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Should I Sell My House? 6 Signs It’s Time to Move On

July 11, 2019

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Ten years. That’s the average amount of time a homeowner stays in a house before a sale, according to the National Association of Realtors®.

Think that sounds shockingly short? Or way too long? The fact is, people’s reasons for selling their homes are different, as are their time frames.

Still, there are some common reasons—financial and emotional—that lead us to sell our current home and move on to the next one. And you don’t always see the reasons coming.

Read on for some telltale signs it’s time to start looking for the next home and packing your bags (and when you should settle in for the long haul).

1. You know the seller’s market is booming and you want in

Let’s start with one of the most obvious reasons to sell: You’re eager to make a profit on your property.

You need to gauge the key indicators of a strong real estate market, explains Allen Shayanfekr, CEO and co-founder of Sharestates, an online real estate investment company.

A few signals: The price per square foot for real estate in your area is increasing, the amount of time properties stay on the market is decreasing, and you’ve noticed an uptick in brokerage activity in your neighborhood. (If you’re situated in an especially hot neighborhood, you might even get a letter or a knock on the door from a listing agent who wants to help you get in on the action.)

“If any of these are true in your area,” Shayanfekr says, “think about selling up.”

2. Because your neighbors just got what for their house?

Check online real estate listings in your neighborhood, and pay attention to the “recently sold” flyers in your mailbox to keep track of comparable home prices in your area.

“If other houses on your street with the same bedroom/bathroom count [as yours] are selling for a price that you’d be more than satisfied with, it might be time to move on,” Shayanfekr says.

Another sign of a hot home sales market is the relationship of asking prices to sale prices. If home buyers are making offers fast—for as much or more than sellers are asking—it’s a seller’s market. A buyer may offer you a sales price you can’t refuse, too.

3. You’re sick of feeling financially stressed

Not everyone sells their real estate in order to pad their bank account. Some homeowners underestimated their ongoing housing costs and simply sell to ease their mortgage burden, or to cash in their equity and use it for other purposes.

If your property taxes or mortgage payments have become unmanageable, the best recourse may be to sell and find another home that’s more affordable, Shayanfekr says. Selling your home is better than struggling with a big mortgage loan, and possibly risking foreclosure.

To breathe easy, your monthly housing costs, including your mortgage interest, principal, property taxes, homeowners insurance, and HOA or condo fees if applicable, shouldn’t exceed 28% of your gross monthly income.

Before you sell your home to reduce your monthly living expenses, make sure you can find another home to rent or buy in your price range, and that you can qualify for a loan at current interest rates when you do.

4. You’ve grown—but your home hasn’t

The starter home you moved into when you were expecting your first child isn’t necessarily the house you need now that you have three preteens and a capybara. It’s bittersweet to give up the memories you’ve made in your home, but if your living quarters are causing you stress rather than comfort, “take the leap and sell up,” Shayanfekr says.

Death, serious illness, divorce—these are all emotionally wrought experiences that may warrant a need for change. Relocation is another factor. But let’s not overthink things.

“Maybe you’re just tired of the same old, same old, and it’s time for a change of scenery,” says Bruce Ailion, a Realtor® and attorney for Re/Max Town and Country in Atlanta.

5. You’re over ‘high maintenance’

The average homeowner shells out $2,000 a year for maintenance services, according to a recent report by Bankrate. Not repairs, mind you, but scheduled services such as landscaping, snow removal, septic service, private trash and recycling, and housecleaning.

Sick of watching these payments steadily drip out of your bank account? You could sell, and buy some lower-maintenance real estate such as a condo or a new-build property, Shayanfekr says. You might even want to try renting, and let a landlord worry about leaky pipes and other property hassles.

6. You’ve put at least 5 years into the relationship

“If you sell too soon—assuming you have a mortgage—you haven’t really built up any equity in the home beyond the down payment,” points out Adam Jusko, founder and CEO of personal finance portal ProudMoney.com. “In the beginning, your mortgage payments are almost completely interest payments.”

In fact, unless the housing market is seriously booming (see above), you might lose money when you sell. You might even owe more than you can get from your house after closing costs.

Remember: Selling isn’t free: You’ll have to shell out to cover all of the costs associated with hiring a real estate agent, closing, and, of course, purchasing another home.

That’s why Jusko recommends staying put for at least five years, unless you have an urgent need to move. In addition to everything else, moving too quickly sends potential buyers a bad message.

“Buyers don’t feel good when it appears you are selling too soon,” Jusko cautions. “What was wrong with the house? Why are you leaving so fast? Are the basement walls about to collapse? Are the neighbors selling drugs and shooting fireworks at your house? Buyers can dream up all kinds of negative scenarios when a seller hasn’t owned the home for very long.”

Another reason you may not want to sell is if you don’t meet the qualifications to avoid paying capital gains tax on your profit from a home sale. Generally, you can exclude the gain from the sale of your home if you owned and lived in the home for two of the past five years. A sale before the two-year mark, if you don’t meet any of the exceptions, could be a costly mistake. By the time you pay capital gains tax, you won’t have as much equity left as you’d planned.

But beware of snap decisions

Of course, there are no promises that selling will be better for you in the long run. Take your time deciding if you should sell, and then study the local home sales market, with the help of your real estate agent, before you price your home. If you underprice your home, a buyer may snatch it up too cheaply. If you overprice it, the right buyer may pass it by.

Jusko and his wife lived in Chicago in the early 2000s, when home values were through the roof. After about three years, they sold at a 40% profit. But soon after moving to the Cleveland area, where they’re both originally from, home values plummeted.

“For many years, our home was worth less than what we paid,” Jusko says. “It’s only now—more than 15 years later—that I believe we could sell for more than our purchase price. And don’t get me started on how much money we’ve put into the house over that time.”

Selling your home is, above all, a personal decision. Do what will help you live—if not happily ever after—happily for now.

The post Should I Sell My House? 6 Signs It’s Time to Move On appeared first on Real Estate News & Insights | realtor.com®.

What Is a Comparative Market Analysis? The CMA Explained

April 11, 2019

iStock/anyaberkut

A home’s price is a moving target—based on where it is, when it’s listed for sale, whether it has that trendy open kitchen, all of it. So if you’re tasked with pricing your own home before putting it on the market, how do you figure out how much your place is worth?

Home sellers pondering this question will no doubt hear they should figure this out by asking a real estate agent for a comparative market analysis, or CMA. But what is it? A comparative market analysis estimates a home’s value based on the recent sales of similar real estate in the area.

Whether you’re hoping to buy a house or sell one, understanding the CMA is essential. Here’s everything home buyers and sellers need to know.

Comparative market analysis (CMA) explained

Real estate agents create CMAs by looking at comparables, or comps—recently sold properties that are similar to your own home (or, if you’re a home buyer, the one you want to make an offer on). Similarity is key, since it gets you closest to an apples-to-apples comparison.

Let’s say your own home has three bedrooms, two baths, and is around 2,000 square feet. Your neighbor’s down the block is also a three-bedroom, two-bath house clocking in at 1,950 square feet—and it sold last week for $300,000. Odds are, your place is worth about that same price.

“Comparable homes should be in the same or similar neighborhood, have similar square footage, number of bedrooms, bathrooms, features, and upgrades,” explains Shayan Jalali, a pricing strategy adviser with Berkshire Hathaway HomeServices in Boston.

But since most houses are at least a little bit unique, how identical do they need to be?

Tristan Ahumada, CEO of Lab Coat Agents, says comps should ideally have the same number of bedrooms and bathrooms, be located within a quarter-mile of your home, and within 200 square feet of your home’s size. Whenever possible, they should be in your ZIP code and school district too.

It’s also important to make sure your CMA analyzes recent sales. Markets can change quickly, so Ahumada advises not going back any more than six months.

Another rookie mistake? Looking at listing prices on homes and assuming those are realistic comps. Those numbers may be inflated based on home sellers’ hopes of what they’ll get rather than reality.

“Or, in really competitive markets, agents purposefully underpricing their listings to generate more interest,” says Beatrice de Jong, director of residential listings at Open Listings in Los Angeles.

Bottom line: CMAs should take into account the final sales prices of homes.

The more comps you use, the better you can triangulate a home’s price, but if you have at least three comparable, recently sold properties, you should be able to average out their prices and get a good sense of what a given home is worth.

Why to ask real estate agents for CMAs

Most real estate agents will provide you with a CMA for free, especially if you are selling your home. In fact, comparing CMAs is a great way to find the agent you want to work with. Ahumada encourages potential clients to get market analyses and conduct interviews with at least three different agents before signing with one.

“It will help you really spot the agents who know the area well,” he explains.

According to Ahumada, most agents should be happy to email you a CMA before you even sit down to have a conversation. Consider it a good kickoff to your working relationship and a way to find the right real estate agent (search your options at realtor.com/realestateagents).

How to do your own comparative market analysis

While your real estate agent can do a CMA for you, you might want to do your own analysis. You can find comps by searching for recent home sales in your area on listing sites such as realtor.com.

One way to quickly assess how much a house is worth is to use an online home value estimator.You plug in an address, and within seconds, a computer algorithm will scan comps, crunch the numbers, then deliver an estimate of how much the house in question is worth.

While online home value calculators are a great starting point, they aren’t the end all, be all. Like any fully automated tool, they can’t take everything into consideration that a human could. Consider it your springboard for further research you or a real estate agent can explore further.

Taking condition into consideration

OK, so you’ve found your recently sold comps, and hopefully they match up with the property you’re analyzing. The more nuanced bit is taking things like condition, lot size, extras, and curb appeal into consideration.

“You can’t compare a fixer-upper to something with lots of upgrades,” says de Jong. Ideally, you will be able to find comps in a similar condition to the house you’re trying to price—but if not, be wary of just adding the full cost of your remodeling to a home’s price.

In other words, just because you spent $10,000 installing an in-ground pool does not mean home buyers are willing to pay you $10,000 more. On average, homeowners should expect to make back only about 56% of the money they spend on renovations, and that return on investment varies widely based on what you do (here’s the ROI on 20 popular home improvements).

De Jong also encourages people to try to find comps with a similar home style. In her market, for example, trendy midcentury modern homes bring a higher price.

Some market knowledge is harder to DIY. Every area will have different things that are desirable, and upgrades and extras will be worth more in some areas than others. In California, for example, Ahumada estimates that a high-end kitchen remodel adds between $20,000 and $40,000 to a home’s price. But if you’re doing a CMA for an area where home prices average $150,000, those numbers are going to be much lower.

Going beyond comps

Still not sure you’ve done enough homework? Another tactic to further hone your CMA is to ask your real estate agent to contact other agents to get the scoop on homes that aren’t sold quite yet, but are currently waiting to close.

“If a house is in escrow, you can reach out and find out how much higher or lower than asking the house went for,” says de Jong. Getting the inside scoop can give you an edge with pricing, and give you a heads-up about potential bumps down the road. For example, did a comparable home have multiple offers? Did the buyer have any appraisal issues? Did the seller have to give any concessions to push the deal through?

All of this can give you an up-to-the-minute snapshot of where the market is headed. It can also explain weird or lowball comps that pop up, throwing off your price.

“Recently, there was a home that sold for 5% less than other homes in the neighborhood. After calling the listing agent, we found that the buyer paid all cash and closed in two weeks,” recalls Allen Johnson, a real estate agent in Woodbridge, VA. “You could have easily used this property as a comparable home, but these details certainly affected the final sales price.”

The post What Is a Comparative Market Analysis? The CMA Explained appeared first on Real Estate News & Insights | realtor.com®.

Got Sticker Shock? These 5 Factors Are Influencing a Home’s Asking Price

March 6, 2019

zstockphotos/iStock; realtor.com

Ever gotten excited about a house for sale, then looked at the price and thought, “Are they out of their minds?” Yeah, us too.

It can be a disheartening moment when you’re house hunting. And that jaw-dropping asking price might simply seem like an arbitrary, money-grabbing number that’s keeping you from your dream home. But before you dismiss a house for being too expensive, you should know that there are a variety of reasons a property is priced the way it is.

“Pricing a home is part science and part art,” says Kevin Vitali, an associate broker with Exit Group One Real Estate, in Tewksbury, MA.

Understanding the reasoning behind a home’s price tag can make you a smarter buyer—and help you know exactly what you’re getting for your money. Here are five factors that experienced real estate agents consider before slapping that “For Sale” sign on a home.

1. What’s happening in your local housing market at any particular moment

Current real estate market conditions—including how many houses are up for sale, and how fast they’re being snapped up—determine how a property should be priced. Low inventory creates a seller’s market with aggressive listing prices. A surplus of homes for sale results in overall lower asking prices.

Perhaps you know all that. But what you might not realize is how quickly it can all change.

“Markets can turn on a dime, and I find home buyers usually have old data in their heads; often, they’re lagging about six months to a year,” Vitali says.

That’s why he recommends working with an experienced real estate agent who’s familiar with the neighborhood you’re shopping in and can assess whether a home is priced fairly—or not.

2. The (extremely specific) location of the house

Yes, you’ve heard the old place-based adage (which we won’t repeat here). But did you know how granular the idea of “location” gets? We’re not just talking about being in a good neighborhood. Similar or even identical houses just streets apart from each other can have wildly different price tags based on things like traffic noise and access to quality schools, shops, and restaurants.

“The asking price also depends on what else is on the block; for example, is there a tear-down next door? And how old are the buildings to your right and left?” asks Sheldon Salnick, a Realtor® with Dreamtown Real Estate, in Chicago. “Is there a park nearby, or a dog run within five blocks?”

A quiet cul-de-sac or a busy thoroughfare will also affect the prices of homes on them, he notes, as will the direction the home faces (any hardened home shopper can tell you how much light affects the overall perception of a home).

And in most areas, properties with easy access to highways fetch higher dollars, Vitali adds.

3. The comps

Often, Vitali says, sellers have a figure in mind based on nothing more than a wish. But real estate pros will do a comparable market analysis—what similar homes have recently sold for—before determining how to price a property.

“Historical data plays a huge role in setting a listing price; it’s not a number just pulled out of the air. So find an agent who can interpret that data,” Vitali says.

“The name of the game is what the competition is charging,” Salnick adds.

4. The amenities (and overall appeal) of the home

Sure, size matters. But today’s demanding buyers are concerned with much more than square footage—all of which helps determine an asking price, Salnick says.

“Clients prefer new construction, brand-name appliances, and large bedrooms—[preferably] at least three on one floor if they have kids—plus a den or office,” Salnick says of the Chicago market. “Light plays a major role in the value of a house: The more windows, the more people enjoy the house. Ceiling heights factor in, too:10 feet and up are where it’s all at.”

Additional features such as parking, central air conditioning, outdoor space, and floor plan also affect the sticker price.

“Layout and functionality are huge; people want open layouts, so homes built in the ’50s or ’60s without open plans are priced lower,” Vitali says.

5. Age and condition of the home

If you happen to fall for an aging, poorly maintained property that you’re just dying to fix up, know this: You won’t automatically see a deeply discounted price tag. It all depends on the home’s location (see No. 2) and other factors we’ve discussed. But chances are good it won’t cost the big bucks that a recently revamped home in the same neighborhood would, Vitali says.

If you want a newer, turnkey home, expect to pay more for that. Caveat: Even if a seller has done multiple upgrades, quality trumps quantity every time, Vitali says.

“If there’s been an addition to the house or some serious electrical work done in an unprofessional manner, that will reduce the sales price,” he says.

The post Got Sticker Shock? These 5 Factors Are Influencing a Home’s Asking Price appeared first on Real Estate News & Insights | realtor.com®.

Forget Price Per Square Foot: The More Accurate Ways to Determine Your Home’s Value

September 19, 2018

A home’s price per square foot is a common way to quantify its value. Most real estate websites and flyers will include the price per square foot value in a listing. Many home shoppers even use it as a determinant for whether or not they’ll even consider touring a home.

But that doesn’t mean it’s the most accurate, end-all and be-all way to gauge a home’s value and compare it with other houses. Why? Because all homes are different.

“Most of the time, when valuing property, there can be small to significant differences,” says Bill Gassett, real estate agent at Re/Max Executive Realty in Hopkinton, MA. “Price per square foot only accounts for one variable: size. There are so many other variables that can affect home value.”

What are those other variables? Let’s discuss.

Why price per square foot isn’t a good gauge of value

Homes come in different styles, are built with different materials, come with different amenities, and exist in different locations. Each of these factors has a profound effect on a home’s value and has nothing to do with size.

Price per square foot also doesn’t take renovations into account. A completely refurbished kitchen will add value to a home without changing the overall square footage of the property. Therefore, two homes may be the exact same size, but can look completely different inside.

Better ways to determine a home’s value

Now that we’ve cleared up why price per square foot isn’t an accurate gauge of value, let’s go over three ways you can get a better idea of what your home is worth.

1. Comps in your area: “The best method to determine a home’s value is using the comparison approach. This is what real estate agents do when they’re figuring out pricing for a listing,” says Kyle Hiscock, a Pittsford, NY, real estate agent.

Looking at comparables, or comps, in your area will give you the greatest read on a home’s true value in that market. When gauging your home’s value, Hiscock says to first look for similar property styles in an area (for example, one-story ranch homes).

Once you have all the same property styles, look at the home’s specs. Figure out the number of bedrooms and bathrooms and garage spaces. Then, take into account upgrades and amenities.

“If the subject property is fully updated with a gourmet kitchen, all new windows, and new HVAC systems, then [price] adjustments must be made,” Hiscock says.

2. A comparable market analysis, or CMA: You can do the comps research yourself by looking up old listings or going to your city’s public records office, but your best bet for getting accurate comps will be to seek out a professional’s help.

Gassett advises speaking with at least three real estate professionals to get a comparable market analysis, or CMA. A CMA is a real estate professional’s analysis of recently sold homes in an area within a six- or 12-month period.

Gassett says a CMA chooses the most similar homes that take into account the following variables:

  • Location
  • Size
  • Bedroom and bath counts
  • Condition
  • Amenities
  • Lot

 

3. A home appraisal: An appraisal is another way to figure out your home’s true value.

Lorrie Beaumont, owner of LB Appraisal Associates in Westwood, MA, says hiring an independent qualified appraiser gives you an unbiased opinion of market value.

“An appraiser that is designated from a highly regarded professional association such as the American Society of Appraisers is a good place to start,” Beaumont says. “ASA appraisers have gone through rigorous testing and requirements to become designated.”

An appraiser uses either a cost or comparison approach. The cost approach figures out the cost to replace or reproduce improvements made in a home, which will reverse a property’s deterioration. The appraiser collects that information and adds it to the value of the property. A comparison approach, meanwhile, is similar to a CMA. The difference is that it’s done by an appraiser rather than a real estate professional.

The post Forget Price Per Square Foot: The More Accurate Ways to Determine Your Home’s Value appeared first on Real Estate News & Insights | realtor.com®.

How Long Should You Live in Your Home? 6 Signs It’s Time to Move On

August 16, 2018

Ten years. That’s the average amount of time a homeowner stays in a house, according to the National Association of Realtors®.

Think that sounds shockingly short? Or way too long? The fact is, people’s reasons for selling their home are different, as are their time frames.

Still, there are some common threads—financial and emotional—that lead us to call it quits on our home and move on to the next one. And you don’t always see them coming.

Read on for some telltale signs it’s time to start packing your bags (and when you should settle in for the long haul).

1. You know the seller’s market is booming and you want in

Let’s start with one of the most obvious reasons to sell: You’re eager to make a profit on your property.

You need to gauge the key indicators of a strong market, explains Allen Shayanfekr, CEO and co-founder of Sharestates, an online real estate investment company.

A few signals: The price per square foot in your area is increasing, the amount of time properties stay on the market is decreasing, and you’ve noticed an uptick in brokerage activity in your neighborhood. (If you’re situated in an especially hot neighborhood, you might even get a letter or a knock on the door from a listing agent who wants to help you get in on the action).

“If any of these are true in your area,” Shayanfekr says, “think about selling up.”

2. Because your neighbors just got what for their house?

Check online listings in your neighborhood, and pay attention to the “recently sold” flyers in your mailbox to keep track of what comparable homes in your area are going for.

“If other houses on your street with the same bedroom/bathroom count [as yours] are selling for a price that you’d be more than satisfied with, it might be time to move on,” Shayanfekr says.

3. You’re sick of feeling financially stressed

Not everyone sells in order to pad their bank account. Some homeowners underestimated their ongoing housing costs and simply want to ease their financial burden.

If your property taxes or mortgage payments have become unmanageable, the best recourse may be to find another home that’s more affordable, Shayanfekr says.

To breathe easy, your monthly housing costs shouldn’t exceed 28% of your gross monthly income.

4. You’ve grown—but your home hasn’t

The starter home you moved into when you were expecting your first child isn’t necessarily the house you need now that you have three preteens and a capybara. It’s bittersweet to give up the memories you’ve made in your home, but if your living quarters are causing you stress rather than comfort, “take the leap and sell up,” Shayanfekr says.

Death, serious illness, divorce—these are all emotionally wrought experiences that may warrant a need for change. Relocation is another factor. But let’s not overthink things.

“Maybe you’re just tired of the same old, same old, and it’s time for a change of scenery,” says Bruce Ailion, a Realtor® and attorney for Re/Max Town and Country in Atlanta.

5. You’re over ‘high maintenance’

The average homeowner shells out $2,000 a year for maintenance services, according to a recent report by Bankrate. Not repairs, mind you, but scheduled services such as landscaping, snow removal, septic service, private trash and recycling, and housecleaning.

Sick of watching these payments steadily drip out of your bank account? You might be better off in a low-maintenance condo or a new-build property, Shayanfekr says.

6. You’ve put at least 5 years into the relationship

“If you sell too soon—assuming you have a mortgage—you haven’t really built up any equity in the home beyond the down payment,” points out Adam Jusko, founder and CEO of personal finance portal ProudMoney.com. “In the beginning, your mortgage payments are almost completely interest payments.”

In fact, unless the housing market is seriously booming (see above), you might lose money when you sell. Remember: Selling isn’t free: You’ll have to shell out to cover all the costs associated with hiring a broker, closing, and, of course, purchasing another home.

That’s why Jusko recommends staying put for at least five years, unless you have an urgent need to move. In addition to everything else, moving too quickly sends prospective buyers a bad message.

“Buyers don’t feel good when it appears you are selling too soon,” Jusko cautions. “What was wrong with the house? Why are you leaving so fast? Are the basement walls about to collapse? Are the neighbors selling drugs and shooting fireworks at your house? Buyers can dream up all kinds of negative scenarios when a seller hasn’t owned the home for very long.”

But beware of snap decisions

Of course, there are no promises that selling will be better for you in the long run.

Jusko and his wife lived in Chicago in the early 2000s when home values were through the roof. After about three years, they sold at a 40% profit. But soon after moving to the Cleveland area, where they’re both originally from, home values plummeted.

“For many years, our home was worth less than what we paid,” Jusko says. “It’s only now—more than 15 years later—that I believe we could sell for more than our purchase price. And don’t get me started on how much money we’ve put into the house over that time.”

Selling your home is, above all, a personal decision. Do what will help you live—if not happily ever after—happily for now.

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