Recent Home Seller Trends for 2021 and Best Practices.
In a normal real estate market or a buyer's market, it's not uncommon for people to put their homes up for sale, find a buyer to purchase the home, go looking for new homes, and have them close at the same time.
A sellers market is here and now we have a different way of going about buying and selling a home
In the traditional sense, a sellers market is when there are more homes for sale than buyers. This means that sellers can be choosier and set higher prices. However, in this new era of real estate we now have a different way of going about it.
In this new era, buyers are more informed and have more options to choose from. Nowadays homes are sold before they go on the market and if they do go up for sale it is almost guaranteed that someone will buy them within days.
This means that instead of being choosy about what price to list at, sellers should be strategic with the timing of their listings so they can sell as quickly as possible while still getting a good deal on their home.
Scott Schulte has been in the real estate business since 2005 and can help you navigate the current real estate market. If you have questions about the best rout for your personal situation. Scott can help you find a home that suits your needs and at the same time help you sell.
Step one deciding what direction to go is how much equity do you have?
The equity in your home is the difference between what you owe on your mortgage and the fair market value of your home. If you are using the equity as a down payment, it’s good to know, so you know how much of the equity you will want to use to manage your monthly payment. The more you put down and the better the rate the lower the payment.
The first thing a person should think about when it comes to home equity is how much they have. If one has a lot of equity, then they are in the position to buy a new home and then sell their current home.
Step 2 discuss the situation with Scott a professional real estate agent that is easy going, and will discuss this with you weather your planning a year out, or right away.
Get a basic idea of how much equity you have here:
Step 3 figure out what direction is best for your family and financial situation:
Below are options you have as an home owner, buy and selling a home. Sell and rent back, becoming a landlord. Many options that you have, let me know what fits your family situation the best, and we can help you devise a plan.
Can you afford both homes for a short time? Buy a home move, then sell your other home?
A lot of clients ask me if they can afford both homes for a short time, which can be expensive. They are wondering if they should buy one house now and then move after they sell their current house, or own both at the same time.
This would give the client to buy a home, take their time to move and then sell their home when they are ready.
This is expensive if you are running mortgages on both homes, If you need the money out of your current home to put down on the new home this does not always work.
If you are looking to purchase a new home and have a mortgage on your current home, you don't want to get stuck with two mortgages.
What if the rates suddenly go up? (Remember Allen Greenspan?) If rates suddenly go up, that can make home buyers suddenly have the buying power for less of a home for the amount of monthly spend they have or are willing to spend. This typically will magically make you an instant landlord. Owning two homes at once has it’s risk!
Sell with an extended or flexible close date, then close both at the same time.
This is very common for 2021, As a seller you have leverage in this market. Most buyers are coming from out of state, or have already sold. Moved in with family, Moved in the Recreational vehicle, or rented an apartment and now have the ability to be flexible on the close date.
When you put your home up for sale we write this in the private selection of the MLS listing for the buyers agents to see “Seller will need at least a 60 day close to obtain another home” or “Seller will look at all offers but will give longer more flexible close of escrow offers priority”
This way the home your selling can be closed at the same time as the one your purchasing and you can use the proceeds as down payment for the new home.
Sale Rent Back is a Very Popular Option in 2021
While selling your home to an investor can be a quick and easy way to sell your home, it also comes with risks. If you're not careful you may end up giving thousands of dollars to a stranger.
Renting with intention to move out as soon as your home is finished being built, or while you find a home, or while you improve a low credit situation then find a home to move into can work for non investment type of buyers in 2021.
With such a shortage of homes on the market, buyers are willing to be more flexible about extended close of escrows or sale rent backs.
Sell Fix Your Credit While Renting Back, Then Purchase
The great part of a sale rent back is if you have equity, you can sell your home, get the proceeds, use the proceeds to strategically fix your credit (under the supervision of your professional loan person), and use the rest of the proceeds for a down payment on your next home.
Buy and become a landlord
The option is a viable one for people who want to become a real estate investor and plan on holding the home while the tenant helps pay the expenses.
This option requires you to take into account the cost of mortgage, insurance, maintenance, and taxes on both homes. You will also need to factor in additional costs such as utilities, housekeeping services, lawn care, security systems, and more.
Becoming a landlord can be very rewarding but you will have to be able to stomach some interesting situations. If you are renting out your property, there is a chance that you will encounter some interesting people.
You may have to deal with damage to the property, water leaks, and even finding out that a tenant has a pet. But the job is not without its downsides - such as dealing with an eviction process if tenants don't pay or having to clean up after pets or find new renters when someone moves out unexpectedly.
Landlords can make good livings by charging their tenants. This is because the average rental costs are higher than the average mortgage costs, meaning that landlords are able to make more money renting out their property than if they were paying for it themselves.
Becoming a landlord can be very rewarding for those who want to invest in real estate on a part-time basis. For those looking for full-time work, it provides them with both the opportunity and freedom to set their own schedule.
The good thing about being a landlord is that you can make your own schedule. You are not under the pressure of someone telling you when to work because you set your own hours. This also means that you don’t have to worry about showing up for work each day, so if your child gets sick or you need to take care of something else, the responsibility doesn’t fall on someone else.
But, being a landlord also comes with responsibilities which can be very time consuming and even costly. You have to deal with repairs, pets peeing inside the house and other annoying problems which make this career not for everyone.
Selling and moving in with family temporarily (very popular 2021)
This can be a fun option, especially if it gives the grandparents extra time to spoil the grandchildren and have some fun.
So this plan is similar to a sale rentback, but you sell, move in with family, start the home search while fixing a few small credit issues with the supervision of the home loan person.
Selling a home and moving out of state
We have had several clients do this, Some moved out of state, and had to wait a week or so before they could start the journey across the US. They enjoyed time with the grandparents then moved on out of Arizona.
Anther cool part of moving east is homes are significantly less expensive. We have actually have had people use equity from the sale of an Arizona home to purchase a home back east for cash! So they took a chapter out of so many Californian’s books!
Don’t set forth on one of these selling plans prior to discussing the ins and outs of them with a profession real estate agent like Scott. The current market may not even entertain these plans right now. Markets and areas are different and they change fast. What works today may not work tomorrow!
For example: One unnamed home builder in Arizona was selling homes like crazy 2 months ago with drawings, cutting agents out of commissions, with a list of home buyers a mile long. This month they are calling real estate agents trying to drum up business. Funny how Karma works!
Keep your life simple, start with your home valuation above, talk to Scott now and then about the market, when your ready, we can help.
Have an interesting market in your neighborhood? Tell us about it below!