Listing a home for sale now, rather than spring
I've been having conversation with other agents, clients and noticing a few blog posts on AR on this subject. Traditionally it has been sound advice to list your home in the spring, when the days are getting longer, the flowers are blooming and everyone else is doing it. In an appreciating market, or even a flat market, this can still be sound advice.
Currently most of the country is still seeing declining values and there is a mysterious shadow inventory waiting to appear. This shadow inventory is the yet to be foreclosed upon homes whose owners are still hoping for a loan modification or just holding out. Housing, being a supply and demand commodity like fruits or vegetables will change in value as it becomes more or less available. Cherries are always cheaper in season than out, if you can get them.
Let's make some assumptions. The home you would like to sell is currently worth $500,000. The median value for housing in the area has declined 6% in the past 12 months and that trend is continuing. If the average time on the market is 90-120 days for similar homes, and you were to wait 3 months to enter the market, with a .5% average monthly decline, your home will be worth $485,000 by the time you get an offer.
Now, how will interest rates impact this situation? Current rates for a purchase of this house as of this writing would be 4.75 (4.854% APR with 20% down). The payment for $400,000 financed at this rate, principle & interest is $2086.59 on a 30 year conventional mortgage.
At the reduced price of $485,000 the payment should be less, right? Well, it really depends on what happens to rates. Most of the "experts" I hear from assume rates will have to go up to fight inflation after the first of the year. While this is uncertain, I find it more plausible than rates going any lower. Even at the lower price, if the rate were to go up to 5.5% (5.610 APR), still a historically great rate, the payment would be higher, $2203.02, or $116.43 more per month.
To get the same payment at 5.5% interest, with 20% down, the home price would have to be all the way down around $425,000. That would be $75,000 off!
A higher rate and higher payment means less affordability, fewer potential buyers will qualify.
Okay, enough with the math. What about the intangibles? Historically winter shoppers are more serious shoppers. Weather, holiday shopping, parties and events are huge diversion for people this time of year. Those who don't need to shop for a home find plenty of other activities to spend time on.
Holiday decorations, when tastefully done, along with a fire in the fireplace and holiday baking can add an emotional appeal hard to match. Take advantage of these bonus opportunities to show your house off and draw in a serious buyer.
A few notes of caution should also be considered. Valuables, especially presents can be tempting to those who have no holiday cheer in them. Always keep things secure and only allow licensed agents to show your home. If a stranger sees your sign in the yard and wants a tour, call your agent. They will either drop what they are doing or arrange a time with the prospective buyer once they have properly qualified them.
So, be a contrarian and come out ahead. List a home now, not this spring, take advantage of all that is available to help you sell for more; low rates, tax credits, emotional appeals and more serious shoppers.
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