In the current market, sellers aren't having any trouble offloading homes. In fact, according to the National Association of REALTORS® , the average home took only 29 days to sell during the month of April, which undercut the previous record of 32 days set last May. The inventory is low, and many homes are getting snatched up before most buyers can even schedule a viewing. As a result, many buyers find themselves watching the market continuously for anything they may be able to purchase.
When buyers are easy to come by, sellers have the ability to be more discriminating and demanding. For this reason, it's important for every serious buyer to have a pre-approval in hand before they begin home shopping.
What is a pre-approval?
A pre-approval is a tentative commitment from a lender to provide you with a loan in a certain amount. This commitment is based on information you provide about your credit, income, other debts and employment history. In most cases, the lender will also check your credit report before issuing a preapproval. When the process is complete, the lender will give you a pre-approval letter that you can show to sellers when you are interested in a home.
What are the benefits of having a pre-approval?
Having a pre-approval gives you an edge over other potential buyers. Some of the benefits of a pre-approval include:
- Showing sellers you're a serious buyer. - Sellers don't want to waste their time with buyers who may not be serious about making a purchase. Having a pre-approval shows the seller that you are ready to make a move.
- Putting the seller's mind at ease. - When your offer is accompanied by a pre-approval letter, the seller knows you will most likely be able to secure the financing you need to go through with the deal.
- Knowing what you can afford. - Too many buyers fall in love with a home only to be disappointed when they aren't able to qualify for the loan. Having a pre-approval lets you know exactly which homes you should view.
With sales happening so quickly, it's likely that the home shortage will continue. Before you start shopping, be sure to obtain a pre-approval to make your offer stand out from the rest.
What to get pre-approved today? Click the APPLY NOW button at the top of the page.
For home sellers, two basic options exist. They can sell their home on their own as a for sale by owner (FSBO) property, or they can sell with the assistance of an agent. Many sellers think that working with an agent is the more costly option, and thus try to sell their home on their own without assistance. Here are 5 reasons why this may not be the best idea.
1. Lower Sale Price
Most sellers choose to go the FSBO route because want to save money. They think, "If I'm not paying a real estate agent, then I get more profit from the sale of my home." Unfortunately, any additional profits they're hoping for end up counteracted by an often lower selling price.
According to the National Association of REALTORS, FSBO homes have a median sales price of $185,000 in. This is compared to a median price of $245,000for agent-assisted homes. A typical agent's fee of 6% on a home price of $245,000 is just $14,700, compared to the $60,000 difference in the prices. So, even with paying an agent, the seller using an agent still makes more money on the sale of the home.
2. Slower Sale
Sellers who tackle the prospect on their own often don't have the marketing expertise to do it right. This means that the home may sit on the market longer, because fewer buyers see it. Since almost 90% of buyers search online for a home, an online presence is critical, and many FSBO sellers don't know how to generate a good one or don't have the tools to keep it up to date and in the sight of potential buyers.
3. More Difficult Transaction
The amount of paperwork necessary to legally sell a home has increased dramatically. All of the inspections, disclosures and other regulations which are mandatory are quite overwhelming, and once the property's ready to sell the process of the contract adds another layer of complexity. When someone tries to sell a home as a FSBO property, they aren't exempt from these regulations, so they must tackle the learning curve on their own. That's one of the reasons the number of FSBO properties has dramatically dropped in recent years.
When selling with a Realtor, sellers get the benefit of working with someone who has extensive experience in this. Agents have to study the regulations and paperwork before getting their licenses, and experienced agents have closed multiple sales to experience the process again and again. This prevents delays and frustration for the seller.
4. Too Many Negotiations
The home selling process can involve a number of negotiations, and most homeowners are not skilled negotiators. Not only are they going to need to negotiate with the buyer, who of course is looking for a deal, but they'll also need to negotiate with the buyer's agent. Some buyers have attorneys as well, and that represents another negotiation. The home inspector, who always finds something wrong with the house, is another place where negotiation has to happen. Without experience in negotiation, this can be incredibly stressful for the seller. An agent comes alongside and guides these negotiations, knowing what is worth fighting for and what is worth conceding.
5. Insufficient Exposure to Buyers
One of the reasons successful real estate agents are successful is because they have a large reach to find prospective buyers for their homes. This starts on the internet, where the majority of buyers start their search. An agent is able to post in all online venues, including those linked to the MLS. In addition, agents know the most effective offline advertisement venues, so sellers don't waste their time posting in newspapers that no one reads. Finally, agents have buyers they're working with as well, and they're motivated to sell to their own buyers to increase their income, so they're going to show buyers the seller's property. When selling on their own, sellers must figure out all of the different venues, post the listing themselves and then hope for the best.
Sellers considering selling on their own have an uphill battle to face. It's always better to partner with an experienced Realtor, as doing so makes the process ahead much smoother and less stressful.
We hear about first time home buyers, buyers of 2nd homes, older people obtaining reverse mortgages… but what about “first time sellers”? The housing market has been heating up in many areas, especially as the weather improves, and buyers complain that there are too few properties to purchase, prices are high, rates are low and demand is rabid. So what is stopping an owner from selling their house today and moving on to the next one?
A high cost transaction can be very intimidating for a first timer, especially in a market such as this one. Borrowers are educating themselves about the process so that they can approach selling their house with confidence. Sellers should investigate what they can afford once they sell their current home, or if it is possible for them to purchase without having first sold: buying power. A qualified mortgage advisor will walk them through the steps and options. Many people discover that they can qualify to make a step up in housing without having their current home sold, which gives them a lot more flexibility because they can buy before they sell.
The loan officer can also inform the seller of the costs of obtaining a new home loan, what programs are available, a general time line, what is required for underwriting, and common mistakes that are made. These include unrealistic expectations, trying to obtain new credit cards or debt prior to buying another home, and so on.
Once a potential seller understands their buying power and the process, they should meet with a realtor for the selling side and the buying side to determine a pricing strategy for selling and a timing strategy for buying. They should know what their buying power will obtain, and study communities where they are likely to purchase. The listing agent for a house will tell the owners to clean up, spruce up, and stage the house for sale, give the first time seller a timeline, and discuss the possibility of renting after a house is sold. Inventory is tight in many areas, so if a buyer falls in love with a house they will work with the seller’s time frame.
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