It’s no secret that the Minnesota real estate market is a buyer’s market. If you are selling your home, here are some points to consider:
- If you have purchased a home in the last year or two, and bought the home on a zero down program, the slower market means that you may not have gained equity. This is especially true if you financed your closing costs by adding them to the mortgage. This is most especially true if you refinanced your home to cover credit cards or other types of consumer debt.
- The Federal Reserve actions or pronouncements have little influence on mortgage rates. If the Fed drops the rate, lower mortgage interest rates do not ensue. Mortgage rates are a function of the bond market. Many sellers mistakely think that a drop by the Fed fortells a hotter market because the mortgage rates will soon be lower. This simply is not true. If you are a potential homebuyer, don’t wait for rates to drop because of something the Fed said. Will home mortgage rates get lower for other reasons? Regardless of what “experts” predict, no one knows. We do know, however, that rates right now are very low, and from an historical perspective, they are extremely low. Combine the low rates with the current inventory of homes, this may be the best opportunity you will ever see.
- Lending restrictions means a smaller inventory of home buyers. The zero-down-with-bad-credit programs are quickly disappearing. Buyers must now have a job, good credit, and in many cases will need to have a down payment.
- If your agent is recommending a price drop, and can show you convincing market data regarding your property value, make the drop now. Don’t wait to “chase the market down.” Don’t be the last homeseller in the area to adjust price to a realistic number. If your neighbor drops the price of his home to a correct level, his home will sell first, and you will still end up lowering your price to sell, but only after incurring additional days on market. Also, keep in mind that the market will probably a holiday slowdown about November 15th or so.
- Sometimes sellers will list at a high price, because buyers can “just make an offer on the house.” Trust me… they won’t. There are simply too many homes to pick from. Buyers are savvy, and will not even look at your house if the price is out of whack. Price generates interest. Even if you could fool your prospective buyers on the the validity of the price, you will not be able to fool the professional buyer representatives that are accompanying them. Buyer representatives in many cases are seeing hundreds of homes in a single week, so they know the market.
- Contrary to popular belief, there is not a large disparity between asking price and selling price. In many areas, the list/sale price ratio is about 97%, which is rather typical of previous years. Why is this true? Properties don’t even get attention from buyers until the price falls into the correct range. Also, quality homes priced agressively are more likely to receive multiple offers. This may seem surprising, but I have seen this happen myself twice this week. Sure, there are a lot of homes out there, but the good ones at good prices will attract buyers. It is true that if you are a buyer and are very interested in a particular property, you can almost bet that someone else is also interested. The nicest ones sell first, and the buyers are quick to identify the nicest homes and the best value.
- The appearance and condition of the home is more critical than ever. You may be competing with new construction and builder’s models that have been professionally staged. Consider fnding a stager that can help you prepare your home for sale. Only clean houses are selling right now. Having fresh paint and mint condition floor coverings is important.
- Be honest with yourself. Ask yourself “Why would my home command a better price than similar ones,” or “How much would I pay for this home if I were buying it now.” Make certain that you are not selecting a listing agent because they are telling you a big price that they think you want to hear.
- Is all of this reason to despair? Keep in mind that any investment can fluctuate up or down in value, and Minnesota homes are no exception. However, over the long haul, investing in Minnesota homes has certainly proven to be wise and profitable.
- The entire market at all price ranges is experiencing an adjustment. This means that if you are thinking of upgrading, this is the best possible time to do so. The price you get for your current home might not be what you were hoping for, but your real savings will be realized when you purchase a higher priced Minnesota home.
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