Even in the face of COVID-19, the real estate market in Shenandoah Valley remains active. Funkhouser Group has put several precautions in place so potential buyers and sellers can continue to purchase or sell homes while social distancing. At this time, buyers should do the following before scheduling a tour:
These guidelines are listed on a yard sign that is available to all sellers working with Funkhouser Group. Additionally, there are safety measures listed for property tours as well. These include:
If you are closing on a house as a purchaser or seller, you may be wondering what that process looks like during the COVID-19 outbreak. Settlement agencies have been in operation during the pandemic as they are an essential business but many of them have had to readjust their typical settlement procedures to ensure the safety of their staff and clients.
New Practices Under Virginia's Stay-at-Home Order
Certain procedures will vary between title agencies as each company decides what is best for their office. West View Title Agency has temporarily closed the office to the public and is handling closings over the phone while the seller or purchaser signs the documents from their car or a table in the parking lot, still within sight of a processor who can notarize the documents. According to Stewart Title’s website, they are limiting who attends closings, disinfecting between all clients, and maintaining 6 feet of distance (in addition to other safety precautions). Other agencies may require you wear a mask at closing or email photocopies of your driver’s license prior to settlement. If you aren’t sure what your own settlement agency’s policies are, a quick call can help you prepare for a contact-less/ limited-contact closing.
Closing in the Future as the State Slowly Re-opens
While the new practices for closing are not ideal, they are in place to prevent coronavirus from spreading. Setting aside the health ramifications, it’s important to keep in mind that if one employee gets sick at a title agency (particularly a smaller agency where the employees work closely together), it could require several people in the office to quarantine for two weeks which would slow down transactions. In the case of West View Title Agency, future closings will likely be handled differently than they were pre-pandemic. Buyers and sellers will close separately and only those who are signing documents would be allowed in so social distancing is still observed. Masks will probably be required as well. Regardless of how a title agency decides to operate, preventing the spread of COVID-19 is still up to every individual and we should all continue to follow recommendations from the WHO and CDC.
Whether you are renovating a home to prepare it for sale or just want to improve it, renovations can be expensive so it’s important to find a contractor you trust and ensure your upgrades add value to your house. Renovating a home can seem overwhelming at first, especially if you have several ideas or projects you want to accomplish. If you have any issues with the basics- your roof, HVAC system, plumbing, or flooring and walls- they will be your first priority. If everything is in good working condition, you may decide to focus on the kitchen or bathrooms which typically have a high return on investment. So once you’ve decided on your project, what should you do next?
1. Set a Budget
Your budget may look different if you are improving upon your dream home versus if you plan to sell your home in a few years. Not all upgrades will pay for themselves when it comes to selling a home. However, if you are improving on a home you plan to live in for several years to come, it may make sense to splurge on amenities that you would want regardless of resale value. A big part of the budget is deciding on materials. In most cases, you want to balance your splurges with economic substitutions. You may decide on an upscale laminate over true hardwood floors or choose a cost-effective neutral tile in the bathroom paired with a top-of-the-line tile for an accent strip. After getting some estimates, you may find that you do not have enough saved. It’s a good idea to review loan options and talk with your mortgage lender.
2. Devise a Plan
Get together all the information about your project including everything you want done and desired materials. You may decide to create your own plan or you might meet with a pro, like an architect or interior designer. It’s a good idea to establish early on how involved you want them to be in the process since hiring an architect for the full job (assembling a team of contractors, overseeing construction, designing every aspect of your renovation) could be costly.
3. Create a List of Candidates
Your realtor, friends and family, and social media platforms can be a good springboard for you to start a list of people/ businesses you may want to use for your renovations. You can find more candidates through an online search as well. Then you will want to narrow down the list by looking at reviews carefully.
4. Interview the Best Candidates
Now you can verify with each candidate that they are licensed and insured as well as inquire about their past work with renovations similar to yours. You can request references and then make sure they check out. Next, you should set up in-person interviews. This ensures you will work well with your contractor and they get a chance to see the property/ area you want renovated. This will help them give you an accurate estimate; you may even decide you want to pay for a “hard estimate” at this time to be sure you will stay within budget (which can be particularly important if you plan to sell soon and want the best return on investment).
5. Select a General Contractor
Now you are ready to hire your General Contractor (or plumber, painter, designer, etc). You want to be present but avoid micromanaging since that can slow down the renovations and add unnecessary tension. Since you’ve been thorough in your selection process, you can be confident in your team to produce high quality work. That said, it’s always a good idea to let your GC know how to get in touch with you when you aren’t home if they need a decision on purchase or design. Your freshly upgraded home is now ready to be enjoyed, or perhaps, sold!
As most people know, Spring can be a great time to list your house. I have found that often buyers who have looked all winter are often ready to make a move on the right house when it comes on the market.
I think this Spring will be particularly good due to continued lack of inventory and historically low interest rates. In other words, the normal lack of inventory due to the slower Winter months only adds the to general inventory problems of today's market and is multiplied by a lot of ready and able buyers with low interest rates!
The following are some simple tips for getting your house market-ready in time for the Spring:
1. Declutter and Clean Your Home
Having a clean and organized house will instantly make the rooms look bigger and show off the best features of your home. Buyers appreciate having lots of storage space and with knick-knacks out of the way, the closets and other storage areas will look more spacious. If you aren't ready to purge everything, you can rent a storage space while your house is on the market. Keep your house as clean as possible so it is always ready to show and make a good first impression on potential buyers.
2. Make Updates and Repairs
Now would be a good time to review the Pre-Home Inspection Checklist to see what updates your house may need. Be sure to fix leaky faucets, running toilets, squeaky doors, etc. Painting neutral colors and replacing hardware, particularly in the kitchen, are relatively quick upgrades that can impress potential buyers.
3. De-Personalize Your Home
Decluttering your home and painting neutral colors are both important aspects to creating a blank slate so that buyers can easily envision themselves living in your house. Put away most framed photos, toys, personal keepsakes and similar items.
4. Stage Your Home
There are several advantages to staging your house; buyers view the house as well maintained and the furniture placement will help highlight the strengths of your house while minimizing any flaws there may be. This will also maximize the space and make the house look inviting. Staging a home includes the exterior to improve its curb appeal. Fresh paint, a mowed lawn, and landscaping will all ensure a great first impression before potential buyers even enter your home. Contact me if you would like to have a professional stager and myself tour your home and provide consultation and possibly pieces to complement your home.
5. Prepare for Professional Photography
The majority of potential buyers will see photos of your house online before they see it in person. In fact, bad photos could discourage them from seeing your house at all! The first step to taking flattering photos is to maximize both artificial and natural light in your home. Clean windows, replace burned out bulbs and add more lighting fixtures or stand alone lamps to make the house look bright and cheery. Professional photography will put your houses' best foot forward by ensuring the pictures are; clear, crisp, high resolution and taken from the best angles. Tips on preparing your house for pictures can be found here.
6. Pricing Your House
Your listing agent is an invaluable asset to you as you prepare to put your house on the market; they provide a wealth of knowledge regarding the local housing market and determining the value of a home. It's important that the asking price be competitive; if it's too high, your listing may get overlooked and after sitting on the market, buyers may wonder why the house hasn't sold. If you want to discuss your the market value of your house email me here.
As discussed in previous posts, you can sell your home at any point you want to after purchasing it, however it may not be the wisest choice financially. While it typically takes about 2 years for a homeowner to be able to turn around and sell their home without a loss, in some circumstances you may need to sell earlier. In our last post we discussed all the specific aspects of selling a home early that you need to consider in your decision. This includes the following:
Next, we’ll walk through a specific example of how to calculate your profit or loss from selling a home after living in it for six months. Let’s say you purchased a home for $300,000 in July, 2019 and you need to sell now. This is how you would calculate your profit or loss.
Home price: $300,000 in July, 2019
Home owned: 6 months
Down payment: 20%, or $60,000
Closing costs: 3%, or $9,000
Financing: $240,000 at a 4.5% interest rate, 30-year fixed loan for a monthly payment of $1,586
Equity: $2,000 from paying down principal
Closing costs for resale: $20,000
Loss: Total loss equals $29,000 (combined closing costs) plus $2,000 in equity equals a $27,000 net loss
So, based on these figures, you would need to sell your home for $327,000 to break even.
These calculations don’t include interest payments, property taxes, or insurance, because it’s probable that you would have incurred similar expenses if you had rented instead of buying and reselling.
Now, if you find yourself in a situation where you need to sell your home early, such as a job change and relocation or a health emergency, you will be able to be prepared for the expenses you could incur. Preparation will make the whole process less stressful and more manageable.
Selling your home is a big step. How do you know you’re ready to sell your home? Here are 8 signs that you’re in a good position to sell your current home and buy a new one.
1. You have positive equity in your home
Equity is the difference between what your house is worth and what you owe on your mortgage. So if your house is worth $300,000 and you owe $200,000, then you have $100,000 of positive equity. Most homeowners have positive equity in their homes, but it’s possible to have negative equity if your home is now worth less than what you paid for it. How much equity do you need to sell your home? Unless you have to do so to avoid foreclosure, don’t sell your home unless you can sell it for more than you bought it for. In terms of what you need to buy a new home, it’s best to have enough money from the sale of your current home to make a 20% down payment on a new home and to be able to pay for closing costs and moving expenses.
2. You’re free from debt outside of your mortgage
The best case scenario for buying a new home is that you are financially secure, with no debt outside your mortgage and enough cash in an emergency fund for at least 3 months of expenses. However, it is possible to carry some debt outside your mortgage and still be approved for a loan for a new home. Lenders will look at your DTI, or debt to income ratio to decide if you’re eligible for a loan. A favorable DTI is less than 43%. To figure out your DTI, add up all your monthly debt and divide it by your monthly income. For example, if your monthly debt is $500 and your income is $3,000, then your DTI is 16%.
5. You have cash for home improvements
In order to get the most out of the sale of your current home, it may be necessary to make some upgrades. Typically, the best places to invest money are in paint jobs, the exterior of the house, and upgrades to the kitchen and bathrooms. Home improvements aren’t a must-have, but having the cash on hand to update your home and maximize its value is a good sign you’re ready to sell.
6. You're emotinally ready to sell
While you may be financially in good shape to sell your home, it’s also important to assess whether or not you are emotionally ready. Can you handle the criticism of your home that potential buyers may make without taking it personally? Are you ready to let go of the memories that you created in your home? Are you prepared to put in the work to get your home ready for the market and keep it ready to show for weeks or months? These are some of the questions you will need to answer in order to determine if you’re emotionally ready to sell.
7. Your current home no longer fits your needs
Whether you need more space to accommodate new family members or you’re ready to downsize, it’s important to assess whether your current home fits your needs. Changes in your family size or lifestyle indicate that you’re ready to sell.
8. You’re in a sellers market.
Do some research and find out the state of your local market. If you're in a seller’s market, meaning that demand for homes is greater than the number of homes available, it’s a good time for you to sell. In a seller’s market you’re likely to get multiple offers on your home that are competitive and you’ll be able to make money off the sale of your home, which is always the outcome you want as a seller.
In summary, to determine if you’re ready to sell your home, you’ll want to take stock of your financial situation, your emotional situation, and the state of the local market. If these three factors are all working in your favor, it’s a sure sign that you’re ready to make the move of selling your home.
In my last post on buying and selling a home at the same time, we looked at some scenarios in which it’s best to sell your existing home first and then buy your new home. But there are also scenarios in which it’s advantageous to buy first and then sell.
Let’s look at two examples of scenarios in which it can be better to buy first, and some steps to take to help you plan it all out.
If you have the funds available to buy a new home before selling your old home, you should take advantage of this fortuitous situation. There are several reasons why it’s a good idea to buy first in the event that you can manage it. Buying first can be the least stressful way to move for a few reasons:
Steps to Follow
Identify and liquidate your assets to be able to make a good offer, also have documentation that you have the funds available
Moving From a Hot Market To a Slow Market
In this scenario it makes sense to buy first because it will be easy to get an offer accepted in the slow market and easy to sell quickly in the hot market. This can happen in Harrisonburg/Rockingham when moving from houses at the median sales price to more expensive neighborhoods. Statistically, there are less people competing the further away you get from the median sales price.
People can shy away from this option because you will be hold two mortgages for a period of time. Some clients are more comfortable with this than others. If you are considering this as an option I would be happy to meet and discuss timing this move. Each situation is unique. Depending on your desire to move slowly, clean, and stage we can get the property marketed quickly. Since I do my own marketing, I can typically be flexible to get the house on the market in a timely manner after it is ready.
Pricing plays a larger role in how quickly the property will sell once it hits the market. However, in a hot market, good marketing and correct pricing can result in a quick contract. The contract can then likely be negotiated for a 30 day settlement. So, it is possible for you to only hold the two mortgages for two months. We of course would want to be prepared for unexpected circumstances and be okay with it potentially taking a little longer.
For homeowners who don’t want to worry about having two mortgages at the same time, there’s another option, which is making a contingency offer. This can be a nice safety net if you really do not want to hold two mortgages for any given amount of time. Some sellers may not be willing to enter into this type of contract but it is not completely uncommon in a sellers market.
Steps to Follow
Pros and Cons
Although it can require more cash on hand, for many homeowners there are still some situations in which it’s better to buy first and then sell later. Here is a look at some pros and cons of buying before selling.
Pros to Buying First
Cons to Buying First
Feeling pressure to sell quickly may cause you to take a lower offer than you would otherwise
Now you have the case for buying before selling, as well as the case for selling first, which we laid out in our previous post. There’s no one right decision, as it depends on your unique situation. So weigh the pros and cons, and go with your gut instinct.
In our last post we introduced some strategies for buying and selling a house at the same time.
But the question still remains, which should you do first, buy or sell? Whether it’s best to buy or sell first will depend on the particular situation you’re in, with variables such as the timeline in which you need to move, the market you’re buying in and the market you’re selling in. In this post we’ll explore why it can be best to sell first, looking at specific scenarios and tips for selling first.
Here are two sample scenarios in which it would be better to sell your home first, and some steps to follow for making it all work out.
In this scenario it may take up to a year to find a new home. Rather than stressing over getting the timing of buying and selling just right, sell first and plan to rent until you find your perfect home. That way you have no particular deadline for buying and can wait until you find just the right place to buy. In a hot market selling first is important because making an offer contingent on selling your current house can put you at a disadvantage to other buyers.
Steps to Follow
This is actually a very common scenario, and most people in this situation need the money from the sale of their current home to be able to buy in a new city.
It may be best to rent for a few months in the new location to help you get familiar with the new area. It can also help to have a local agent help guide you. If you are planning such a move, I'd be happy to connect you with a qualified agent in your destination city across the country. Shoot me an email.
Steps to Follow
Pros and Cons
However you choose to go about selling your current home and moving into a new one, there are some pros and cons to consider for selling first and buying later. Here are a few of them.
Pros to Selling First
Cons to Selling First
Here you have a case for selling first, but there are scenarios in which it may be better to buy first. We'll explore buying first in our next post!
Buying and selling a home at the same time is a complicated process. Here are some practical tips that will help things go more smoothly.
Find an experienced agent
Given the complexity of buying and selling at the same time, you will want the help of an experienced real estate agent. An experienced agent will be able to help you price your home optimally, and will be an expert at timing the sale of your home, negotiating the price, and strategies for buying and selling at the same time. Choosing the listing price is one of the most important functions of a listing agent, and you’ll want someone who really knows the local market.
If you think you are ready to discuss the best strategy for your situation, I'd love to meet up with you. If you want more information about my experience, see here.
Determine if you’re in a buyer’s market or a seller’s market
The steps that you take in selling and buying a home will differ depending on the local market. If you’re moving to a different town, you will be selling your home in a different market than the one you’re buying in. In a buyer’s market, there are more homes up for sale then there are people looking to buy. You may find a new home before you sell your own home. In a seller’s market, there are more people looking to buy then there are homes for sale. You will likely sell your old home before finding a new home.
There is not a one size fits all solution for everyone. You have to determine what works best for you and your situation. Here would be some examples of strategies give the market conditions.
If you’re in a…
Make an offer with a kickout clause (in this case the purchase of the new home is contingent on the sale of the old home).
Request an extended closing. This will help give you time to sell your current house.
Make an offer with an extended closing and trust your house will sell. This may feel risky but depending on your house and financial situation, it can work out very well. Pricing your old house will be very important in this option.
Sell your house first and negotiate a rent back agreement. This will give you sometime to shop for a new house without having to move into a temporary rental.
Know your financial situation
The next step in the process is to take stock of your financial situation. You will want to talk to your mortgage company and your accountant or financial advisor to find out the following information. You’ll want to know how much liquid cash you have on hand, how much equity you have in your home, and what types of loans you qualify for. Ask me for recommendations.
A key part of your financial situation is the value of your home. You will want to find out how much your home is likely to sell for. As part of determining the value of your home, you may want to get a pre-inspection to find out how much work will need to be done in order to sell your home. This is also an ingredient in determining how much equity you have in your home. Equity is the amount of money left over after you take the market value of your home and deduct the amount that’s left to pay on your mortgage. In other words, it’s the amount you’ve already paid toward the current value of your home.
Buy First or Sell First?
Now you have some tips to help you in the process of buying and selling at the same time. But which should you do first, buy your new home or sell your old home? We’ll look at some different scenarios for selling and buying your home in our next posts!
Saving money is one of the main reasons people sell For Sale By Owner (FSBO). It makes logical sense. If a person sells their house for $200,000, they don't have to pay any commissions. If they use an agent to sell their house for $200,000, they will have to pay the commission. This obviously means less profit.
The biggest thing FSBOs overlook is what they can actually get for their house when they sell by themselves vs. with a Realtor. The idea that money is being saved is not only appealing to a home seller, it is also appealing to a buyer looking for a bargain. To analyze this further, let's look at the 4 buyer types and their exposure to FSBO homes.
1. First Time Home Buyers- First time home buyers generally seek as much help as possible. They want to make sure that the biggest purchase/investment of their lives goes smoothly. This is why the majority of first time home owners use a real estate agent. This agent will be using the MLS to find and show them properties.
2. Repeat Home Buyers- The majority of homes are sold with an agent. Most repeat buyers are not only loyal to the agent who sold them their last home but they are likely using an agent to sell their current home. This means the majority of repeat home buyers will be using an agent to find and purchase their home. Again, the agent will be using the MLS to find and show them properties.
3. Relocation Buyers- Relocation buyers generally use an agent because they want a local expert to help them find their next home in an unfamiliar area. Furthermore, the moving can be very stressful and the more they can hand off to an agent, the better. Once more, the agent will be using the MLS to find and show them properties.
4. Investors- Investors will use agents but they will also do a lot more leg work to find themselves a bargain. They are not in a rush to buy and readily throw out low offers. Investors concentrate on areas they can find good deals. This includes foreclosures, bank owned properties, and FSBO. This is why the majority of interest FSBOs get is from investors and the offers are generally a lot lower than they had hoped.
Altogether, the majority of interest a FSBO gets is from investors who are looking to make a profit. Not only will a real estate agent help expose a house to the maximum amount of buyers, they will use their expertise to analyze the market to ensure you are getting the most for your house.