New Year, New House?
It's still not too late to make some homeowner's real estate resolutions for 2021. Inventory and interest rates are at historic lows and prices keep climbing. But even with higher prices, the low-interest rates still help with your buying power.
Home Buyer Resolutions
Work on getting mortgage-ready - figure out your current home buying power. Your credit score is a big part of qualifying for a mortgage. Ask for a free credit report from the annualcreditreport.com website.
Your credit will need to be at least 740 for most lenders, and the lower the score, the higher your interest rate might be. This is why you need to do this before you start actively looking at homes. Many agents won't even take you out to see places unless you've been pre-qualified. And in today's low inventory market with bidding wars, you should get fully pre-approved before making an offer.
Work on any credit issues - a good lender (we can refer you), will tell you what you need to do to bring your credit up to shape so you can qualify for a mortgage. If you're not quite there right now, don't give up! I've worked with many buyers that fixed their credit in months, not years.
This might entail paying off a judgment in full or paying down some of your debt. Don't make any large purchases while trying to qualify. Also, if you have less than 10-12 months worth of payments due on a car, the lender might not even count that monthly debt against you.
You will need some cash to make a purchase - no matter how little you have to put down, there are other expenses to buying a home beside the down payment. Both buyers and sellers have closing costs. It was popular for buyers to ask sellers to help with closing costs, but in such a competitive market as we're currently in, your offer won't be considered.
And speaking of the current Seller's Market, many properties are getting more than the list price. So you might have to look at the low end of your price range in order to be able to afford to pay more than the asking price. It might be difficult for a new buyer to understand how a Seller's Market works, but they learn pretty quickly when their offer isn't accepted. This isn't the time to expect a deal!
Your lender will require that you have some money left over after the purchase. They don't want a catastrophic event to happen to you that would force you to foreclose on the house.
Home Seller Resolutions
Get your home on the market as soon as you can - with today's low inventory, there really isn't a best time to sell right now. You want to get in on the current Seller's Market, and although predictions are that we'll see low inventory and interest rates throughout 2021, you should work on getting your home on the market.
Work on getting your home sales-ready - we don't tell a seller to do anything we wouldn't do to get your home sold at top dollar. There are homes that sell the first day on the market for higher than list price, but there are still homes that aren't selling as quickly and aren't getting "over list price" offers.
We recently sold 2 of our properties. We did work on both of them. Our main house was painted inside and out, de-cluttered, and we put new floors in on 2 of the 4 levels (it was a split-level with a sub-basement). We also had yard work done and a brand new roof and gutters. We paid for a home inspection prior to listing the house to see if there were any issues we didn't know about. We had to get a new furnace. But we sold in a day and a half (only because agents were begging us to let their buyers in) with 18 offers and got $25,000 over our asking price, which we thought was a fair price to begin with.
If you want a quick sale at the highest price possible, you have to have your house up to par with others on the market. If you can't afford to put in the work, time, and money, then realize your home might not sell as fast as others and you might not get the same price as a home in your area that was in better condition.
Prepare yourself as a buyer - it's great to be a seller in today's market, but most sellers will also be buyers. That means you will probably be in bidding wars and will have to adjust to this crazy real estate world we're in today.
In most cases, you will probably have to sell your place before you can buy something else. Contingent on sale offers were usually only accepted by sellers who couldn't find a buyer for their homes in the past. Contingent on sale means that you have your house listed on the market with a brokerage, but you don't yet have a buyer. And if you don't, there's something wrong!
Even with a contingent on close offer, where you have a buyer in line with an accepted contract (and usually when the inspection period is over and all is accepted), you will have a hard time winning your offer. Why? You will probably be up against non-contingent (or just contingent on financing) offers, and some might be cash. I've seen contingent on close contracts fall apart - anything can happen to your buyers.
There are some companies out there right now that can help keep you from having to use a contingent on sale or close offer. I can help you find a solution so you can be competitive and get the place you love.
Consider changes you've been through during the pandemic - not everyone is selling right now. The pandemic has changed many of our lives. Some have lost jobs and some that still have their jobs are working from home.
If you're still employed, you might want to cash in on your home's equity to make some needed upgrades. I try to tell people to be careful about using their house as an ATM machine, but if you can afford it, and with today's low rates, this might be the time. Maybe you need to create a more functional home office space or make other updates, upgrades, and repairs.
If you don't want to take cash out of your house, this would be a great time to refinance at these historically low interest rates. This could save you a lot of money in the long run, although do the math to make sure the costs involved make sense, especially if you don't plan on living in the home for a long time.
Keep your home in shape - even if your finances aren't the same as they were before the pandemic, don't let little fixes turn into huge repairs down the road. You might have extra time to do some things yourself. Even if you're not a fix-it person (I'm not), you can use YouTube to help with small repairs. If you have the spare time, it could be wise to use it to de-clutter and organize your place.
Make a plan for your future finances - if you're an active buyer and/or seller, you are thinking about your finances, current and future. Even if you're not thinking about buying and selling right now, keep saving money and investing if you're able to.
Maybe your credit is taking a hit right now. Think about plans to get it back on track.
I don't know if I'd tell anyone to invest in real estate right now with these high prices, but it might be something to think about if prices go down in the future (although that usually means interest rates will go up). Use our mortgage calculator to figure out different price ranges and interest rates.
Be sure to call Judy at 480-877-1549 if you have any Scottsdale real estate resolutions for 2021.