The Top 5 Reasons You Should Not For Sale By Owner

The Top 5 Reasons You Should Not For Sale By Owner | Keeping Current Matters

In today’s market, with homes selling quickly and prices rising, some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.

Here are five of those reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

2. Exposure to Prospective Purchasers

Recent studies have shown that 89% of buyers search online for a home. That is in comparison to only 20% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3. Results Come from the Internet

Where do buyers find the home they actually purchased?

  • 44% on the internet
  • 33% from a Real Estate Agent
  • 9% from a yard sign
  • 1% from newspaper

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $210,000 while the typical house sold by an agent sells for $249,000. This doesn’t mean that an agent can get $39,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Home Sales Up Year-Over-Year

Home Sales Up Year-Over-Year | Keeping Current Matters

Some Highlights

  • This is the 48th consecutive month with year-over-year price gains.
  • Lawrence Yun, NAR’s Chief Economist says that, “The main issue continues to be a supply & affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”
  • Inventory is still below historic norms at a 4.4 month supply.

How Do You Know If You’ve Found Your ‘Perfect Match’? [INFOGRAPHIC]

How Do You Know If You've Found Your 'Perfect Match'? [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Every agent brings a different set of skills & specialties to their clients.
  • It is important to find an agent who you can trust to guide you through the entire process step-by-step.
  • Having a conversation about your goals & expectations will not only save you unneeded frustration, but will also make the transaction as smooth as possible.

Homeowner’s Net Worth is 45x Greater Than a Renter’s

Homeowner’s Net Worth is 45x Greater Than a Renter's | Keeping Current Matters

Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article the National Association of Realtors’ (NAR) Chief EconomistLawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Homeowner’s Net Worth is 45x Greater Than a Renter's | Keeping Current Matters

Put Your Housing Cost to Work For You

Simply put, homeownership is a form of ‘forced savings’. Every time you pay your mortgage you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, meet with a real estate professional in your area who can guide you through the process.

Play Chess… Not Checkers

Play Chess… Not Checkers | Keeping Current Matters

Checkers is a simple game with a simple objective; eliminate the other player’s pieces. Even the process of doing so is simple, jump the other player’s pieces and start a collection. There is very little thought as to a defensive strategy and it is often more reactive than strategic.

Even though the objective of Chess is simply laid out — obtain the other player’s King — the process in which to obtain this goal is much more strategic. Chess requires a greater understanding of the ability of each of the 9 different pieces on the board and a risk assessment that takes longer than a simple scan of the board.

“It’s a game in which the winning strategy is dynamic and requires complex thought across many turns, both for the player and their opponent’s turns.  Chess requires a player to understand the context behind the moves on the board rather than just the risks offered by each individual turn.” – Play Chess Not Checkers by Zach West

You may have heard the saying, “Play Chess, Not Checkers” before, but how does this apply to real estate?

Plan past your next move

So you want to sell your house. You can just put a sign in your front yard and call it a day, right? Wrong! The process of listing your home for sale and what happens next is much more complex than that.

According to the Orlando Regional REALTOR Association, there are over 230 possible actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, and who knows what these actions are to make sure that you acquire your dream?

One example, as we’ve reported before, is the fact that 92% of buyers search online for a home. That is in comparison to only 28% looking at print newspaper ads. Most real estate agents have an extensive internet strategy to promote the sale of your home. Do you?

Identify Risks & Defend Against Them

An experienced real estate professional knows the obstacles associated with buying or selling a home and works closely with other professionals to ensure the process is a smooth one.

Practice Makes Perfect

Just like with any skill, practice and experience bring a sense of confidence and expertise. Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Bottom Line

With an experienced Real Estate Professional on your side, even the complex process of buying your next home or selling your house can be strategically navigated.

Homeownership Finally Makes Political Debate

Homeownership Finally Makes Political Debate | Keeping Current Matters

This is not a political post!

Finally, the issue of homeownership has become a platform talking point in this year’s presidential debate. Yesterday, one of the candidates running for President spoke out about the importance of homeownership in America.

Hillary Clinton detailed a new economic agenda yesterday. In announcing her new agenda, she remarked:

“Homeownership is about more than just owning a home. It is about putting roots down in a community with better schools, safer streets and good jobs. And it is about building wealth, as homeowners build equity in their home one mortgage payment at a time…We must make sure that everyone has a fair shot at homeownership.”

This post isn’t political!

It doesn’t matter that it was Clinton who said it first. It doesn’t matter that she is a Democrat.

What matters is that EVERY candidate for our country’s highest office realizes the important role homeownership plays in the development of our nation.

The fact that homeownership was finally brought to the forefront of the debate is great news – no matter which way you lean politically.

Are the Kids Finally Moving Out?

Are the Kids Finally Moving Out? | Keeping Current Matters

During the recession, many young adults graduating from college were forced to move back in with their parents. This caused new household formations to drop dramatically from the long term average of 1.2 million formations annually to half that number. However, this may be the year this turns back around.

According to the Urban Land Institute’s report, Emerging Trends in Real Estate, household formations will increase dramatically. They project that 3.68 million additional households will be formed in the next three years. This brings household formations back to pre-recession numbers of 1.2 million a year.

What will happen in 2016?

One of the key indicators to an improving housing market is household formation: How many people are moving out and forming an independent living unit? Many of the people “moving out on their own” will be those Millennials who can finally move from their parents’ basements to their first home.

Not every person moving out will decide on an apartment. A certain percentage of consumers will decide that homeownership is a better option for themselves and their families.

Jonathan Smoke, Chief Economist at realtor.com, believes:

“Demand for for-sale housing will grow and will continue to be dominated by older millennials, aged 25 to 34. This demographic has the potential to claim a third of home sales in 2016 and represent 2 million home purchases.”

What about household formations moving forward?

And Louis Keely, the President of The Demand Institute, predicts strong household growth will continue over the next ten years:

“We expect new household formation to be robust over the next decade as the large millennial generation ages and forms new households of their own.”

Bottom Line

Here come the Millennials!! They will finally be entering the housing market in 2016 and will dominate real estate sales over the next decade.

How To Create Real Family Wealth [INFOGRAPHIC]

How To Create Real Family Wealth | Keeping Current Matters

Some Highlights:

  • Buying a home is often the biggest financial decision that any family will make.
  • The average net worth of a homeowner is 45x greater than that of a renter.
  • Homeownership puts your housing costs to work for you.
  • Infographic was created in cooperation with Jensen & Co.

Future Home Values: Where Do The Experts Think They Are Headed?

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 3.7% over the course of 2016, 3.3% in 2017 and 3.2% in the next two years, and finally 3.1% in 2020 (as shown below). That means the average annual appreciation will be 3.3% over the next 5 years.

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

The prediction for cumulative appreciation slowed slightly from 21.6% to 17.7% by 2020. The experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 10.9%.

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

Thinking of Buying A Home? What Are You Waiting For?

Thinking of Buying A Home? What Are You Waiting For? | Keeping Current Matters

With spring right around the corner, you may be wondering if you should wait to enter the housing market. Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.2% a year for the next 5 years.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained below 4%. Most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Freddie Mac & theNational Association of Realtors are in unison projecting that rates will be up almost three-quarters of a percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You Are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Bottom Line

If you are ready and willing to buy, find out if you are able to. Meet with a local real estate professional who can help you find your dream home.