We’ve Bottomed Out, 5 Reasons Homeowners Should Sell Now!
We are in an interesting situation in the bay area. There is now a lack of inventory on the market and there are a number of buyers waiting for homes to come on the market that want to buy desperately. There is currently a moratorium on foreclosures that has been enacted since June 15 which requires the banks to show that they have worked diligently with home owners and offered them an extensive workout package before they proceed to foreclosure. This law along with previous laws and encouragement from state and federal government have slowed the number of homes coming on the market to a dribble. The low prices that are unprecedented along with low interest rates has encouraged buyers to enter the market. We now are in a sellers’ market. Now obviously this does not mean that you can price your house at an above market amount and expect to get that price, but it does mean that if you meet certain criteria, you are in a position to capitalize on the current market conditions and meet or exceed the national average of home appreciation over a 10 year period.
1. The first criteria you need to meet is that you’ve owned the home for at least 10 years. On average, a home will double in value over a 10 year period. This means that if you bought your home for $100,000 in 1999, it will be worth approximately $200,000 today. Of course this is a national average and does not account for flexibility in local assets so of course you will need to talk with a local real estate agent to determine the current value of the home.
2. Additionally you cannot have over mortgaged your home. Many home owners took advantage of the high appreciation over the last 10 years and have mortgaged their homes up to the unrealistic values of 5 years ago. In many cases, home owners took out additional mortgages up to 100% of the value of the home. Additionally, the money was not used to maintain the home and instead was used for personal consumption. If you bought your home for $100,000 ten years ago, you should not have used more that 30% of that value. If that is the case, you will be in a good position to sell.
3. The third requirement is that you must have maintained your home. If you have let your home fall into disrepair and there is a lot of deferred maintenance required, you will have to price your home extremely low to attract a buyer. There are a couple of reasons for this. Your home rather than standing alone, is now competing with foreclosure homes. These homes are for the most part in terrible condition. Many must be purchased with cash or financed with a heavy cash down payment. If your home, due to it’s condition will not qualify for all types of financing available, it will not demand top pricing.
4. The forth condition you must meet is that your home must have some sort of attractive asset other than it’s condition. If you live in a great school district, have an amazing view or live on a cul de sac in an area known for home ownership or safety or something similar to these qualifications, you are in a great position to sell your home.
5. The last and most important criteria is that you must be willing to show your home in the most stunning way possible. This means it must look model perfect or as close to it as possible. Staging is a must and can be done relatively inexpensively. You must be willing to paint and repair everything down to the smallest detail. This includes replacing light switch covers, changing those out-dated light fixtures, and keeping the home spotless.
These five requirements will ensure that you will sell your home for the maximum price possible in this current market. I’ve heard a lot of people say, “I’m waiting until the market turns around.” In my neighborhood, home values are approximately $400,000. About 4-5 years ago, they were $600-$700,000. $400,000 is a fair price for the age of the homes. So if you want to “wait for the market to turn around,” you will be waiting about 5-10 more years to realize the “fake” values of 5 years ago. If you are not ready to sell now then of course this makes sense. But if you need to sell now, if you can meet the above criteria; you will be pleased with the result.
