The Biggest Mistakes Sellers Are Making Right Now
The housing market is going through a transition. Higher mortgage rates are causing more moderate buyer activity at the same time the supply of homes for sale is growing.And if you aren’t working with an agent, you may not realize that. Here’s the downside. If you’re not informed, you can’t adjust your strategy or expectations to today’s market. And that can lead to a number of costly mistakes.Here’s a look at some of the most common ones – and how an agent will help you avoid them when you sell. 1. Overpricing Your HouseMany sellers set their asking price too high and that’s why there’s an uptick in homes with price reductions today. An unrealistic price will deter potential buyers, cause an appraisal issue, or lead to your house sitting on the market longer. An article from the National Association of Realtors (NAR) explains:“Some sellers are pricing their homes higher than ever just because they can, but this may drive away serious buyers and result in unapproved appraisals . . .”To avoid falling into this trap, partner with a pro. An agent uses recent sales of similar homes, the condition of your house, local market trends, and so much more to find the price that’ll attract more buyers and open the door for multiple offers and a faster sale.2. Skipping the Small StuffYou may try to skip important repairs, thinking you can pass the task on to your buyer. But visible issues (even if they’re small) can turn off potential buyers and result in lower offers or demands for concessions. As Money Talks News says:“Home shoppers like to turn on lights, flush toilets and run the water. If these basic things don’t work, they may assume you’ve skipped other maintenance. Homes that appear neglected aren’t likely to fetch top price.”If you want to get your house ready to sell, the best place to turn to for advice is your agent. They’ll be able to do a walk-through with you and point out anything you’ll need to tackle before the photographer comes in.3. Not Looking at Things ObjectivelyBuyers today are feeling the pinch of high home prices and mortgage rates. With affordability that tight, they may come in with an offer that’s lower than you’d want to see – especially if you didn’t stage, price, or market the house well.It’s important you don’t take this personally. Getting overly emotional can put the sale at risk. As an article from Ramsey Solutions says:“Remember, a buyer’s offer is not a reflection of their opinion of your home or your housekeeping abilities. . . The sale of your home is strictly a business transaction. If they start out with a low offer, don’t take it personally and get emotional. Instead, channel that energy toward negotiating. Work with your agent and make a counteroffer.”4. Being Unwilling To NegotiateThe supply of homes for sale has grown. That means buyers have more options, and with that comes more negotiation power. As a seller, you may see more buyers getting an inspection, requesting repairs, or asking for help with closing costs today. You need to be prepared to have those conversations. As U.S. News Real Estate explains:“If you've received an offer for your house that isn't quite what you'd hoped it would be, expect to negotiate . . . the only way to come to a successful deal is to make sure the buyer also feels like he or she benefits . . . consider offering to cover some of the buyer's closing costs or agree to a credit for a minor repair the inspector found.”An agent will walk you through what levers you may want to pull based on your own goals, budget, and timeframe.5. Not Using a Real Estate AgentNotice anything? For each of these mistakes, partnering with an agent helps prevent them from happening in the first place. That makes trying to sell your house without an agent’s help the biggest mistake of all.Real estate agents have experience and expertise in pricing, marketing, negotiating, and more. That knowledge streamlines the selling process and usually results in drumming up more interest and ultimately can get you a higher final price.Bottom LineIf you want to avoid making mistakes like these, you need to work with a real estate agent.
Are Home Prices Going To Come Down?
Today’s headlines and news stories about home prices are confusing and make it tough to know what’s really happening. Some say home prices are heading for a correction, but what do the facts say? Well, it helps to start by looking at what a correction means.Here’s what Danielle Hale, Chief Economist at Realtor.com, says: “In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices . . . We don't have the same established definitions in the housing market.”In the context of today’s housing market, it doesn’t mean home prices are going to fall dramatically. It only means prices, which have been increasing rapidly over the last couple years, are normalizing a bit. In other words, they’re now growing at a slower pace. Prices vary a lot by local market, but rest assured, a big drop off isn’t what’s happening at a national level.The Real Estate Market Is NormalizingFrom 2020 to 2022, home prices skyrocketed. That rapid increase was due to high demand, low interest rates, and a shortage of homes for sale. But, that kind of aggressive growth couldn’t continue forever.Today, price growth has started to slow down, which is a sign the market is beginning to normalize. The most recent data from Case-Shiller shows that after being basically flat for a couple of months last year, prices are going up at a national level – just not as quickly as before (see graph below):The big takeaway? So far this year, there’s been a much healthier pace of price growth compared to the pandemic.Of course, that’s what’s happening now, but you may be wondering what’s next for prices. Marco Santarelli, the Founder of Norada Real Estate Investments, says:“Expert forecasts lean towards a moderation in home price growth over the next five years. This translates to a slower and more sustainable pace of appreciation compared to the breakneck speed witnessed in recent years, rather than a freefall in prices.”It’s all about supply and demand. Increasing inventory plus limited buyer demand, due to relatively high mortgage rates, will continue to ease some of the upward pressure on prices. What This Means for You If you’re thinking about buying a home, slowing price growth is welcome news. Skyrocketing home prices during the pandemic left many would-be homebuyers feeling priced-out. While it’s still a good thing to know the value of the home you buy will likely continue to go up once you own it, slowing price gains are making things feel more manageable. Odeta Kushi, Deputy Chief Economist at First American, says:“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn't boarded up just yet.”Bottom LineAt the national level, home prices are not going down. And most experts forecast they’ll continue growing moderately moving forward. But prices vary a lot by local market. That’s where a trusted real estate agent comes into play. If you have questions about what’s happening with prices in your area, reach out to an agent.
Why You Should Have A Trust
Navigating the complexities of real estate and estate planning can be overwhelming, but it's essential to consider the most efficient ways to manage and transfer your assets. One often overlooked but incredibly beneficial option is placing your home into a trust. Not only can this help you avoid the labyrinth of probate, but it also offers a seamless, tax-efficient way to transfer wealth to your heirs. Here’s why establishing a trust should be a critical component of your estate planning strategy. Trust: The Basics A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of beneficiaries. Trusts can be structured in various ways and can specify exactly how and when the assets pass to the beneficiaries. They offer greater control and flexibility than outright gifting or using wills. There are two main types of trusts: revocable (living trusts) and irrevocable trusts. With a **revocable trust**, you retain control over the assets and can modify the trust as needed. On the other hand, an **irrevocable trust** generally cannot be altered once executed and may provide certain tax benefits. Avoid Probate One of the most compelling reasons to place your home in a trust is to avoid probate. Probate is the court-supervised process of authenticating a last will and testament if the deceased made one. It involves cataloging the deceased’s property, paying any remaining debts and taxes, and distributing the remaining property as the will (or state law, if there’s no will) directs. This process can be lengthy, public, and costly. By placing your home in a trust, you can bypass this cumbersome process. The property within a trust passes directly to the beneficiaries without going through probate. This not only saves time but also maintains privacy, as probate proceedings are public record. Being able to avoid probate could result in considerable savings of both money and stress for your loved ones during an already difficult time. Transfer Wealth Trusts are excellent tools for transferring wealth efficiently. When you put your home in a trust, you're setting up a clear, legally binding plan for what should happen to that property after your death. This can prevent disputes among heirs and ensure a smooth transition of assets. Moreover, trusts allow you to stipulate terms and conditions tailored to family needs, such as ensuring that a family home stays within the family for future generations. Another advantage is that a trust can be designed to take effect under specific conditions, such as after reaching a certain age or completing education. This conditional transfer can help protect young or financially irresponsible heirs from squandering their inheritance. Tax Advantages Putting your home in a trust also offers several tax benefits. For one, it can help reduce estate taxes, which can be significant, depending on the value of your estate. By placing your home in an irrevocable trust, the asset is usually removed from your taxable estate. This reduction can potentially save your heirs a significant amount of money on estate taxes. Additionally, assets in a trust often receive a "step-up" in basis upon the grantor’s death, meaning that the property’s value is adjusted to its fair market value at the time of death. This step-up can significantly reduce the capital gains taxes your heirs might owe if they decide to sell the property later. Conclusion Establishing a trust is not just for the wealthy; it is a practical estate planning tool that offers multiple benefits, such as avoiding probate, providing a straightforward way to transfer wealth, and potentially reducing taxes for your heirs. If you want to secure a smooth and efficient transfer of your family home while safeguarding your heirs from legal and financial hurdles, placing your home in a trust should be a top consideration. Taking the time now to place your home in a trust could save you and your loved ones considerable stress, time, and money in the future. Consult with a qualified estate planner to explore the best trust options suited to your unique circumstances and ensure your family's financial security for generations to come.
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