Why Today’s Seller’s Market Is Good for Your Bottom Line
Thinking about selling your house and wondering if now’s a good time to do it? Here’s what you need to know. Even though the number of homes for sale has been growing this year, there still aren’t enough homes on the market for all the buyers who want to buy. So, what does that mean for you? To keep it simple, it means it’s still a seller’s market. Here’s how it works: A neutral market is when supply and demand is balanced. Basically, there are enough homes to meet buyer demand based on the current sales pace, and home prices hold fairly steady. A buyer’s market is when there are more homes for sale than there are buyers. When that happens, buyers have more negotiation power because sellers are willing to make compromises to close the deal. In a buyer’s market, sellers may have to do price cuts to re-ignite interest in their home, and prices may go down. But we haven’t seen this for years since there are so few homes available to buy. In a seller’s market, it’s just the opposite. When the supply of homes for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which can lead to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer upfront. This could drive the final sale price of your house up. The graph below uses data from the National Association of Realtors to show just how deep into seller’s market territory we still are today: What Does This Mean for You? The market is still working in your favor. If you lean on an agent for advice on how to get your house list ready and how to price it competitively, it should get a lot of attention from eager buyers. That means you’ll likely get multiple offers and see your house sell quickly and for top dollar. As a recent article from Ramsey Solutions explains: “A seller’s market is when demand for homes is higher than the supply of homes. And that’s still the case right now. If you’re planning to sell your house, you can expect to sell it fairly quickly for close to your asking price—as long as your asking price is realistic for the current market.”
Four Ways You Can Use Your Home Equity
If you’re a homeowner, odds are your equity has grown significantly over the last few years. Equity builds over time as home values grow and as you pay down your home loan. And, since home prices skyrocketed during the ‘unicorn’ years, you’ve likely gained more than you think. According to the latest Equity Insights Report from CoreLogic, the average homeowner has more than $274,000 in equity right now. That much equity can help you achieve certain goals. In a recent article, Bankrate elaborates: “While the pandemic created serious challenges, the silver lining for anyone who owned a home was the sizable equity gain. Understanding how home equity works, and how to leverage it, is important for any homeowner.” Here are a few examples of how you can put your home equity to work for you. 1. Buy a Home That Fits Your Needs If your current space no longer meets your needs, it might be time to think about moving to a bigger home. And if you've got too much space, downsizing to a smaller home could be just right. Either way, you can put your equity toward a down payment on a home that fits your changing lifestyle. A real estate agent can help you figure out how much equity you've got and how to use it when buying your next home. 2. Reinvest in Your Current Home Renovations are a great option if you want to change your living space, but you aren’t yet ready to make a move. Home improvement projects give you the freedom to tailor your home to match your needs and personal style. But it's important to consider the long-term benefits certain upgrades can bring to your home’s value. Lean on a real estate professional for the best advice on which improvement projects to prioritize in order to get the greatest return on your investment when you sell later on. 3. Pursue Personal Ambitions Home equity can also serve as a catalyst for realizing your life-long dreams. That could mean investing in a new business venture, retirement, or funding an education. While you shouldn’t use your equity for unnecessary spending, using it responsibly for something meaningful and impactful can really make a difference in your life. 4. Understand Your Options to Avoid Foreclosure Today the number of foreclosure filings remains below the norm, so there’s no need to fear a wave of foreclosed homes flooding the market. But unfortunately, there are still some homeowners who experience the foreclosure process each year. If you’re facing financial difficulties, having a clear understanding of your options and how your equity can help is crucial. Equity can act as a financial cushion that can be used in times of unexpected challenges or unforeseen circumstances that may disrupt your ability to make mortgage payments on time. In an article, Freddie Mac explains it this way: “If exiting your home is the best option for you, selling with equity may be a good option. When selling with equity, you are using the proceeds from selling your home at a higher price than the amount you owe on your mortgage to pay off your remaining mortgage debt.” Bottom Line Your equity can be a game changer in reinvesting in your needs, pursuing your goals, and even helping you avoid foreclosure during difficult times. If you’re unsure how much equity you have in your home, let’s connect so you can start planning your next move.
The Short Sale Process: 5 Steps to Break Free of Mortgage Trouble for Good
The short sale process can seem intimidating, yet getting a handle on the steps can make it a lotless scary—and help home sellers navigate a difficult financial situation without too muchdamage. A short sale—where homeowners sell their property for less than they owe on their mortgage—isoften the last resort for people who can’t pay their mortgage and arefacing foreclosure, explains Rachel Ivers, a junior agent at The Blake Team at KellerWilliams in Aurora, CO. So how does the short sale process work? Here are the steps involved, and what happens after theshort sale is complete. 1. Consider a loan modification first Before you assume you must have a short sale, talk to your lender or housing counselorabout your situation. You may be able to get a loan modification and avoid having to sellyour home, says Michele Lerner, author of “Homebuying: Tough Times, First Time, AnyTime.” The federal Home Affordable Modification Program, a project run by the U.S.Department of Housing and Urban Development, may be an option. If you’re eligible forHAMP, your mortgage company will likely put you on a three-month trial plan, giving youtime to show you can make timely payments at a new monthly payment level. If youmake it through the trial, you may have a new mortgage payment and avoid movingahead with a short sale. If loan modification is not an option, the next step is to move forward with a short sale. 2. Talk to your lender about a short sale Since a short sale means you’re trying to sell your house for less than you owe on yourmortgage, your lender will have to sign off on it. But first, the lender is going to needproof that the short sale must happen, says real estate agent Lisa Blake, also of TheBlake Team at Keller Williams. “The sellers must submit a short sale packet, which includes hardship papers,” Blakesays. “Hardship papers show the bank that the seller is, in fact, undergoing financialhardship.” That paperwork may include bank statements and account information, incomestatements such as pay stubs, copies of bills and various expenses, asset disclosures,and more. 3. Contact a real estate agent Of course, you’ll need a real estate agent to sell your property—and since short sales arecomplex, you’ll want an agent with experience in the short sale process to handle thedeal. You can search for agents in your area with certain expertise on realtor.com®’s Find aRealtor tool. Keep an eye out for someone who has become a Certified DistressedProperty Expert, which means the pro has completed coursework related to short salesand foreclosures. Once you reach out, the agent will then review your financial situation, as well as thehome’s estimated value, to come up with a listing price. 4. List your property This is one step in the short sale process that is like any other property sale—the homein question is listed by your real estate agent, who will try to find a buyer and get thehome under contract. Once you have an offer from a buyer, this will need to be submitted to your lender forreview. Further negotiations may be required between your agent, the buyer’s agent, andthe lender until a settlement is reached. If your lender has opted to approve your short sale under the U.S. Treasury’s HomeAffordable Foreclosure Alternatives program, this will all be done in about four months.If you didn’t qualify for HAFA, the process can take longer. 5. Close the deal If your lender approves your buyer, all is good. You move out. The buyer moves in.The funds used to purchase the house will go to your lender, and your mortgage debtwill be forgiven. If you qualified for HAFA, you will also walk away with $3,000 in movingexpenses. If you didn’t, you simply walk away without that mortgage debt on yourshoulders. After a short sale, how long before I can buy a new home? Granted, there are repercussions to selling your home in a short sale. The IRS will treatyour forgiven mortgage debt as taxable income, so you may still end up owing money toUncle Sam in the form of income tax. And your credit score could take a hit, since you’renot paying the full debt you agreed to pay when you took out the mortgage. Yet short sales have a few advantages, too. Not only will they get a seller out from underthe threat of foreclosure and out of debt, but they also allow you to stay in your homeduring the selling process, says Sarah Naylor, an agent with the Patty Turner Group inRockwall, TX. Typically you can apply for a conventional loan within four years of a short sale. Thismay seem long, but it’s far better than foreclosure, where lenders tend to expect you towait seven years. “A short sale does look better in the bank’s eyes than a foreclosure,” Naylor adds. “Thebank appreciates that you came to them with your inability to pay as opposed to justleaving your home.”
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