The real estate market is supposed to stay pretty much the same in 2012 as it did last year. There is expected to be a similar round of foreclosures, and a higher than usual amount of houses on the market because of this. Discretionary sellers who are in a position to wait will probably still wait instead of listing the properties this year. The industry expects the interest rates to continue to be low in an effort to spur housing sales. But with the strict guidelines it is harder than ever for people to qualify for a loan. I will probably have to say that I am more pessimistic than the general reports. I don’t think the economy is going to rise before the end of the year. Also it would not surprise me to see an uptick in foreclosures with the 5 & 7 Adjustable Rate Mortgages coming up. People who have been in a position to maintain the payments on their loans may not be in a position to either refinance or to change the loan when it begins to adjust. This may be okay since the interest rates are low right now but there are many loans that have built in increases upon maturity, which may increase the monthly payments. If that is the case there may be another round of foreclosures to wade through before the housing prices begin to settle and rise. So needless to say there may still be another bump in the road as we work our way through summer and into the fall. We will just have to see.
We know that despite the political climate and the way the media is discussing the economy and the economic outlook that we still have a way to go to get out of the mess we are in. Our region has been hit particularly hard with a high foreclosure rate and slow housing sales. As a home owner who may need or want to sell, speed of the transaction will probably be at the top of your mind. Why? Well as you know the longer it takes to sell your property the more money it can cost you. Not just with the direct costs of mortgage, insurance, utilities, interest. But also with the indirect costs, houses that are on the market longer than 60-90 days take a price tumble.
Most real estate agents that you talk with will say that if you do not have an offer in the first 30 days you need to revisit the price. So you lower the asking price $5,000, then it doesn’t sell in the next couple of weeks and they recommend another $10,000 – $15,000 to spur interest. It is a vicious cycle. The original price was not right for the condition of the property and the market. So you need to adjust to get rid of the house. So you have to work hard to come up with the right price in the beginning and then market aggressively to sell quickly. Let’s take an example of a house for $350,000. It doesn’t sell for 150 days. The agent asks for a $5,000 reduction at day 30, another on day 50, another $10,000 on day 75, another $5,000 on day 120. So at day 150 you get an offer for $320,000. You decide to take it. Then the house is inspected and the buyer wants you to fix about $3,000 worth of “miscellaneous” needs.
So you go to closing at day 180 for a grand total of $317,000. You factor in the cost of the closing, usually 3% and then the real estate agents commission 6%, inspections & miscellaneous fees (1%), and then finally the tax on the sale. So your $317,000 suddenly becomes $272,000 or so. Not to mention the 6 months of payments, interest, utilities and the like and you can see the result of waiting to sell the property the conventional way. So time is a huge factor when selling. You can be much better off in the long run working with a professional Real Estate Service company that can buy your house at a reasonable price and get you out from under quickly. So investigate your options and weigh them it could be that your “off the top of your head” thinking that you should only work with an agent could be leading you down a path of no return. Give us a call to see what options you may have. You may decide that you want to continue working with an agent is best for you but you will never know unless you have all the information.