You’ve seen the signs: I’ll sell your home in 60 days, or I’ll buy it. I want to take a minute and share with you how those programs work, and what you should be aware of when considering this type of program.
Personally, I don’t have a guaranteed sale program. I can’t offer something in good conscience that, in my opinion, is a bait and switch marketing tactic. I have nothing against the Realtors that use these programs, and a lot of the most successful agents in this country have some form of this program in their business plan.
However, if you were to talk with several of these agents, very few end up having to buy the home from their client. Even fewer of the clients choose to list their home under these programs. That’s partly due to what’s in the fine print. There are several criteria that the seller must agree and comply with in order to make these programs work.
Some of these programs include an agreed upon list price, which is solely based on recently sold properties and not current market conditions. Other programs include a pre-agreed upon price reduction every 7 days, and that can be a significant amount. Still more programs include an upfront marketing fee of $1,500 to $2,500 and pay for staging and any other things the Realtor recommends.
In addition, the pre-agreed upon price that the agent would pay for the home is usually well below market value and includes the same seller commissions and fees as a regular transaction.
The reality is that these types of programs might work for a small percentage of people, but ultimately, guaranteed sale programs are a marketing tool to get the agent’s phone to ring, and it often works. I’ve talked to several who use these programs, and they all say that it’s a huge lead generation system for them.
Bottom line, if it seems too good to be true, it probably is. If you’re a motivated seller and you’re willing to do what your agent recommends, price your home aggressively based on the current market conditions, and combine that with a fantastic marketing plan, then your home should sell.
If you have any questions, please don’t hesitate to give me a call or send me an email. I look forward to hearing from you!
The Northern Virginia real estate market got off to a hot start in 2016. The blizzard might have set us back a couple days, but the market is still doing very well. My team and I put a house on the market just before the snow started and it went under contract in 5 days. Buyers are still out there even though inventory is low. Here’s the scoop on the Virginia real estate market:
Sales in December 2015 increased by about 1% with 2,845 closed transactions. Pending sales were up from 2014 by 9.5% to 2,230. New listings were also up 5%, but active listings are down by 0.8%, resulting in low inventory.
In December, there were only 2.32 months of inventory on the market, which is very low for the region. According to the National Association of Realtors, housing inventory levels across the country have seen a downward trend since 2011.
Despite low inventory, real estate was the best investment in 2015, getting property owners a 6.8% return. Overall, 88% of the population feels homeownership is a good financial decision.
While real estate is a great investment, most people want to buy real estate to have a home of their own or a place to raise their family. However, buyers are concerned about low inventory, saving for down payments, and rising interest rates. First time buyers will be the most affected if interest rates rise.
If you are thinking of buying a home, keep in mind that it takes 49 days to close on a loan.
What does all of this mean? Our real estate market is strong. There is high demand for homes and low supply. If you’re waiting for May, June, or July to sell your home, you might want to reconsider. Get on the market now. Buyers are looking, and you’ll beat the competition.
As a buyer, get with a lender and get pre-qualified. You might want to wait for spring for inventory levels to rise. However, if interest rates do go up, that home you can afford today might be too expensive in a couple months. Don’t miss out because you weren’t sure what to do.
If you have any questions, give us a call or send us an email. We would be happy to help you!
Today we are excited to talk about both the perceptions, and realities, of homeownership in Northern Virginia. The National Association of Realtors recently released a report saying Americans at every age and income level agree that homeownership is both a smart financial decision, and part of the American dream. We've talked about some obstacles to homeownership in the past, but as studies like this have shown, many obstacles are perceived. They aren't real. A recent study by Fannie Mae revealed that many consumers are either unsure or misinformed regarding the minimum requirements to obtain a mortgage. We are going to break down three such challenges today. 1. Down payment perceptions Many renters have mentioned that the lack of an adequate down payment is the thing that most prevents them from buying. According to the Fannie Mae report mentioned above, 40% of all renters don't know what kind of down payment is required, while 15% think you need at least 20% down and 4% believe at least 10% down is required. The reality is, there are tons of programs out there from Fannie Mae, Freddie Mac, and FHA that offer 3% down programs. VA and USDA loans offer 0% down programs. The average down payment for a first-time buyer is 6%.
2. Credit score perceptions Many renters have also mentioned that the lack of a good credit score is the thing preventing them from buying. According to the same Fannie Mae report, 54% of all renters don't know what credit score is required, and 5% think you need at least a score of 740. Actually, many mortgages are granted to purchasers with a score below 700. The average credit score for FHA loans is 687, and the average score on all loans is 722. 3. Debt-to-income ratio perceptions Many renters say they carry too much debt, but 59% of renters surveyed by Fannie Mae don't even know what ratio is acceptable. Lenders like to see a back-end ratio that does not exceed 36% of the buyer's stable monthly income. All of this leads us to the bottom line: Don't let a lack of knowledge or misinformation keep you from buying this year. If you don't know where to start, or have any other questions about the market, we would be glad to help. Give us a call or send us an email. We look forward to being in touch!
