The Number One Mistake Sellers Are Making: Overpricing Their House

by Michael Cummiskey

In today’s housing market, many sellers are making a critical mistake: overpricing their houses. This common error can lead to a home sitting on the market for a long time without any offers. And when that happens, the homeowner may have to drop their asking price to try to re-ignite buyer interest.

Data from Realtor.com shows the number of homeowners realizing this mistake and doing a price reduction is climbing (see graph below):

If you’re thinking about making a move yourself, here’s what you need to know. The best way to avoid making a costly mistake is to work with a trusted real estate agent to find the right price. Here’s a look at what’s at stake if you don’t.

Not Paying Attention To Current Market Conditions

Understanding current market conditions is key to accurate pricing. You don’t want to set your asking price based on what happened during the pandemic. The market has moderated a lot since then, so it’s far better to align your price with today’s reality.

Real estate agents stay updated on market trends and how they impact the pricing strategy for your house.

Pricing It Based on What You Want To Make (Not What It’s Worth)

Another misstep is pricing it based on what you want to make on the sale, and not necessarily current market value. You may see other homes in your neighborhood selling for top dollar and assume yours can do the same. But you may not be considering differences in size, condition, and features. For example, maybe that other house is waterfront or has a finished basement. To sum it up, Bankrate explains:

“How do you find that sweet spot of pricing for profit but not overpricing? The expertise of your agent can be truly valuable here. A knowledgeable agent will understand fair market value in your area, how much your house is worth and how much you might reasonably expect to get for it in the current market.”

An agent will do a comparative market analysis (CMA) to make sure your house is compared with truly similar properties to get an accurate look at how it should be priced.

Pricing High to Leave Room for Negotiation

Another common, yet misguided strategy is to price your house high on purpose, so you have more room to negotiate down during the sale. But this can backfire. A price that seems too high often deters potential buyers from even considering the home. So rather than leaving room for negotiation, what you’ll actually be doing is turning buyers away. U.S. News Real Estate explains:

“You want to sell your house for top dollar, but be realistic about the value of the property and how buyers will see it. If you’ve overpriced your home, chances are you’ll eventually need to lower the number, but the peak period of activity that a new listing experiences is already gone.”

An agent can help you set a fair price that attracts buyers and encourages more competitive offers.

Bottom Line

Overpricing your home can have serious consequences. A knowledgeable real estate agent brings an objective perspective, in-depth market knowledge, and a strategic approach to pricing.

Connect with a local real estate professional to avoid making a pricing mistake that’ll cost you.

Hire A Professional • Home Buyers • Luxury Homes • Money Talk • New Build • Retirement • Selling Your Home • VA Loan • August 20, 2024

How To Choose a Great Local Real Estate Agent

by Michael Cummiskey

Selecting the right real estate agent can make a world of difference when buying or selling a home. But how do you find the best one? Here are some tips to help you make that big decision as you determine your partner in the process.

Check Their Reputation

Start by gathering information about agents in your area. From there, try to narrow down the list. Ask the people you trust if they have someone they’d recommend. You’ll want to find an agent with a strong online presence, plenty of positive reviews, and someone whose great reputation truly precedes them. As Freddie Mac explains:

“. . . you may want to look for a real estate agent who specializes in the type of home you’re searching for. For example, if you are looking for an energy-efficient home, look for an agent who has experience with finding and negotiating offers for those homes. If you are looking for new construction, you’ll want to find an agent who has experience with new construction and isn’t affiliated with the builder . . .”

Look for Local Market Expertise

A great agent should have in-depth knowledge of what’s happening at the national and local level. That way they can clear up any misconceptions sparked by what you’re reading or hearing in the news. And they can tell you how your area compares to the national data. As an added perk, they’ll also be familiar with the neighborhoods you’re interested in and community amenities. As a recent article from Business Insider says:

“Spend some time talking with prospective agents about the local real estate market and how it could impact your purchase or sale. You want to get an understanding of how knowledgeable they are about local market conditions. Whether they’re helping you sell or buy, their strategy for you should account for those conditions.”

Get a Feel for Their Communication Style and Availability

Effective communication is key in real estate transactions. Choose an agent who listens to your needs, answers your questions quickly, and keeps you informed throughout the process. If an agent is juggling too many clients, they might not be able to give you the attention you deserve. You want someone who will be readily available and responsive. So, what’s the best way to get a feel for their communication style and preferences? Bankrate offers this advice:

“Interviews also give you a chance to find out the agent’s preferred method of communication and their availability. For example, if you’re most comfortable texting and expect to visit homes after work hours during the week, you’ll want an agent who’s happy to do the same.”

Trust Your Gut

Last, rely on your instincts. If you feel like you do or don’t click with one of the agents you’re talking to, that matters. Choose an agent you feel at ease with and who inspires confidence. The right agent should be someone you trust to guide you through one of the most significant transactions of your life. As Business Insider says:

“As long as you’ve properly vetted the agents you’re considering and ensured they have the necessary expertise, it’s ok to go with your gut . . . Maybe you have a better rapport with one of the agents you’re considering, or you just feel like they’re easier to approach. You’re going to be working closely with this person, so it’s important to choose an agent you’re comfortable with.”

Bottom Line

By following these tips, you can pick an agent who’ll provide the support and expertise you need to help make the process as smooth as possible. Connect with local agents to see if they’d be a good fit for working together.

Hire A Professional • Home Buyers • Money Talk • August 19, 2024

How Mortgage Rate Changes Impact Your Homebuying Power

by Michael Cummiskey

If you’re thinking about buying or selling a home, you’ve probably got mortgage rates on your mind. That’s because you’ve likely heard that mortgage rates impact how much you can afford in your monthly mortgage payment, and you want to factor that into your planning. Here’s what you need to know.

What’s Happening with Mortgage Rates?

Mortgage rates have been trending down recently. While that’s good news for your homebuying plans, it’s important to know that rates can be unpredictable because they’re affected by many factors.

Things like the economy, job market, inflation, and decisions made by the Federal Reserve all play a part. So, even as rates go down, they can still bounce around a bit based on new economic data. As Odeta Kushi, Deputy Chief Economist at First American, says:

“The ongoing deceleration in inflation, coupled with the Federal Reserve’s recent indication of potential rate cuts [in 2024], suggests an environment supportive of modest declines in mortgage rates. Barring any unforeseen circumstances and resurgence in inflation, lower mortgage rates could be on the horizon, but the journey towards them might be slow and bumpy.”

How Do These Changes Affect You?

When mortgage rates change, it affects how much you pay each month for your home loan. Even a small rate change can make a big difference to your monthly bill.

Take a look at the chart below to see how different mortgage rates impact your house payment each month for various loan amounts. Imagine you can afford a monthly payment of $2,600 for your home loan. The green part in the chart shows payments in that range or lower based on varying mortgage rates (see chart below):

Understanding how mortgage rates impact your payment helps you make better decisions.

How Can You Keep Track of the Latest on Rates?

Real estate agents have the expertise to help you understand what’s happening and what it means for you. They can provide tools and visuals, like the chart above, to show how rate changes impact your buying power.

You don’t need to be a mortgage expert; you just need a professional by your side. Someone who can help you make sense of the market and guide you through your homebuying or selling journey.

Bottom Line

If you have questions about the housing market, reach out to a local real estate agent. They can help you understand what’s going on and how to navigate it.

Hire A Professional • Home Buyers • Money Talk • Selling Your Home • August 16, 2024

3 Reasons To Move in Today’s Shifting Market

by Michael Cummiskey

Some Highlights

The housing market is in a transition. And that gives you 3 key opportunities going into the fall.
There are more homes actively for sale. Builders are motivated to sell, so a newly built home may be more achievable than you think. And mortgage rates have come down from their recent peak.
If you’re ready and able to buy, you may find the housing market this fall a bit easier to navigate. Connect with an agent to get started.

Hire A Professional • Home Buyers • Money Talk • August 16, 2024

What Credit Score Do You Really Need To Buy a House?

by Michael Cummiskey

When you’re thinking about buying a home, your credit score is one of the biggest pieces of the puzzle. Think of it like your financial report card that lenders look at when trying to figure out if you qualify, and which home loan will work best for you. As the Mortgage Report says:

“Good credit scores communicate to lenders that you have a track record for properly managing your debts. For this reason, the higher your score, the better your chances of qualifying for a mortgage.”

The trouble is most buyers overestimate the minimum credit score they need to buy a home. According to a report from Fannie Mae, only 32% of consumers have a good idea of what lenders require. That means nearly 2 out of every 3 people don’t.

So, here’s a general ballpark to give you a rough idea. Experian says:

“The minimum credit score needed to buy a house can range from 500 to 700, but will ultimately depend on the type of mortgage loan you’re applying for and your lender. Most lenders require a minimum credit score of 620 to buy a house with a conventional mortgage.”

Basically, it varies. So, even if your credit isn’t perfect, there are still options out there. FICO explains:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .”

And if your credit score needs a little TLC, don’t worry—Experian says there are some easy steps you can take to give it a boost, including:

1. Pay Your Bills on Time

Lenders want to see that you can reliably pay your bills on time. This includes everything from credit cards to utilities and cell phone bills. Consistent, on-time payments show you’re a responsible borrower.

2. Pay Off Outstanding Debt

Paying down what you owe can help lower your overall debt and make you less of a risk to lenders. Plus, it improves your credit utilization ratio (how much credit you’re using compared to your total limit). A lower ratio means you’re more reliable to lenders.

3. Don’t Apply for Too Much Credit

While it might be tempting to open more credit cards to build your score, it’s best to hold off. Too many new credit applications can lead to hard inquiries on your report, which can temporarily lower your score.

Bottom Line

Your credit score is crucial when buying a home. Even if your score isn’t perfect, there are still pathways to homeownership. Let’s connect if you want to go over your options with an expert.

Hire A Professional • Home Buyers • Luxury Homes • Money Talk • Retirement • Selling Your Home • August 14, 2024

The Great Wealth Transfer: A New Era of Opportunity

by Michael Cummiskey

In recent years, there’s been a significant shift in how wealth is distributed among generations. It’s called the Great Wealth Transfer.

Historically, the transfer of wealth from one generation to the next was a more gradual process, often limited to smaller amounts of inheritance or family savings. But today, the scale has increased in a big way. As a recent article from Bankrate says:

“The biggest wave of wealth in history is about to pass from Baby Boomers over the next 20 years, and it’s going to have major impacts on many facets of life. Called The Great Wealth Transfer, $84 trillion is poised to move from older Americans to Gen X and millennials. If it’s managed smartly, Americans will be able to grow their wealth and ensure their financial security.”

Basically, as more Baby Boomers retire, sell businesses, or downsize their homes, more substantial assets are being passed down to younger generations. And this creates a powerful ripple effect that’ll continue over the next few decades. The graph below uses data from Merrill and Cerulli Associates to give you an idea of how much inherited money is set to change hands through 2045:

Impact on the Housing Market

One of the most immediate effects of this wealth transfer is on the housing market. Home affordability has been a concern for many aspiring buyers, especially in high-demand areas. The increase in generational wealth is expected to ease some of these challenges by providing future homeowners with greater financial resources. As assets are passed down through generations, buyers may find themselves in a better position to afford homes. Merrill talks about that benefit in a recent article:

“While millennials face steep barriers . . . to buying a first home in many markets, ‘that’s a for-now story, not a forever story’ . . . The Great Wealth Transfer should enable more of them to become homeowners — or trade up or add a second home — either through inherited property or the funds for a down payment.”

Impact on the Economy

But the Great Wealth Transfer doesn’t just impact housing. It’s also going to provide a new avenue for entrepreneurial spirits to fuel economic growth. If someone is looking to start a business and they’re receiving funds like this, that money can used as the necessary capital to start a new company. This helps the next generation of innovators and business owners bring their ideas to life.

Bottom Line

While affordability remains a challenge in today’s housing market, the ongoing Great Wealth Transfer is poised to unlock new opportunities. As wealth is passed down and put to use, it’s expected to ease some of the barriers to homeownership and fuel other entrepreneurial endeavors.

Hire A Professional • Home Buyers • Money Talk • August 14, 2024

Is Affordability Starting To Improve?

by Michael Cummiskey

Over the past couple of years, a lot of people have had a hard time buying a home. And while affordability is still tight, there are signs it’s getting a little better and might keep improving throughout the rest of the year. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Housing affordability is improving ever so modestly, but it is moving in the right direction.”

Here’s a look at the latest data on the three biggest factors affecting home affordability: mortgage rates, home prices, and wages.

1. Mortgage Rates

Mortgage rates have been volatile this year, bouncing around from the mid-6% to low 7% range. But there’s some good news. Data from Freddie Mac shows rates have been trending down overall since May (see graph below):

Mortgage rates have improved lately in part because of recent economic, employment, and inflation data. Moving forward, some rate volatility is to be expected. But if future economic data continues to show signs of cooling, experts say mortgage rates could keep going down.

Even a small drop can help you out. When rates decline, it’s easier to afford the home you want because your monthly payment will be lower. Just don’t expect them to go back down to 3%.

2. Home Prices

The second big thing to think about is home prices. Nationally, they’re still going up this year, but not as fast as they did a couple of years ago. The graph below uses home price data from Case-Shiller to illustrate that point:

If you’re thinking about buying a home, slower price growth is good news. Home prices went up a lot during the pandemic, making it hard for many people to buy. Now, with prices rising more slowly, buying a home may feel less out of reach. As Odeta Kushi, Deputy Chief Economist at First American, says:

“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help – so the dream of homeownership isn’t boarded up just yet.”

3. Wages

Another factor helping with affordability is rising wages. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have increased over time:

Look at the blue dotted line. It shows how wages usually go up in a typical year. On the right side of the graph, you’ll see wages are rising even faster than normal right now – that’s the green line.

This helps you because if your income increases, it’s easier to afford a home. That’s because you won’t have to spend as much of your paycheck on your monthly mortgage payment.

Bottom Line

When you put all these factors together, you see mortgage rates are trending down, home prices are rising more slowly, and wages are going up faster than usual. Though affordability is still a challenge, these trends are early signs things might be starting to improve.

Hire A Professional • Home Buyers • Money Talk • Selling Your Home • August 14, 2024

Are There More Homes for Sale Where You Live?

by Michael Cummiskey

One of the biggest bright spots in today’s housing market is how much the supply of homes for sale has grown since the beginning of this year.

Recent data from Realtor.com shows that nationally, there are 36.6% more homes actively for sale now compared to the same time last year. That’s a significant improvement. It gives you far more options for your move than you would’ve had just a year ago. And with supply improving, you’re also regaining a bit of negotiation power. So, if you’re someone who thought about buying a home over the last few years but was discouraged by how limited inventory was, this should be welcome news.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”

But just so you have perspective, even though inventory has grown, that doesn’t mean we’ve suddenly flipped to an oversupply of homes on the market. There are nowhere near enough homes for sale to make prices crash. If you compare today’s inventory levels to more normal, pre-pandemic numbers (2017–2019), there are still roughly 29% fewer homes actively for sale now (see graph below):

So, while we’re up by almost 37% year-over-year, we’re still not back to how much inventory there’d be in a normal market.

As Bill McBride, Housing Analyst for Calculated Risk, explains:

“ . . . currently inventory is increasing year-over-year but is still well below pre-pandemic levels.”

But that’s okay. It’s to be expected. As a country, it’ll take a while to get back to the typical level of homes for sale. And the good news for buyers is, in some select markets, it’s closer to being a reality.

Here’s a rundown of what today’s inventory growth looks like by region (see graph below):

Real estate will always be hyper-local. If you want to find out what inventory numbers look like where you live, reach out to a local agent. They’ll be able to tell you what they’re seeing and how it stacks up to the national market. You may find you have even more opportunity to move where you are.

Bottom Line

The supply of homes across the country is improving in a big way. As a buyer, that gives you more options for your home search, and ultimately, a better chance of finding what you like.

So, what are you looking for in a home? And what’s your budget? Reach out to a local agent to go over that together to find the options that may be right for you.

Hire A Professional • Home Buyers • Money Talk • Selling Your Home • August 8, 2024

Where Will You Go After You Sell?

by Michael Cummiskey

If you’re planning to sell your house and move, you probably know there’s been a shortage of options available. But here’s the good news: the supply of homes for sale has grown in a lot of markets this year – and that’s not just existing, or previously-owned, homes. It’s true for newly built homes too.

So how do you decide which route to go? Do you buy an existing home or a brand-new one? The choice is yours – you just need to figure out what’s most important to you.

Perks of a Newly Built Home

Here are some benefits of buying a newly built home right now:

Have brand new everything with never-been-used appliances and materials
Use energy efficient options to save money and leave a smaller footprint
Minimize the need for repairs and benefit from builder warranties
Take advantage of builder concessions that can help with affordability

In today’s market, a lot of builders are focusing on selling their current inventory before they add more homes to their mix. And some of them are offering concessions and are more willing to negotiate to make a sale happen.

That, coupled with the fact builders are primarily building smaller, more affordable homes, has led to one other potential perk. The median price for a newly built home in today’s market is actually lower than the median price of an existing home – which isn’t usually the case. Ralph McLaughlin, Senior Economist at Realtor.com, shares:

“Homebuyers who are looking for that ‘new-home smell’ may be in a relatively friendlier market than times past when new homes were considerably more expensive than used ones.”

If you’re interested in seeing what builders nearby have to offer, lean on your real estate agent. Their knowledge of local builders, new communities, and builder contracts will be important in this process.

Perks of an Existing Home

Now, let’s compare that to the benefits of buying an existing home.

Join an established neighborhood that you can get a feel for before moving in
Choose from a wider variety of floorplans and styles
Appreciate the lived-in charm that only an older home can provide
Enjoy the privacy and curb appeal of mature trees and landscaping

In addition to these lifestyle benefits, there’s strategic value to buying an existing home, too. Remember, you can always make upgrades to an existing home down the road to give it some of the latest features available. This gives you the best of both worlds: you’ll get the charm, the neighborhood, and over time, you can still add those on-trend elements you may see in a brand-new home. And if you do, you’ll likely increase the home’s value too. An article from LendingTree explains:

“. . . they can personalize it and possibly increase its potential resale value with cosmetic upgrades . . . Plus, if a home comes with physical details or stories that add charm, in some cases, these elements are attractive enough to add to a home’s resale value . . .”

Want to see what’s available? Your real estate agent can show you what homes are for sale in your area, so you can see if there’s one that works for you and your needs.

Bottom Line

There are a lot of factors that go into deciding whether to buy an existing home or a newly built one after you sell, but it’s essential in today’s market to understand the opportunities you can find in both. Work with a local housing market professional so you have expert guidance as you explore the options in your area.

Hire A Professional • Home Buyers • Luxury Homes • Money Talk • New Build • Retirement • Selling Your Home • August 7, 2024

Mortgage Rates Down a Full Percent from Recent High

by Michael Cummiskey

Mortgage rates have been one of the hottest topics in the housing market lately because of their impact on affordability. And if you’re someone who’s looking to make a move, you’ve probably been waiting eagerly for rates to come down for that very reason. Well, if the past few weeks are any indication, you may be getting your wish.

Mortgage Rates Trend Down in Recent Weeks

There’s big news for mortgage rates. After the latest reports on the economy, inflation, the unemployment rate, and the Federal Reserve’s recent comments, mortgage rates started dropping a bit. And according to Freddie Mac, they’re now at a level we haven’t seen since February. To help show the downward trend, check out the graph below:

Maybe you’re seeing this and wondering if you should ride the wave and see how low they’ll go. If that’s the case, here’s some important perspective. Remember, the record-low rates from the pandemic are a thing of the past. If you’re holding out hope to see a 3% mortgage rate again, you’re waiting for something experts agree won’t happen. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“The hopes for lower interest rates need the reality check that ‘lower’ doesn’t mean we’re going back to 3% mortgage rates. . . the best we may be able to hope for over the next year is 5.5 to 6%.”

And with the decrease in recent weeks, you’ve got a big opportunity in front of you right now. It may be enough for you to want to jump back in.

The Relationship Between Rates and Demand

If you wait for mortgage rates to drop further, you might find yourself dealing with more competition as other buyers re-ignite their home searches too.

In the housing market, there’s generally a relationship between mortgage rates and buyer demand. Typically, the higher rates are, the lower buyer demand is. But when rates start to come down, things change. Buyers who were on the fence over higher rates will resume their searches. Here’s what that means for you. As a recent article from Bankrate says:

“If you’re ready to buy, now might be the time to strike. Home prices have been rising primarily because of a longstanding shortage of homes for sale. That’s unlikely to change, and if mortgage rates do fall below 6%, it’s possible buyers would enter the market en masse, further pushing up prices and resurrecting bidding wars.”

Bottom Line

If you’ve been waiting to make your move, the recent downward trend in mortgage rates may be enough to get you off the sidelines. Rates have hit their lowest point in months, and that gives you the opportunity to jump back in before all the other buyers do too.

If you’re ready and able to start the process, reach out to a local real estate professional to get started.