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Before you make the decision to relocate, it’s a good idea to ballpark how much you’d pocket from selling your house, and figure out how far that money would stretch in a new location that may have a drastically different cost of living. Will you be going from a spacious single-family to a shack with shared walls in a more expensive city? Or could a relocation mean you’re finally able to trade up to a nicer place?
Don’t just guess… do the math. You can follow this quick step-by-step:
Get your estimates
(Note that online home valuation tools can give you a decent home value average, but you should consult a top local real estate agent who can conduct a formal comparative market analysis before setting your list price.)
Once you have an estimate for what your house would fetch on the market, subtract your outstanding mortgage payoff amount and the estimated costs of selling a house including agent commissions (5%-6% of the sale price), transfer fees, and home preparations and repairs—likely amounting to 7%-12% of your home’s value depending on its condition.
With that you’ll have a solid estimate of your home sale proceeds.
Calculating how far your new salary will cover your new cost of living is key to deciding on the size of your new home and your price range. “That’s one of the questions you want to answer: What kind of lifestyle changes are you going to be experiencing in reference to cost of living?” said Gene Darden, a Relocation Specialist.
For instance, Darden explains: a 4,000-square-foot house in the Birmingham, Alabama, market costs about $500,000…In Atlanta, the same size costs twice as much.
There are lots of cost of living calculators online to help you evaluate how far your dollars will stretch. Sperling’s Best Places, the company that provides statistical information on crime rates, climate, and other factors, provides a cost of living comparison that includes housing, food, utilities, transportation, health costs, and taxes.
Want to dig deeper? Bankrate’s Cost of Living Calculator starts with a salary comparison between cities, then itemizes for costs such as specific foods (ground beef, coffee, half-gallon of milk), gasoline, clothing items, services (dry cleaning, hair salon), clothing, and toiletries such as ibuprofen and toothpaste.
Based on your home sale proceeds estimate and new monthly salary, you can figure out how much house you can afford in your new city.
A couple of good rules of thumb:
Your job start date will affect your packing, cleaning, and prep time for your home sale, as well as how your real estate agent prices your home.
“If they come to me and say, ‘I want to put my house on the market in January but … my job doesn’t start until May 1st,’ that would be a different approach than putting your house on the market in January and the job starts February 1st,” said Darden.
According to an Allied survey of 3,500 respondents, 47% of people relocating for a job had thirty days or less to move. Such a tight timeline makes a traditional home sale logistically difficult and you might consider accepting a cash offer for a shorter closing.
Although most sellers choose to list on the open market to achieve the highest possible price point for their house, a cash offer provides simplicity and certainty, so it could be an attractive option to streamline your job transfer.
Find out what cash buyers are willing to pay for your home right now.
Not everything can be compared by salary alone. Glassdoor’s Employment Confidence Survey noted that about 60% of people reported that benefits and perks were a major factor in considering whether to accept a job offer—even over a pay raise.
The Harvard Business Review reported that it had surveyed 2,000 workers ages 18 to 81 about 17 benefits they would weigh when deciding between a high-paying job and a lower-paying one with more perks.
The majority (88%) gave heavy or some consideration to a job with better health, dental, and vision insurance, as well as more flexible hours.
Other benefits that respondents said might influence their job choice included more vacation time, work-from-home options, student loan or tuition assistance, paid maternity or paternity leave, free gym membership, and free day-care services.
Getting acclimated to a new community is the second most challenging part of relocating for a job behind finding a new home, according to Allied. If you have children, you’ll naturally have questions about schools in a new area, for instance.
While some companies provide suggestions from all personnel to new employees who are house hunting, ranging from neighborhood commute times to school district ratings, your real estate agent also can be a good resource.
“It’s not just selling their home but answering all those other questions: What is the school district? Where can I go that somewhat parallels where I am now?” Darden said.
According to CNBC, Americans are spending more time commuting to work: about 26 minutes each way compared with less than 22 minutes each way in 1990. Those extra minutes add up throughout the year to a whole work week (about 35 hours) in transit! So consider in your calculations, not just the price of gasoline but any benefits that might offset a long commute, such as flex time.
SmartAsset has a handy commute calculator you can use. Simply input your future home address, work address (plus any other addresses you’d like to compare) and it will give you an estimated commute time by car, public transportation, or foot.
When you’re relocating to another city or state because of work, your employer might provide financial relief for your moving expenses.
“I would say probably that for at least 50% of my clients, the company picks up a lot of the moving expenses and other costs that are associated with selling their home,” Darden said.
Although Darden has known employers to pay for expenses only to help with the move itself, there are companies that provide other forms of compensation.
According to the Allied survey:
In general, the larger the company, the more likely you’ll have some financial assistance with your move. About 63% of the Allied respondents who had relocated worked for companies that offered relocation packages. Companies with 5,000 or more employees had this benefit in 77% of moves, but even about 71%-72% employers with 500 to 1,000 employees offered a relocation package.
The Internal Revenue Service won’t require you to pay taxes on up to $250,000 of capital gains from the sale of your home if you’re filing as an individual and you’ve used this as your primary residence for at least two of the past five years. (This exclusion bumps up to $500,000 for couples filing jointly.)
Even if you meet that exclusion, however, you may be responsible for municipality and state taxes, depending on the details of your move. Consult an accountant before you file to help you sort through these fees, as well as walk you through deductions you qualify for.
Some employers contract with a relocation company that helps employees find and purchase housing in a new area. Darden has known clients who have had such a benefit, which picks a real estate agent in the new location. He’s also assisted people without access to this service by coordinating with another agent from his brokerage in their new hometown.
However your move is structured, you want effective communication. “You want to liaison with the Realtor where they’re going and help with that process,” he said.
Studies consistently show that moving is one of the most stressful events in life, whether you’re moving across town or across the country. But there are resources and professionals available to help take off the pressure by answering your most pressing questions.
“Even if you haven’t found the house yet, you get all the questions answered that you can,” Darden said, “because the more unknowns you remove from a situation, the less stressful it’s going to be.”
Source: homelight.com ~ By: Valerie Kalfrin ~ Image: Canva Pro
Here’s a look at the process of calculating the value of your home and what it means for your home’s sale price.
You know how much you paid for your home, and you likely factor the work you’ve done and the memories you’ve made there into your idea of what it’s worth. But while your home may be your castle, your personal feelings toward the property and even how much you paid for it a few years ago play no part in the value of your home today.
In short, a house’s value is based on the amount the property would likely sell for if it went on the market.
You should have a grasp of the value of your home in a variety of situations: if you’re getting ready to sell your house, looking to refinance your mortgage or buying a new homeowners insurance policy, for example.
For a better understanding of what your home’s value means, how it may change over time and what the impact may be if the housing market shifts significantly in your neighborhood, city or even the whole country, here’s our breakdown.
If your property value is based on what a buyer is willing to pay for it, all you have to do is find someone willing to pay as much as you think it’s worth, right?
Determining a home’s value is a bit more complicated. Keep in mind that buyers place no value on the good times you’ve spent there and might not consider your updated bathroom or in-ground swimming pool to be worth the same amount you paid for the upgrades.
And even if you find a buyer willing to pay $450,000 for your home, the value of your house isn’t necessarily $450,000. Ultimately, the financial backing in a deal determines the property’s value, and it’s most often a mortgage lender making the call.
Property valuation primarily takes into account recent sales of comparable properties in the area. Key identifying factors are the same square footage, number of bedrooms and lot size, among other details. Professionals who determine property values for a living compare all the details that make your house similar and different from those recent sales, and then calculate the value.
But when your property is unique – maybe it’s a triangular lot or a four-bedroom house in a neighborhood full of condos – determining the value can be more difficult.
The individual, group or tool appraising the property may also influence the outcome of the appraisal since they all appraise properties differently for a variety of reasons. Here’s a look at common appraisal scenarios.
In the case of a property sale, the appraisal often happens once the property has gone under contract. The lender will hire an appraiser to complete a report on the property, getting all the details on the house and its history, as well as the details of similar real estate deals that have closed in the last six months or so.
If the appraiser comes back with a valuation below that $450,000 sale price you’ve agreed upon, the lender will likely state that it is willing to lend an amount equal to the property’s value as determined by the appraisal, but not more. If the appraisal comes in at $425,000, the buyer has the option to come up with the $25,000 difference or try to negotiate the price down.
Sellers are often open to negotiation at this point, knowing that a low appraisal likely means the house won’t sell for a higher price once it’s back on the market, though excessive interest in a property may be able to sway an appraiser.
Lindsay Katz, a real estate agent with Redfin in the Los Angeles area, says low inventory and high demand has made the Los Angeles market extremely competitive. In cases of multiple offers on a home that drive the price above its initial asking point, a higher value becomes easier to prove to an appraiser that the market value of the home has risen. “I don’t know how you can’t justify that price when 13 people agree,” Katz says.
If you haven’t yet put your house on the market and are struggling to determine price, hiring an appraiser can help you get a realistic estimate.
Especially if you’re struggling to agree with your real estate agent on what the most likely sale price will be, bringing in a third party could provide additional context. The cost of a formal appraisal is about $350 on average, according to home services company Angi.
Many real estate information sites offer more informal home appraisal tools that will give you a ballpark value for your home. You may have previously taken a look at U.S. News’ own home value estimator, Zillow’s Zestimate, realtor.com’s RealEstimate tool or explored the Federal Housing Finance Agency’s House Price Calculator.
It’s important to keep in mind that an online home value estimator is simply pulling from available information online and may not have all the facts that a professional appraiser would utilize in a valuation report. The online algorithms can catch many details, but they don’t necessarily have the ability to account for more localized factors, like the impact of severe storm damage or trends taking place in your city.
“There’s a lot of information out there,” says Danielle Hale, chief economist for realtor.com. “They don’t always agree, depending on how unique your home is or if there aren’t a lot of sales where your home is.”
Tax Assessor
Your home’s value also determines annual property taxes. In addition to examining the sale prices of similar houses that sold recently, a tax assessor looks at what the cost would be to build a similar house, whether you’ve done any recent improvements, if you earn income from the property and the cost of upkeep.
A property’s assessed value for tax purposes is often less than the appraised value – and that’s a good thing. The property taxes you pay annually are based on the assessed value, so the higher it is, the more you owe.
There are multiple ways to find out the current value of your house, but individual appraisals and assessments aren’t the only cases where you’ll hear about home values. In annual, quarterly or even monthly reports, home values are often discussed along with the rising cost of homeownership on a local, state and national level.
Depending on the source of information, reported values may be based on online estimator tools, listing prices for houses currently on the market or property value information from local assessors’ offices. These numbers are useful to discuss trends on a large scale, but they don’t always reflect the actual sale prices of real estate deals that closed in those time periods.
The details you get about rising values can be useful as you prepare to put your home on the market, buy your first house or learn more about economic forecasts, but don’t take national trends as indicators of what’s happening in your area.
The importance of trends in home values depends on the stage of homeownership you’re in or moving toward. Here’s what you should know:
For Buyers
As you’re preparing to start house hunting, keeping up on real estate market trends can be an excellent way to know what you’ll be facing. If values are climbing every month and year-over-year comparisons show fast growth – for example, 5% or more – those are signs that a lot of buyers are looking for houses at the same time as you. In mid-2021, home values were climbing at an incredibly fast pace, and the median sale price in the U.S. was seeing more than 20% year-over-year growth. Don’t expect this to repeat soon.
Whether you’re looking to invest in a property for rental income or buy a fixer-upper for a quick turnaround, current market trends may influence your choice of purchase. In Los Angeles and many other parts of the country, more time spent at home during the pandemic caused many buyers to shift their focus when looking for a place to live. Instead of prioritizing proximity to shopping and nightlife, for example, “people renting or living in a condo are thinking they’d like to have a backyard, perhaps a pool,” Katz says.
But before you invest in a sprawling property with all the outdoor amenities, learn more about the market and its previous trends. You’ll also want to crunch the numbers to see if rent will be able to cover the mortgage and upkeep on an income property.
If you’re preparing your home for sale or just looking to learn more about your net worth, keep in mind that wider home value trends and reports have little impact on you.
Instead, keep a close eye on local reports; those that provide monthly or quarterly trends on your specific ZIP code can be a better reflection of what’s happening to your property value, Hale says.
Especially if you’re considering selling your home, a knowledgeable real estate agent could be your best source in understanding your property value. “You would want to reach out and talk to an agent and get a local expert’s assessment,” Hale says.
On the other hand, “if you’re not selling, a (positive) change in value still might help you feel wealthier,” says Hale, noting that a current valuation of your home may help you make future financial decisions.
Whether you’re planning to sell now or in a couple of years, or you’re simply looking to make your home as valuable as possible in the long term, you can potentially help increase its value with regular maintenance, renovations or even additions that could appeal to homebuyers.
Many homeowners are motivated to add value to a property when they’re preparing to sell. It’s not impossible to add a couple of thousand dollars to the price tag with some simple remodeling projects that can make your home look fresh and appeal to buyers. Here are a few:
Maximizing value isn’t just about cosmetic fixes – it’s also about focusing on key areas like the roof and HVAC systems that would come up in a home inspection. Issues like leftover water damage on the ceiling from an old roof leak or a cracked window will show up in the home inspector’s report. If anything concerns the buyer too much, you may run the risk of the deal falling through.
If you’re looking to make changes to your home so it’s on par with a different caliber of properties in your neighborhood, consider these larger construction projects:
These more extensive changes can be an excellent way to take your home to the next level, but only if other houses like this exist in the area. Adding a master suite and new garage to a neighborhood full of two-bedroom bungalows with street parking won’t make the property appraise much higher than the others. That’s because your house may no longer appeal to the typical buyer in that neighborhood.
If you’re looking to increase your home’s value for the sake of your overall wealth, the best thing you can do is continue to pay off your mortgage and gain equity in the property. With proper upkeep and work to keep the home up to date, your home value will, on the whole, naturally increase over time.
Source: realestate.usnews.com ~ By Devon Thorsby ~ Image: Canva Pro
California is a leader in the solar industry, with enough solar power installed statewide as of December to power 10.7 million homes. Solar panels may be a good option if you live in the Golden State and are interested in lowering your household carbon emissions while also saving on energy bills.
California’s average residential electricity rate is higher than the national average making Californians pay a higher traditional energy bill than residents in other states, according to SaveOnEnergy, CNET’s sister company.
On April 15, California’s new net metering regulations went into effect. Overall, they increase the incentives for going solar with a battery while reducing the payouts for solar without storage.
Meanwhile, the cost of residential solar panels has decreased by more than 69% in the last two decades, according to a Lawrence Berkeley National Laboratory report. Tax credits and rebates at the federal, state and local levels can help bring that cost down further. Whether you’re interested in helping the environment or lowering your energy bills, the amount you could save on solar panels in 2022 is higher than in previous years.
The cost of a home solar panel system will depend on the system size (i.e., the number of panels included), components like solar batteries and installation costs. California’s average solar panel system is smaller (and therefore cheaper) than the national average, even though the cost per watt is normally above the US average.
Because solar is so popular in California, there is also a high number of solar panel installers, which gives customers plenty of options to choose from when looking for the right solar company.
Here’s a breakdown of the average size and cost of solar panels in California and nationwide based on 2022 data from Findenergy.com and consulting firm Wood Mackenzie.
If you decide to invest in solar panels for your home, there are several financing options to make the purchase easier.
Cash: A big expensive project like solar panels requires a lot of cash. If you see solar power in your future consider saving money now. Regular contributions to a high-yield savings account can help pad your savings.
Solar loan: Many solar companies will offer third party financing. Shop around with different lenders, because your solar company’s third party choice might not have the best terms or interest rate.
Home equity loan or HELOC: You can also consider a home equity loan or line of credit,. These can save you on interest but your home is at risk if you fail to repay.
Mortgage: Another way to get the cash for solar panels is to refinance your mortgage. Fannie Mae’s HomeStyle energy mortgage is designed to fund energy efficiency projects.
Even though the cost of solar panels has decreased in the last two decades, they’re still a substantial investment. But several solar tax credits and incentives make solar more affordable, especially in California. One key solar incentive, net metering, was reduced in a utility commission vote last year. When that change goes into effect April 15, it’s expected to increase a solar system’s payback period from six years to 10. California also introduced time of use rates, which could make installing backup batteries more profitable.
The residential clean energy credit (previously known as the investment tax credit) is a federal solar tax incentive offered in California that credits 30% of the cost of a solar system back to consumers who buy solar panels. This solar tax credit was increased and extended due to the Inflation Reduction Act, passed in August. There is no cap on the federal tax credit, so you can claim the entire 30% regardless of the size of the system.
You can apply for the residential clean energy credit by including IRS Form 5695 with your tax return. The IRS provides instructions on how to fill out this form, or the best tax software can take care of it for you. Your savings from the tax credit will be included in your tax refund or used to offset taxes you owe.
There are various state and local solar incentives available in California, too. You can find a more comprehensive list through the Database of State Incentives for Renewables and Efficiency. Here are just a few you should know.
According to the Solar Energy Industry Association, nearly 2,000 solar companies operate across California. While this means there are plenty of California solar installers to choose from, it can also feel overwhelming to sort through your options.
We’ve compiled a list of solar panel companies that stand out in the industry. Here are a few California solar installers you can consider during your search.
Formerly Sunpro Solar, ADT Solar operates throughout California and provides a variety of solar systems, including battery installations. ADT Solar says it prioritizes customer satisfaction and offers 25-year labor, power production and manufacturer warranties. The company also extends a price-match guarantee on installations.
ADT Solar does not offer solar leases or PPAs. It previously preferred to source its solar panels from LG, which left the industry in 2022. Since then, ADT Solar has confirmed it is committed to providing solar customers with a 25-year manufacturer warranty and will continue to extend a 25-year production guarantee from ADT.
Palmetto is one of the largest solar companies in the country and offers home solar systems in California. With Palmetto, you can buy solar panels outright or sign a solar lease or PPA. The majority of Palmetto’s customers choose to buy their solar system to save the most money on energy bills over time.
Palmetto has operated in the solar industry since 2010 and says it’s committed to top-tier customer service. It offers a subscription called Palmetto Protect, which monitors the performance of a solar system and provides tiered levels of support if the solar panels are damaged or fail. Palmetto solar panels have an efficiency rating above 19.8%, a minimum 12-year product warranty, and a 25-year performance guarantee.
SunPower offers some of the most efficient residential solar panels and the best warranties on the market. With an efficiency rating of up to 22.8%, the SunPower Equinox solar panels outrank all competitors. The SunPower Equinox package includes solar panels from Maxeon, a manufacturer that worked with the company until 2020, and Enphase microinverters and mounting equipment.
SunPower operates across most California regions and aims to continue providing more accessible and affordable solar products. The company was founded in 1985 and offers some of the strongest warranties available, guaranteeing 92% production capacity for 25 years.
Sunrun is the largest solar company in the US and offers a strong lineup of solar products and warranties. Sunrun’s focus is on solar leases, which come with a different set of pros and cons, but can be a good option for consumers who aren’t able to purchase a solar system. While most of Sunrun’s customers lease their equipment, the company still offers the option to buy solar panels.
The company currently sources its solar panels from several manufacturers. For people who lease their system from Sunrun, the company provides “bumper-to-bumper” coverage on maintenance and monitoring. However, those looking to buy a system will rely on the manufacturer’s warranties. Sunrun does offer a 10-year quality warranty, which covers roof damage and installation issues.
Tesla became a big player in the solar market in 2016 when it purchased SolarCity, which significantly increased Tesla’s installation capacity. Between the solar panel branch of Tesla and the Tesla Solar Roof, Tesla is one of the most recognizable brands in the industry.
The price tag, efficiency rating and warranty terms will differ depending on the solar system you buy from Tesla. The Tesla Solar Roof comes with a 25-year product warranty and a performance warranty at 95% capacity after five years and 85% after 25 years. However, the Solar Roof has a much higher price tag than many competitors.
Meanwhile, Tesla solar panels are more affordable than the Solar Roof, and the quality remains high. Its solar panels are warranted at 85% capacity after 25 years and have an efficiency range between 19.3% to 20.6%. It is worth noting that some Tesla customers have reported issues with customer service.
Solar panels are a big investment, so it’s important to consider all elements that could impact whether they’re right for you. Some installation aspects to consider include:
Source: cnet.com/home ~ By Caitlin Ritchie ~ Image: Canva Pro
Two-thirds of Americans plan to sell, buy, or refinance homes in 2023.[1] But they’ll face a housing market that has changed dramatically in the past year – and will keep shifting.
Don’t expect bidding wars to drive up your price, for one. Instead, expect to negotiate and possibly offer concessions. And if your home needs some work, get ready to help with the costs or give a little on your list price.
That said, there are still ways for sellers to walk away from a home sale happy.
Here’s how to get ahead of a buyer’s market in 2023 — including what to do when you’re selling AND buying or selling and older home in need of repairs.
Homes with the best presentation, condition, curb appeal and appearance will always command a premium. But that doesn’t mean you should jump into extensive renovations to prepare your home for sale.
Instead, focus on repairs and improvements that will help your home compete against comparable ones in your area. Make sure that you’ll regain at least what you put into your home through your sale prices. Make every dollar count, especially in a 2023 real estate market that will increasingly favor buyers.
Your improvements will depend on your home’s age and condition. Also, consider your time frame. How much time do you have before you plan to sell? Use your available time well, especially if you plan to save money. This is no time to sit back.
Give the highest priority to items that allow a good return on investment, especially low-cost but noticeable repairs and improvements. Here are a few items that can provide bang for your buck:
Can you do some of the work yourself? Every dollar you save puts you in a better financial position for your home sale. For example, saving $5,000 on landscaping could enable you to offer a closing credit to seal a deal with your eventual buyer.
Be careful about your finances, especially if you plan to buy a home after you sell your current one. Don’t take on unnecessary debt without a fairly good certainty of eventual payoff.
How will you pay for the repairs and improvements you are planning? If you have an existing home equity line of credit, or HELOC, that might be a good approach. However, if you’re planning to sell in 2023, taking out a new HELOC or cash-out refinance probably won’t make sense. You won’t recover your costs. If you have a longer time frame, you might find it will pay off, but keep in mind that interest rates are high. However, mortgage interest is tax-deductible, which could help in a longer time frame.
If you have enough cash on hand, that may be your best option. Just make sure you’re not cutting into your savings too much.
Also, you might be able to find a contractor who will take a down payment but wait until the home sells to collect the rest. Usually, the contractor will charge a premium for work that isn’t paid in advance. But that might be worth it to you.
It’s a slow time for many contractors, so now’s a good time to compare quotes and find a good deal to fix your home. Even if you’re considering selling later in 2023, consider having the work done now. Take advantage of the time you have and get ahead of the curve.
Also, talk with an experienced realtor with a network of contractors and vendors who can maximize your renovation dollars. The good news is that many contractors will be glad to have work over the winter, and you probably can get a better deal.
Speaking of realtors, you don’t have to wait until you’re ready to sell to talk to an agent or two or three. Activity has slowed for most agents, so they’ll be happy to take your call, discuss your plans, and advise you.
You can discuss what improvements you should make, what contractors you might use, and how to best compete in your local market.
Also, many realtors will list your home for a reduced commission, especially if they might also earn your business for your next home purchase. No good realtor should turn down two bites at the apple. (More on this below.)
The biggest mistake that sellers make is pricing their homes too high. It’s often hard for a seller to have an unbiased view of their home’s value.
As the market slowed in 2022, many sellers chose to take their homes off the market rather than adjust their thinking. As a result, we now have a low supply of homes for sale but relatively few buyers. But with drops in mortgage rates and more seller concessions, more buyers could jump back in this spring.
So, sellers in 2023 should prepare to make deals. First, you and your realtor need to have a conversation about what your house can fetch in the coming months. Ask the agent for a comparative market analysis of your home. The best defense for your price is a tight, well-researched CMA and a house in prime selling condition.
The National Association of Realtors predicts that price appreciation for homes nationally will slow to 5.4% in 2023, compared to 10.2% in 2022 and 17% in 2021. Also, keep in mind that home values have been dropping from their mid-2022 highs in some markets.
Older homes can present challenges, so sellers might take different approaches.
Sometimes, it makes sense to throw in the towel and sell your property “as-is.” Your situation and time frame may lead you to this option.
A good realtor can prepare a comparative market analysis (CMA) for you at a listing appointment. The agent will also advise you on negotiating inspection contingencies and issues that arise from them.
You can still get a good offer for an “as-is” property in this market. Investors are always looking for properties in disrepair so they can fix them up and flip them.
And buyers who are priced out of other homes may be interested in your fixer-upper. They can use FHA 203K loans to pay for renovations if it’s their primary residence.
If the home is in bad shape, consider donating it to charity. You’ll get a generous tax write-off for the home’s full market value as if it didn’t need repairs. In addition, in many cases you can carry over the deduction for up to five years. And you avoid any capital gains taxes.
I recently had a client with a one-acre plot of land in Potomac, Maryland. Unfortunately, it failed its perc test for a septic system, dropping its value. So, instead of selling the land for little more than he paid for it 30 years ago, he donated it to a charity and got full market value as a tax write-off.
As we discussed earlier, buyers hold more cards in this housing market. But it’s hard to consider it a true buyer’s market. Mortgage rates have dropped almost a point from their 7% peak, but they remain double what they were a year ago. So purchasing power has fallen.
Here’s what to do if you’ll be on both sides of the table: selling and buying.
Suppose you’re planning to buy a bigger house and counting on getting the best interest rate for that new loan. You don’t want maxed-out credit cards and other debt harming your credit score. That would mean a higher rate.
Also, you want a healthy debt-to-income ratio, which lenders will review closely.
If you’re going to use your seller’s agent as your buyer’s agent once your house sells, put them to work NOW looking for homes for you.
With luck, the agent can scout out some good deals for you early. They might even arrange an off-market deal so you can buy your home without contingencies, such as needing to sell your current home first and extinguish the mortgage before buying another one.
The good news is in this market, more sellers will entertain offers with contingencies. They may be in the same boat as you, offering closing help for buyers.
As previously mentioned, using the same agent for both transactions gives you leverage to negotiate a discounted commission for the sale. The agent will then likely make a larger commission on your purchase, and that commission comes from that seller. (Of course, it’s worked into the selling price, though.)
The commissions depend partly on what’s customary in your market and the competition. Here’s a state-by-state comparison of average commission rates.
Mortgage rates rose to 7% but have dropped closer to 6% in recent weeks. Some economists predict they could hit 7% again, but nobody knows for sure with all the economic factors at play.
One good way for buyers to approach this volatility is by “buying down” the mortgage rate. That means you pay for percentage points to bring down your rate.
You might even negotiate a concession with your seller to pay for the buy-down. A smaller concession on this can often beat a bigger lowering of the home’s price. For example, a $6,000 concession for a rate-buydown could save your more than a $20,000 drop in the selling price, depending on the home’s value and your mortgage rate.
To that end, many lenders have been offering rate buydowns and longer rate locks. Long locks enable you to shop with confidence, knowing that a rate increase won’t knock you out of qualifying.
In this market, you might need every available tool to make the numbers work.
Source: listwithclever.com ~ By Daniel J. Goldstein ~ Image: Canva Pro
