You’ve no doubt heard that the housing market in changing. In fact, one expert claims that “We’re in a housing recession right now.”
While he is a lone voice on that front, there’s no doubt that the market is transitioning.
For instance, first-time homebuyers are putting their plans on hold for the time being. The pool of these homebuyers has shrunk from 34% to 26% since this time last year, according to the National Association of Realtors.
Does this mean that you’ll have trouble finding a buyer for your home?
Not at all.
What it does mean is that you should forget about the wonders of yesterday’s housing market. Tales of multiple offers, homes selling for more than the asking price, homes flying off the market within 24 hours and being able to call most of the shots during the transaction.
In other words, the market will, hopefully, correct to a normal real estate market.
There are a few other aspects of selling a home that you would do well to keep in mind right now.
1. Understand how market value is determined
Even if his home is identical to yours, it doesn’t matter what neighbor Joe’s home sold for 6 months ago. Yours isn’t worth that now. In fact, your home is only worth what a willing buyer will pay for it.
At this point in the market transition, that price is a moving target. You should certainly not rely on what the big online real estate portals (Zillow, etc.) suggest. Even professional appraisers will have to crunch more numbers to come up with a suggested value for their clients, the lenders.
Homes for sale in your neighborhood don’t dictate market value either. List prices are a bit like Fantasyland. They represent what the seller is hoping to get for the home. Only the prices of recently sold homes can help us determine current market value.
It’s important to be realistic when entertain a list price for your home. You are no longer selling at the height of the market, regardless of how much we all wish you were.
2. Most improvements don’t add significant value to a home
Many homeowners are surprised that the improvements they’ve made to the home won’t raise the value of the home. “For cost recovery, remodeling projects generally must fix a design or structural flaw to earn back the cost of construction,” warns Rebecca Baldridge, CFA, at Investopedia.com.
She goes on to caution homeowners that “The return on investment (ROI) of any given renovation project is a function of local market characteristics, the condition of the residential real estate market when the property is sold, and the quality of the work performed.”
Each year, the pros at Remodeling magazine research the average costs of a number of remodeling projects and determine how much the projects add to a home’s value.
In 2022, none of the projects studied result in a 100% or greater ROI. A garage door replacement, with specific products (which you can find here), comes closest with an ROI of 93.3%.
Again, it’s important to remain realistic about your home during the selling process.
3. Never be afraid or embarrassed to ask questions
Knowledge is power. It is therefore imperative that you understand every part of the home selling process. We are happy to help you with this.
Never allow fear of the unknown to overtake you at any point during the sale process. Ask questions and demand answers until you find your comfort zone.