. For example, if you want a home that’s easier to clean, cut down on knickknacks that require frequent dusting. If you’re moving to be closer to your grandchildren, choose the shatterproof plates over the antique china.

Allow yourself time to take breaks if you start to feel overwhelmed. If you’re helping a loved one with a move, try to be a patient listener if they want to stop and share stories about particular items or memories throughout the process.3 This can be therapeutic for them and an opportunity for you to learn family history that may otherwise have been forgotten.

  1. Get Help When You Need It

Moving is stressful in any situation. But if you’re downsizing due to health issues or a major life change, it can be an especially tough transition. Don’t be afraid to ask for help.

Seek out friends and family members who can assist with packing and decluttering. If that’s not an option, or if you need additional help, consider hiring a home organizer, full-service moving company, or even a senior move manager, which is a professional who assists older adults and their families with the physical and emotional aspects of relocation.4 You can find one accredited by the National Association of Senior Move Managers at https://www.nasmm.org/find/index.cfm.

If financial constraints are holding back, let us know. We can help you explore the possibility of tapping into the equity in your current home now. That way you can afford to get the assistance you need to make your transition as smooth as possible.

ARE YOU LIVING YOUR BEST LIFE?

If your current home no longer suits your needs, maybe it’s time to consider a change. We would love to help you explore your options. Contact us today to schedule a free, no-obligation consultation.

Sources:

  1. The Tiny Life –
    https://thetinylife.com/what-is-the-tiny-house-movement/
  2. My Move –
    https://www.mymove.com/moving/senior-guide-downsizing/
  3. Daily Caring –
    https://dailycaring.com/5-tips-to-downsizing-for-seniors-keepsakes-mementos/
  4. National Association of Senior Move Managers –
    https://www.nasmm.org

Will Your Remodel Pay Off?

Will Your Remodel Pay Off?

The Best (and Worst) Ways to Spend Your Budget

Most new homeowners have something about their property that they want to change. And as family needs and design trends shift over time, many will eventually choose to remodel. Some homeowners make updates to their property before listing it to maximize their potential sales revenue.

Whatever your reasons are for taking on a home improvement project, it’s wise to consider how the money you invest will impact your home’s value.

We’ve taken a look at six popular home renovations and identified those that—on average—have the best and worst returns on investment. So before you lift a hammer or hire a contractor, take a look at this list and see if your remodeling efforts will reward you when it comes time to sell.

RENOVATIONS THAT PAY OFF

These three common home improvement projects not only add function and style to your home, but they also offer a strong return on investment. Making strategic upgrades to your property will help you increase its value over time.

The kitchen is often referred to as the “heart of the home,” and for good reason. Traditionally used for preparing food, it has morphed into so much more. Many of us now eat our family meals in the kitchen, it serves as a favorite spot for homework and kids’ art projects, and it’s the place guests tend to gather when we host events.

Because we spend so much time in our kitchens, it’s natural that we will eventually want to make updates and upgrades to better suit our needs and changing style preferences.

Luckily, a minor kitchen remodel is one of the best investments you can make in your home. According to Remodeling Magazine’s annual Cost vs. Value Report, it has an average 80.5% return on investment.1

The key to making a kitchen remodel pay off is to keep it modest in scale. Spend too much on custom or high-end selections, and you are less likely to recoup your investment. Instead, make an effort to keep your existing layout if it works for you and your family. Paint or reface cabinets instead of replacing them. Update counter tops with low-maintenance quartz and swap out old light fixtures with modern alternatives. Replace outdated appliances with energy-efficient models. The average cost for a minor kitchen remodel is $22,500, and it’s likely to recoup more than $18,000 at resale.1

Wood Deck Addition
A deck addition is a popular way to extend and enhance the use of your outdoor space. It’s the perfect spot for grilling, dining alfresco, and entertaining. In fact, 81% of surveyed homeowners said they have a greater desire to be home since completing a deck addition.2

For a 16 x 20-foot wood deck, you can expect to spend around $13,000. Fortunately, the money you invest offers an average return of 76%.1

Decks made of composite material are a popular alternative these days, as they don’t require the regular sanding and staining that wood decks need. However, at an average cost of $19,000 for a 16 x 20-foot composite deck, they are significantly more expensive. Plus, the expected return on investment is only 69%.1 Still, if you plan to hire someone to provide regular maintenance to a wood deck, then a composite deck may offer cost savings over time.

Siding Replacement
Everyone knows good curb appeal is important when selling your home. And while it may not be the most exciting way to spend your remodeling budget, new siding can make a big impression on buyers … and your selling price.

Your home’s exterior is one of the first things buyers see when they view your home. It sets the tone for what they are going to see inside. It also gives an impression of how well the property has been maintained. Worn, peeling, or rotted siding can be a major red flag for buyers.

Replacing 1,250 square feet of siding costs around $16,000 and will net you an average of 76% at resale.1

For an even greater impact, consider replacing a portion of your siding with manufactured stone veneer. It can have a dramatic effect on the visual appeal of your home. A 300 square foot area will run you around $8,900, but you can expect to see a nearly 95% return when it comes time to sell.1


RENOVATIONS WITH WEAK RETURNS

These three popular remodeling projects are homeowner favorites. However, don’t expect to see a high rate of return at resale. Instead, consider them an investment in your current quality of life. Just make sure you’ll be living in the home long enough to make them worthwhile.

Major Kitchen Remodel
If there’s one room the majority of homeowners dream about making over, it’s their kitchen. From custom cabinetry to high-end appliances, the possibilities are endless. But those dreams can come at a cost.

An upscale kitchen remodel with high-end cabinetry and countertops, commercial-grade appliances, and designer features can cost upwards of $130,000. And unfortunately, you’ll only get back around 60% at resale. Even a mid-range kitchen remodel that includes new semi-custom wood cabinets, laminate countertops, and energy-efficient appliances could run you around $66,000 and net you a mere 62% at resale.1

Of course, an outdated or non-functional kitchen could turn buyers off from your home completely … and keep you from enjoying it yourself! So if your kitchen needs a major remodel, you shouldn’t necessarily scrap your plans. Just go in with the realization that you may only get back a fraction of what you invest. Then you can decide which upgrades are worth the splurge.

In-ground Pool
Few additions deliver more entertainment or enjoyment than an in-ground pool. It brings families and friends together, provides a break from the summer heat, and offers a fun and convenient way to stay fit. Plus, you’ll be the envy of your neighbors! But before you dive into a pool addition, consider whether the benefits outweigh the (substantial) costs.

The average expense to install a standard 18 x 36-foot in-ground pool is $57,500. And the estimated return at resale is only or 43%.2 In addition to the installation cost, plan to spend money each year on maintenance, repairs, and additional insurance.

However, 92% of surveyed homeowners said they “have a greater desire to be home” since installing a pool, and 83% have “an increased sense of enjoyment when they are at home.” For you and your family, the perks of a pool may be priceless.2

Master Suite Addition
If you own a house built before the 1980s, there’s a good chance it lacks a master suite, which is a feature that has become commonplace in most newly constructed homes.3

Master bedrooms have evolved from a simple place to sleep into a homeowner’s retreat—often featuring a sitting area, his-and-hers walk-in closets, and an attached bathroom with double vanities, a soaking tub, and a walk-in shower.

And master suite additions have become increasingly popular—both in homes that lack one as well as those with aging owners who can no longer accommodate stairs to an upper-level bedroom.

But what’s the typical return at resale? Unfortunately, a master suite addition offers one of the lowest returns of any remodeling project. With a median cost of $125,000, most sellers will only recoup around 52% of their investment. Nevertheless, in a survey of homeowners, the majority were satisfied with their decision to add a master suite, giving it a “Joy Score” of 10 out of 10.4


WEIGHING COST VS. BENEFIT

It’s always wise to enter into a remodeling project with knowledge of how it will impact your home’s value. In most cases, upscale or highly-customized upgrades are less likely to offer a high rate of return. That said, home renovations that improve your quality of life and enhance your enjoyment may be worthwhile no matter the cost.

GET A CUSTOMIZED ANALYSIS OF YOUR PROJECT

We’ve been talking averages. But the truth is, the actual return you can expect on a home improvement project will vary depending on your particular home and neighborhood. If you have plans to remodel, call or send us the details. We’d be happy to conduct a free analysis to determine how the renovations will impact the value of your home!

Sources:
2019 Cost vs. Value Report –
https://www.remodeling.hw.net/cost-vs-value/2019/
NAR’ Remodeling Impact Report – https://www.nar.realtor/sites/default/files/documents/2018-05-remodeling-impact-outdoor-features-05-23-2018.pdf
Zillow –
https://www.zillow.com/blog/evolution-of-the-master-bedroom-48286/
House Logic –
https://www.houselogic.com/by-room/bedroom-closet/master-suite-addition-return-investment/

Are You Serious About Selling Your Home?

Selling Your Home

We all want to be good neighbors. But when it comes to selling your home, it’s not just about “keeping up with the Joneses.” It’s about outshining them at every opportunity!

Selling your home fast, for the most money possible, you’ll need a strategy to set it apart from all the other listings competing for buyers in your area. That’s why we’ve outlined our proven, five-step plan for serious sellers.

Use these five tactics to help your listing get noticed, win over buyers, and net a higher sales price than your neighbors!

 

STEP 1: Stage Your Home to Show Its Full Potential

The average seller will do the minimum to prepare their home for market: clean and declutter, fix anything that’s broken, mow the lawn. And while those tasks are essential, today’s buyers want more than just a clean house and tidy yard. When they dream of buying a new home, they envision a designer house with modern finishes. Help them see your property’s full potential by staging it.

Home staging is one of the hottest trends in real estate—because it works! According to the Real Estate Staging Association, homes that are professionally staged spend 73% less time on the market.1

So what exactly is staging? In a broad sense, staging is the act of preparing your home for market. The goal is to highlight your home’s strengths, minimize any deficiencies, and help buyers envision themselves living in the space. When staging a home, you might rearrange the furniture to make a room feel larger or remove heavy curtains to make it appear brighter.

Some sellers choose to hire a professional home stager, who has specialized training and experience, to maximize the appeal of their home to the largest number of potential buyers. Others may opt to do it themselves, using guidance from their agent.

We can help you determine the appropriate budget and effort required to push your home ahead of the competition in your neighborhood. The good news is, an investment in staging pays off. A 2018 survey found that 85% of staged homes sold for 6-25% more than their unstaged neighbors homes.2

 

STEP 2: Draw Buyers in with High-Quality Listing Photos

You only have one chance to make a first impression with potential buyers. And many buyers will view photos of a listing before they decide whether or not to visit it in person. In fact, 87% of buyers find photos “very useful” in their home search.3Poor-quality or amateur-looking listing photos could keep buyers from ever stepping through your door.

Since good photography plays such an important role in getting your property noticed, we only work with the top local professionals to photograph our listings. But we don’t just rely on their photography skills when it comes to showcasing your home.

We go the extra mile to ensure your listing photos showcase the true essence of your home. We’re always on site during the photo shoot to help the photographer capture the best angles and lighting, and to let them know about unique or compelling selling features that they should photograph. The extra effort pays off in the end. In fact, listings with high-quality photography sell 32% faster than the competition … and often for more money!4

  

STEP 3: Price It Properly From the Start

Even in a strong real estate market, there are homes that will sit unsold for months on end. This can be the “kiss of death” in real estate, as buyers tend to imagine that there must be something wrong with the property, even if it’s not the case.

But why are those houses still on the market in the first place? It’s because they are often priced too high.

Every buyer has a budget. And most will be viewing listings within a particular price range. If your property is overpriced, it can’t properly compete with the other houses they’re viewing that are priced correctly. Which means it’ll sit on the market until you’re eventually forced to drop the price.

Alternatively, if you price your home aggressively, it can be among the nicest homes that buyers have seen within their budget. This can lead to emotionally-attached buyers, who are often willing to pay a premium or settle for fewer seller concessions. And in certain markets, it can lead to a multiple-offer situation, or bidding war. The end result? More money in your pocket.

We can help you determine the ideal listing price for your home in the current market. Pricing it properly in the beginning is the best way to ensure selling your home quickly and for a profit. 

 

STEP 4: Put on a Good Show at Each Showing

Once buyers are interested enough to schedule a visit, it’s crucial that you put on a good show at each showing.

The first step is to make your home readily available—and often on short notice—for buyers to see it. A missed showing is a missed opportunity to sell your home. If you set too many restrictions on when it’s available to view, busy buyers will simply skip over your listing and move on to the next one.

Part of making your home available means keeping it relatively show-ready as long as it’s on the market. Most of us don’t live picture-perfect lives, and our homes reflect the day-to-day reality of our busy (and sometimes messy) families. But a little extra effort spent keeping your home clean, fresh-smelling, and ready for buyers will help it sell faster … which means you can get back to your regular routine as quickly as possible!

 

STEP 5: Use a Proven Promotion Plan

Most agents are still marketing their listings like they did 20 years ago  … put a sign in the yard, put the listing in the MLS, and pray that it sells. Yet, we know that 93% of buyers search for real estate listings online.3

That’s why we invest in the latest training and technology—to ensure your listing appears in the places where buyers are most likely to look. Our dual-level promotion strategy includes both pre-launch activities designed to seed the marketplace and post-listing activities to ensure your home stays top-of-mind with potential buyers.

By utilizing online and social marketing platforms to connect with consumers and offline channels to connect with local real estate agents, your property gets maximum exposure to prospective buyers.

 

LET’S GET MOVING

Are you thinking about selling your home? Get a head start on your competition! Contact us for a copy of our Home Seller’s Guide, which offers a complete guide to the home selling process. Or call us to schedule a free no-commitment consultation. We’d love to put together a custom plan to maximize the sales potential of your property!

 

Sources:

  1. Real Estate Staging Association – https://www.realestatestagingassociation.com/content.aspx?page_id=22&club_id=304550&module_id=164548
  2. Home Staging Resources –
    https://www.homestagingresources.com/2018-home-staging-statistics/
  3. National Association of Realtors –
    https://www.nar.realtor/sites/default/files/documents/2018-real-estate-in-a-digital-world-12-12-2018.pdf
  4. RIS Media –
    https://rismedia.com/2018/12/12/shocking-stats-importance-photography-real-estate/

Want to Test Your Home Buying IQ?

Want to Test Your Home Buying IQ?

If you’re thinking about buying a home, you’ve probably received your share of advice from family and friends. Add to that the constant stream of TV shows, news segments, and social media posts that over-simplify the home buying process for easy entertainment.

With so much information to sift through, it can be tough to distinguish fact from fiction. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions.

Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future.

DON’T FALL FOR THESE COMMON HOME BUYER MYTHS

Myth #1: You need a 20% down payment.

Plenty of buyers are purchasing homes with down payments that are much less than 20% of the total cost of the property. Today, you can buy a home with as little as 3-5% down.

There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will most likely need to pay mortgage insurance as part of your monthly payment.

Myth #2: Real estate agents are expensive.

Your agent is with you every step of the way throughout your home buying journey, and he or she spends countless hours working on your behalf. It sounds like having an agent is expensive, right? Well, not for you. Buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying.1The seller knows to factor this cost into the property’s total purchase price.

Myth #3: Don’t call a real estate agent until you’re ready to buy.

The earlier you bring in an agent to help with the purchasing process, the better. Even if you’re in the very early stages of casually browsing Zillow, a real estate professional can be a huge help.

They can create a search for you in the Multiple Listing Service (MLS), so you get notifications for every house that meets your criteria as soon as it hits the market. The MLS is typically more up-to-date than popular home search sites like Zillow and Trulia. Setting up a search a few months before you’re considering buying gives you a good idea of what’s out there in your town that’s in your budget. Reviewing the MLS and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process.

Myth #4: Fixer-uppers are more budget friendly.

We’ve all watched the shows on HGTV that encourage people to go after fixer-uppers because they’re more affordable and allow buyers to eventually renovate the home to include everything on their wishlist. But, this isn’t always the case.

Sometimes, homes that need a lot of work also require a lot of money. Big renovations, like add-ons, a total kitchen remodel, or installing a pool, take a lot longer than it looks on TV. If you’re really interested in a fixer-upper, ask your agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations and see if you can work them into your budget.

Myth #5: Your only upfront cost is your down payment.

Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home.2This amount includes the cost for items like homeowners insurance, title fees, and more.

You’ll also need to pay for an inspection before closing, which usually costs a few hundred dollars. This price will be higher or lower based on the size of your new property. Your lender will also require an appraisal. An appraiser will come in and inspect the home to determine how much it’s worth. Depending on your lender, you may have to pay this when the appraisal is conducted or it might be rolled into your closing costs.

Myth #6: You need a high credit score to buy a house.

You don’t need perfect credit to buy the perfect home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a few local lenders or mortgage brokers to talk through which options might be best for you.

Myth #7: You can’t qualify for a mortgage if you’re still paying off student loans.

While some buyers may feel more comfortable paying off their existing debts before taking the leap into homeownership, it’s not a requirement. When you’re applying for a mortgage, the lender takes a close look at your debt-to-income ratio.3 If you want to calculate this on your own, add up all of your monthly debt payments and divide those by your monthly income. When you’re lender does this, they’re trying to make sure that you will be able to afford your monthly mortgage payments along with your other existing payments. If your income is high enough to allow you to make all of these payments each month, having a student loan will most likely not stop you from getting a mortgage.

Myth #8: You should base your budget on what your lender approves.

How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for.4 For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow.

Instead, figure out how much house you can actually afford. An online mortgage calculatorcan be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like HOA dues and maintenance.

Myth #9: It’s all about location.

You’ve heard the phrase. Location, location, location is basically the real estate industry’s motto, but we’ll let you in on a little known secret: It’s not always true. Yes, location is great to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family’s lifestyle. If a family of five is choosing between a one bedroom condo in the bustling city center and a 4-bedroom home out in the suburbs, the latter is probably the best, most functional choice for them. Also, by buying in a less sought after neighborhood, your property taxes will most likely be much lower!

Obviously, you might still want to choose an area with great resale potential, and this is something that your agent can speak to you about. They’re an expert in your city and are constantly monitoring buying and selling trends.

Myth #10: If you look hard enough, you’ll find a home that checks every box on your wishlist.

You’ve seen that famous house hunting show. And while we have our suspicions about how real it is, the one thing they get right is that almost every buyer needs to compromise on something. Yes, the perfect house that meets every item on your wishlist is probably out there, but it’s also probably double or triple your budget.

A long wishlist can be a great starting point for figuring out what you want and don’t want, but we recommend narrowing that wishlist down to the top five things that are important to you in order of priority. We also recommend noting on your wishlist what your absolute deal breakers are, like “must have a yard for our dog,” and noting what you can live without, like “heated bathroom floors.”

This is a great list to discuss when you first start talking to an agent. A good real estate agent will be able to look at your list and find properties that might work for you. By coming to that first meeting with realistic expectations and knowledge about home buying rather than a bunch of myths heard here and there, you’ll be able to start the process off on the right foot and be in your new house in no time.

WE’RE HERE TO HELP

Whether you’re a first-time buyer or a seasoned homeowner, there’s no reason to go through the home buying process without an advocate on your side. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new home. Call us today to schedule a free, no-obligation consultation.

Get a FREE copy of our Home Buyer’s Guide to Getting Mortgage Ready

 

Now that we’ve cleared up these common homebuyer myths, find out if you know the steps you should take to prepare financially before you apply for a mortgage. Contact us to request a complimentary copy of our “Home Buyer’s Guide to Getting Mortgage Ready.”

 

Note: Mortgage Ready Guides are part of the March 2018 MVP.

Download US Version at: https://dashboard.thepaperlessagent.com/download/march-2018-digital-marketing-campaign-report/

Sources:

  1. Realtor.com – https://www.realtor.com/advice/finance/realtor-fees-closing-costs/
  1. The Balance –  https://www.thebalance.com/buyer-s-closing-costs-1798422
  2. StudentLoanHero – https://studentloanhero.com/featured/student-loans-buying-house/
  1. Zillow – https://www.zillow.com/mortgage-learning/pre-qualification-vs-pre-approval/

What’s Your Home Actually Worth?

What’s Your Home Actually Worth?

 

Discover What Buyers Will Pay in Today’s Market

 

It’s easy to look up how much money you have in your savings account or the real-time value of your stock investments. But determining the dollar value of a home is trickier.

As a seller, knowing your home’s worth helps you price it correctly when you put it up for sale. If you price it too high, it may sit on the market. But price it too low and you may be losing out on a good chunk of money (nobody wants that!). For buyers, it’s important to know a home’s worth before you make an offer. You want your offer to be competitive, but you don’t want to overpay for the property.

Even if you’re not a buyer or seller right now, as a current homeowner you might just be curious about the value of your home. Keeping track of your home’s worth year over year helps you understand the trends in your market. So when you are ready to sell, you can take advantage of a good window of opportunity.

The good news is, a trained real estate agent—who understands the nuances of your particular neighborhood—can determine the true market value of your property … and at no cost to you!

 

THE THREE TYPES OF HOME VALUES

When you start the process of buying or selling a home, you’ll frequently hear the words appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, informed decisions.

Appraised Value

A professional appraiser is in charge of determining the appraised value of a home. These appraisals are typically required by a lender when a buyer is financing the property. And while the lender is the one requiring this information, the appraiser does not work for the lender.1Your appraiser should be an objective, licensed professional who doesn’t have allegiance to the buyer, seller, or lender—no matter who is paying their fee.

The number the appraiser comes up with (the appraised value) assures the lender that the buyer is not overpaying for the property. For example, imagine a seller lists a home for $400,000. They reach a deal with the buyer to sell the home for $375,000. However, if an appraiser evaluates the property and determines that the appraised value is actually $325,000, then the lender will not lend for an amount higher than that appraised value of $325,000.2

When figuring out this number, an appraiser will compare the property to similar homes in your neighborhood, and they’ll evaluate factors such as location, square footage, appliances, upgrades, improvements, and the interior and exterior of the home. 

Assessed Value

The assessed value of a home is determined by your local municipal property assessor. This value matters when your county calculates property taxes each year. The lower your assessed value, the less property tax you’ll pay.3

To come up with this value, your assessor will evaluate what comparable homes in the neighborhood have sold for, the size of your home, age, overall condition, and any improvements or upgrades that have been made. However, most assessors don’t have full access to your home, so their information is limited.

Assessments are done annually to determine how much property tax you owe. Many counties use a multiplier (typically between 60%-80%) to calculate the final assessed value. So, if the assessor determines that the value of the home is $300,000, but the county uses a 70% multiplier, the assessed value of the home would be $210,000 for tax purposes.4

If your assessed value isn’t as high as you envisioned, don’t sweat it. Many homeowners appeal their assessment in favor of a lower valuation so that they can save money on property taxes. If you’re interested in appealing your property tax assessment, let us know. We offer complimentary assistance and would be happy to help you build your case.

True Market Value

True market value is established by your real estate agent. It basically refers to the value that a buyer is willing to pay for the property. A good real estate agent is an expert in determining true market value because they have hands-on experience buying and selling properties. They understand the mindsets of buyers in your market and know what they’ll pay for a desirable house, townhouse, or condo.

As a seller, knowing your true market value is important because it helps you choose how much to list your property for. It can also help you decide if you want to make any improvements to your home before putting it on the market. Your agent can help you figure out which updates and upgrades will have the biggest impact on your true market value.

 

WHAT’S THE DEAL WITH ONLINE CALCULATORS?

When figuring out your home’s value, you might be tempted to see what popular real estate sites like Zillow, Redfin, and Trulia have to say. When you use an online calculator to determine your home’s value on these sites, it is just an estimate. It’s not an actual appraisal or the “true market value.” These sites all have their own algorithms for coming up with their estimates. For example, Zillow comes up with their “Zestimates” by calculating “public and user-submitted data, taking into account special features, location, and market conditions.” 5

These online estimates can be a great starting point for opening up the conversation with your real estate agent about your home’s worth. But even Zillow recommends that you use a real estate agent for coming up with the actual market value of your home. The site says that once you get your “Zestimate,” you should still get “a comparative market analysis from a real estate agent.”

Having an agent involved in this process is essential because they understand the market better than a computer ever could. They’re showing property in your city every single day, and they know the particular preferences of buyers and sellers in the area. Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has most likely worked with all of them, so they understand what every segment in your market is specifically looking for.

 

HOW AN AGENT FINDS YOUR HOME’S TRUE MARKET VALUE

So, how does an actual real estate agent determine true market value? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare your home’s features to similar properties in your area. For the CMA, the agent looks at the below factors to influence their assessment of your home’s worth:6

  • Neighborhood sales– Your agent will look at similar, recently sold homes in your neighborhood to see what they sold for and what they have in common with your house.
  • The exterior – What does your home look like from the outside? Your agent will factor in curb appeal, the style of the house, the front and backyard, and anything else that impacts how the house looks to everyone walking and driving by.
  • The interior– This is everything inside the walls of the house. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.
  • Age of the home – Whether you have a newer or older home affects the number your agent comes up with as part of their assessment.
  • Style of the home – The style of your home is important because buyers in different markets have different tastes. If buyers prefer ranch-style homes and you have one, then your home may sell for a premium (aka more money!).
  • Market trends –Because a local agent has so much experience in your market, they have their finger on the pulse of your area’s trends and know what buyers are willing to pay for a property like yours.
  • Location, location, location– This one’s probably the most obvious. Your agent will think about how popular the area is, how safe it is, and what schools are like.

A computer algorithm simply can’t take all of these factors into account when calculating the value of your home. The reality is, nothing beats the accuracy of a real estate agent or professional appraiser when it comes to determining a home’s true market value.

 

YOUR AGENT IS THERE EVERY STEP OF THE WAY

Determining a home’s true market value is a real estate agent’s forte. If you’re a seller, your agent will help you find your home’s market value so you can list it at the right price.

For buyers, your agent will help you determine the value so you can come up with a fair offer. Your agent can also set up a personalized home search on the Multiple Listing Service (MLS) for you so you’ll receive emails of listings that meet your criteria. This will help you see what’s out there in your city and how properties are being priced.

Get a Complimentary Report With Your Home’s True Market Value

Curious about your home’s true market value? Please call us to request a free, no-obligation Comparative Market Analysis to find out exactly how much your home is worth!

 

Sources:

 

  1. Chicago Tribune –

https://www.chicagotribune.com/suburbs/chi-ugc-article-what-is-the-difference-between-market-value-a-2013-09-30-story.html

  1. SFGATE –

https://homeguides.sfgate.com/market-value-vs-appraised-value-1206.html

  1. ValuePenguin –

https://www.valuepenguin.com/mortgages/what-is-the-assessed-value-of-a-house

  1. Movoto –

https://www.movoto.com/blog/homeownership/assessed-value-vs-market-value/

  1. Zillow –

https://www.zillow.com/how-much-is-my-home-worth/

  1. com –

https://www.realtor.com/advice/sell/assessed-value-vs-market-value-difference/

 

WHAT TO KNOW ABOUT WORKING WITH AFFLUENT BUYERS

Affluent Buyers

Institute For Luxury Home Marketing

Working with affluent buyers can be incredibly rewarding but comes with its own set of challenges. Higher net worth individuals don’t always have the same set of motivations as traditional buyers. Not just that, but luxury markets require their own set of research.

Whether you are new to working in more affluent markets or a seasoned professional, it’s critical to continually shift your mindset to understand and adapt to the market conditions and the requirements of these higher net worth individuals.

Here’s what you should remember when it comes to wealthy clients.

WHO ARE THE AFFLUENT?

In today’s market there are more affluent buyers than ever before. Wealth-X states that globally in 2015 there were 212,615 ultra high net worth individuals and predicts that by 2020 this number will have increased to 318,000; forecasting total wealth assets rising from $31 trillion in 2018 to $46.2 trillion by 2020. In the US, personal wealth of high net worth individuals grew by $8.5 trillion, 197 cities have a median home value of $1 million (up from 164 in 2017) and the number of sales above $1 million rose 6% in the last year.

The most common affluent buyers can be grouped in three categories.

  • The mass affluent: These high net worth individuals have at least $1 million in net worth and household earnings of about $125,000 or more annually.
  • High net worth individuals: These buyers have between $1 million and $30 million in investable assets and 2.5 million people have assets of $5 million plus.
  • Ultra high net worth individuals: Buyers who have at least $30 million in investable assets and their combined wealth in 2018 is approx. $31 trillion.

There are three additional categories that a minority of affluent buyers fall in: centi-millionaires, demi-billionaires and billionaires.

WHAT CHARACTERISTICS DEFINE WEALTHY BUYERS?

Affluent buyers might not necessarily stand out to you right away. Here are some characteristics of certain high net worth clients in the “mass affluent” and “high net worth” categories from above:

  • Save 15% to 20% of gross incomes.
  • Don’t lead luxurious lifestyles.
  • 76% are married.
  • 41% have children under 18 years old.
  • 24% are in top management.

Since some purchasers may be stretching to break into the luxury market, sometimes it’s a good idea to qualify buyers before you get deep into negotiations for a property. You can do this by tactfully suggesting they prepare a verification of assets from a financial institution in order to negotiate more effectively. Introducing qualified individuals to an appropriate lender can also help you get all your bases covered before you get too involved in any particular negotiation.

3 CONCEPTS TO REMEMBER WHEN WORKING WITH AFFLUENT BUYERS

Avoid beginner’s mistakes by keeping these core concepts about luxury clients in mind.

1. THE TRADITIONAL MARKET AND LUXURY AREN’T ALWAYS IN SYNC

If you’ve been a real estate agent for a while, you probably have some knowledge on the traditional market. While this is certainly helpful, don’t assume the luxury market is reacting to economic changes in the same way. Here are some ways to evaluate the luxury market:

  • Inventory levels: If they’re low, it could be difficult for clients on the lower end of this demographic to purchase, but when inventory’s high that’s a good time for new buyers to break in.
  • Watch for catalysts: Just like the traditional market, macro and micro events could influence pricing in the luxury market. These events might not necessarily be the same in each market, so don’t assume one catalyst will spell the same outcome for clients at every price point.
  • Divide your upper-tier marketing into price ranges: The upper tier of the marketplace isn’t homogenous. Within it there are several different price ranges for luxury homes that you’ll want to understand in your market. We recommend doing a price brand analysis that includes factors such as a listing’s average days-on-market, percentage of list price for which the property sold, the level of inventory within each price range and the number of sales by price range.
2. KEEP AN EYE ON CITIES THAT ARE SEEING GROWTH

It can be challenging to find new clients when breaking into the luxury market as an agent. That’s why it’s advantageous to keep an eye on cities that are seeing new luxury growth beyond the major, well-established luxury markets in the U.S.

Since new markets are always emerging, you’ll need to do your research about nationwide markets. Once you’ve identified some that you feel you might be able to break into as an agent, brainstorm how you can find clients in those markets. Perhaps clients in your location who are looking for a second property might find an emerging luxury market fits their strategy and you can help them purchase. Maybe you reach out to potential clients in emerging luxury markets with some expertise they want to take advantage of. The key is finding a strategy and putting it to work.

3. ALWAYS BE RESEARCHING

Many affluent buyers are leaders in their industries and well accustomed to staying attuned to changes in their own markets. They’ll want you to do the same if you’re going to work with them and expect to have intelligent conversations backed by industry data. If you’re not doing quality research you could find it harder to connect and retain affluent buyers. The Institute for Luxury Home Marketing provides members with insights on up to 60 luxury markets from across North America to help you stay on top of the game.

EDUCATE YOURSELF ON THE LUXURY MARKET

Succeeding with affluent buyers means understanding their motivations and how their specific luxury market is reacting to changes in the current political and economic landscape. Educating yourself on both these elements can help you prepare for success as a real estate agent to the wealthy.

Article from Institute For Luxury Home Marketing

Why Houses DO NOT Sell In A Strong Market

Strong Housing Market

The KCM Crew discovered that many homeowners find themselves asking the question, “If we’re currently in a strong real estate market, why won’t my house sell?” 

There are houses selling every single day because they are listed at the right price, have the right marketing plan, and are staged for the sale. If for some reason your home didn’t sell and you’re still motivated to get it sold, contact a local real estate professional who can help you figure out the reason your house isn’t selling!

Below are the 5 most common reasons why a listing contract will expire:

1. The Price

Sometimes when the market is hot, homeowners attempt to set their listing price higher. Their hope is that a motivated buyer will be willing to pay any price for a house in their desired neighborhood! Sellers must remember, though, that in today’s market a house must be sold twice; first to the buyer and then to their bank.

A buyer can agree to pay the homeowner’s asking price, but after the bank conducts their appraisal, the price might need to be adjusted. The bank will only give the buyer a mortgage for the value of determined in the appraisal.

Sellers must also keep in mind that today’s homebuyers are well-educated. Before they look to buy a house, they have already seen many houses online. They’ve done their research on the neighborhoods they are interested in, including information on the school districts in the area.

They will know if your house seems overpriced and will not waste their time considering it. This is why it’s so important to make sure that your home is priced right from day one on the market!

2. The Condition of the House

In many areas, builders are taking advantage of the lack of inventory of homes for sale by building new houses. These newly constructed homes create competition for existing homes in the market. For this reason, many homeowners are making renovations and updates to their homes to compete with the new construction in their marketplace.

Most agents recommend that homeowners declutter their houses before putting them on the market. Buyers want to be able to imagine themselves living in the home instead of focusing on the current homeowner’s decor.

It’s important to take care of the small problems like dripping faucets and torn screens, while also remembering to remove any posters hanging in your teenager’s bedroom. Making sure your home is in perfect condition will make buyers fall in love with it and will ultimately help you get the right price for your house!

3. Seller’s Motivation

Why did the seller put their house on the market in the first place? Is the seller’s motivation still the same as it was when they first listed?

If homeowners are really motivated to sell, they will make sure their houses are both priced right and in good condition. The seller’s motivation will push them to consider all offers and help them make the right decision for their family’s future.

4. Marketing Plan

Having a marketing plan is important! According to NAR’s 2018 Profile of Home Buyers and Sellers, 95% of buyers searched online for a home last year. The days of looking for a newspaper ad or yard sign in your preferred neighborhood are over.

If you want to sell your home, you need a real estate professional who understands your local market and knows how to promote your home online. Something as simple as using pictures taken by a professional photographer can make a huge impact in advertising your home!

5. Lack of Communication with Your Agent

Keeping an open line of communication with your agent is crucial in getting your home sold with the least amount of hassles, in the right amount of time, and for the right price! From the beginning, establish a continuous line of communication with your agent, and make sure you review your agreement often to see if any changes need to be made. For example, adjusting the selling price!

via The KCM Crew