If you have been following along for the last 30 days by now you should know that waiting for home prices to go down is okay but they’ll only go down a little bit more as interest rates creep up. Higher rates means higher mortgage payments and lower prices you can be approved for because approval is based on rates that dictate your monthly payment and that alone determines your affordability; not prices. Waiting for prices while rates are rising is costing you more money and lowering your ability to afford much. Be careful with “timing the market” hacks that are mostly BS!

You know by now that DOM can exceed 30 days simply because the market has reset and is now stable versus chaotic so it’s flipped from a seller’s market to a buyer’s market. It’s okay. You know too from being here how to sell faster in this market. I have multiple posts on this topic if you need a reference.

This month we also talked about equity and putting serious cash in your possession that’s free and already in your pocket without you knowing it. What else?

Oh yeah!

Your FHA loan can buy you an investment property for the same price as a regular home and you can become an investor overnight without extra money or debt. Cool huh?

It’s a big question right now and it’s important. Keep reading: ⤵️

1. Know that two months on the market is now common but if you follow the next rule could be avoided.
2. Price aggressively means don’t price what you want or need but what it will likely sell at. Multiple offers aren’t common right now so if you want real offers and buyers you MUST be reasonable and understand the current market.
3. A first impression is everything right now so pack now and get a storage unit. Donate, trash, recycle, and sell everything else.
4. Call me then proceed immediately to step 5.
5. Hire a stager or I can make recommendations. It’s an expense to you but worth it. Do it.

The market isn’t bad; it’s just back to normal when the selling season usually wanes for a breather. It’s stable and that’s healthy for you when you move too.

As always stills are available with a post on my blog. #theconverserealtor #agentofparadise

House hacking is not at all a new concept but it’s got a new, trendy name these days. It’s basically becoming a landlord in your own home and/or having roommates that essentially cover all of your expenses for you so you live almost free. 

The rent you charge each tenant is what you deem is fair given the current rental market averages in your area and you charge that amount to include utilities; either by room rate if it’s a single family home or unit rate if you bought a duplex, triplex, 4-plex type property. Those rents will cover your mortgage, utility costs, insurance, maintenance reserves, and potentially even more to put into your savings account!

Most of us did this back in the day because we were flat broke and had no other option than multiple roommates and sharing the bills. While it’s not ideal for everyone, if you’re having significant financial struggles or job loss, it can be a temporary solution to save your home, keep the AC on, and food in your belly. 

If you’re a single person or couple especially, this is a great way to get into a three bedroom home now that you can purchase for 3.5% down with a standard FHA loan and not pay a dime for while you also buy and hold to either sell for profit in a few years OR eventually turn into your family home when it’s time to start one. Remember: homeownership also comes with tax benefits!

If you’re a single woman or family who needs the extra income but you are concerned about safety, you can also rent out to traveling nurses and fellow working single moms or professionals who are not around much and make excellent renters while paying down some of your debts and expenses. 

Of course, make sure you run full background checks on anyone coming on to your property as well as credit checks, verify employment, have standard property rules in place, and HAVE A LEGITIMATE LEASE AGREEMENT written by a real estate attorney to help you protect your assets and rights. Require a security deposit and have someone who can be an authority on property when needed whether it’s you, family, or friend. A property manager may end up a great addition as well if you can. A candidate with a stable job and proof of payment history is a wonderful start. Don’t even bother otherwise! Make sure they fill out an application and pass your checks before showing the property physically. You can also hire an agent for a small fee if you wish. Let me know how else I can help you.

Here’s the truth:

1. You SHOULD buy. The right time to buy is when the time is right for you financially and when you are sick of paying record high rents. Lower prices do NOT mean lower mortgage payments so timing prices is a waste of time. It’s not at all saving you money.

2. You CAN by multi-family properties, up to 4 units, with your FHA home loan. If you are interested in investing or “house hacking” to live free, then try purchasing a duplex, triplex, or 4-plex with an FHA mortgage first before exploring other financing options. Make sure to speak with your lender to discuss your goals at time of application and when you locate a property of interest.

3. It’s always a good time to sell. People are always buying and even 2008 didn’t change that. Whenever it’s best for you to sell and move on with your life, that’s when it’s best to sell. Thanks to the last two years of wild buying, equity is still very high and bidding wars are virtually gone. Selling now is even easier to move to your next home.

4. Prices may go down a little in some markets but overall hardly anything and they’re leveling out. Even a $20k drop isn’t going to save you hardly anything at all on your monthly mortgage payment. Prices make little impact actually. Payments are calculated on rate. Prices just value and secure the loan.

5. It’s certainly NOT cheaper to rent right now. Rent prices soared the last two years and unlike home prices, they’re not going to start dropping and become easier to obtain. Rents stay high even when they stop rising and waitlists are a growing problem across the country which allows property managers of apartments and homes to keep them that way. It’s cheaper to buy a 3/2 with an FHA loan and you can write off on your taxes if you talk to a tax professional to file them for you. It’s actually not expensive.

6. As always, mortgage payments are calculated by mortgage rates. The home value is a tool for buying purposes for the lender and seller actually. The buyer’s costs are the monthly payment which is decided by interest rates and then calculated as a total loan value for you to write offers. It’s not decided then broken down into a payment for you. That’s not how mortgages work.

Here’s an example of why interest rates are crucial to understand and how they drive your payment instead of price:

HOW MUCH DOES IT COST TO BUY A HOME RIGHT NOW?

Thanks to rising interest rates, it costs a lot to purchase a home now. It was actually cheaper last year because interest rates determine your monthly payment and affordability, not purchase price.

A half million dollar home is now over $4,000 per month when two years ago with low interest rates it was a thousand less for the same price home. “Timing the market” costs you!! Home prices barely affect how much you pay. The price is really just a lending tool. For you what matters are the current mortgage rates.

Most buyers now are going back to FHA and paying usually a down of 3.5% plus closing costs which around here tend to average around $12k or a little higher. So for this home expect to pay out of pocket at least $30,000 out of pocket.

Selling a home in the pandemic driven market was almost too easy; but in this post pandemic market, it’s too easy to become discouraged. It’s normal now to sit on the market for two months and reduce the price. It’s normal to get few showings, offers below ask with incentives, and it’s common for this to be upsetting after the last two years of insane bidding wars after two hours on the market. That market is over.

Now, we need to get to work on fully showing your property outside of its walls and showcasing every sweet detail it has. This is your A-game moment if you are a seller.

If you are a buyer, this is your market to get homes without competing with dozens of other buyers and waiving appraisals. This is your market to buy without the bullish market tactics and prices. This is your market also if you are an FHA buyer and were squeezed out of the running the last two years.

Sellers, focus on all the details. If you were hosting your most favorite person in the world whom you’d always want to meet in real life (not family and friends), how would you prepare the house for them? Would you pull the weeds in the front yard, trim shrubs, touch up paint, power wash, clean windows and sills, and present it like a magazine were coming to shoot it? That’s how you need to prepare your home to sell.

What else is important to buyers? Location, location, LOCATION!!! If you have stellar position in the city, you have a leg up on getting an offer over the one a couple miles away. How do you use location to your advantage and wow buyers even more? Make it known. Read my previous blog post for more information on that.

When putting your home up for sale, there are many things to keep in mind besides just showings and a well written MLS listing. Some properties have special attributes like neighborhoods and locations. Proximity matters to buyers and if you are close to schools, shopping, main shopping areas with grocery stores and common places people go, hiking trails, local favorites, etc; make sure those are showcased and buyers are aware.

As the listing agent, I love to highlight these. If I know a home is close by to nature trails and popular hiking trails I will mention it in marketing and to potential buyers at open houses and showings. I’ll put it in a flyer and discuss on social media. I tell my clients and the agent of the buyer in case they are not familiar. The home’s presentation is absolutely important but in a now shifting market that is going from easy to difficult, anything is important and a selling point. Location is always a driving factor in buyer decisions.

Maybe your home is in the safest area of town, you have no HOA, and you are located in the vicinity of nice restaurants and places people love. It’s all important to buyers and are a key point in which home they will offer on. Play up your home’s attributes. I’ve had amazing homes not sell because they were on a busy street that was right off a main highway and the road noise could be heard on the balcony as well as in the view. Buyers absolutely care.

Buyers, think about everything regarding the location. Families often look at schools and Sunday services but what about how close they are to Target, parks, the crime stats, quiet streets to ride bikes, nice streets to walk the dogs, neighborhood friendliness, sunset views, doctors offices, emergency services like fire and police, etc. Many desirable qualities can make a home a smarter purchase when you consider the bigger picture.

You keep hearing it and it’s happening. The market is in fact cooling as rates increase, schools begin session, inflation rises, and people lose buyer enthusiasm. What if you are a seller though who now feels confident to move and buy but not so much that your home will list and receive solid offers?

Valid question and here’s how:

It sounds simple but it is so critical for sellers to understand this market now is different than the start of the summer. Don’t look at comps from June because they’re not your reality now. Look at the last 30 days only. Those are your competitive market conditions to keep in line with. Price to a lower listing value keeping in mind amenities and size. Do not price high at all. Homes are already spending a month on the market easy before receiving offers. If you list even a little too high, you will sit longer and likely get low offers after many weeks; or have to reduce price to get any action at all. Don’t squeeze dollars to get pennies!

Make the home look clean, organized, uncluttered, staged versus lived in, and spacious. Buyers can’t visualize their stuff over your stuff. Start packing and moving or get a storage unit. Keep the home very clean and inviting for showings that come up at any time.

In this market, buyers are already becoming used to incentives at closing for design credits, closing costs, additional agent commissions, or even out right cash at close money-in-your-pocket. Yep! Get ready to be generous. Know offers are now trickling in versus pouring in and they’re more around list price than way over. If you get 3, you did well. That’s the new buyer’s market we’re in.

This is so crucial to understand that the tide is turning and it’s a new ocean we’re swimming in. It’s not bad; it’s just calmer seas now so patience and smarts are most important to get your home sold for the price you need.

Any more questions? Please 📞 call, text, or email 📧 at agentofparadise@gmail.com for more information and a general neighborhood market analysis.

Be sure to read the previous blog post as well for more information how rates, not home price, affect your buying power, budget, and monthly payment.

This idea of timing the market is more myth and urban legend than strategy or budget hack. The mad rush of the last two years was because of insanely low interest rates were allowing people to buy their dream homes for actually CHEAPER than they are now. Now for those same people, the homes they’re in would be out of reach today. Yep. The difference interest rates have is the only difference in these two examples. Same client and circumstances. What a difference two years makes. Waiting means now you can only buy a $500,000 house which nowadays isn’t much. Two years ago you could have bought a $700,000 home which was still better than todays 500k and paid the same amount! That’s why the market was nuts. 💰

Home price is nearly irrelevant unless you are flipping the home or selling soon afterwards. Otherwise, it’s Mortgage Rates that matter. That’s how lenders approve you. NOT by total amount. That’s just for you so you know how to search on @zillow ✌🏼

📞 💬 📧 Jennifer Larson for more information on connecting with a lender and buying or selling a home.