What a rollercoaster ride the housing market has seen in the past eighteen months! Today’s market is showing what’s being referred to as a Deceleration when home prices continue to appreciate but at a slower or more moderate pace. You have probably seen headlines about ongoing price appreciation, but at the same time, some sellers are now reducing the price of their homes. This can make for confusing times which makes it more difficult to get a clear picture.
How Rates in Today’s Market Have Changed The Game For Sellers
Nationally, mortgage rates are projected to rise more moderately than last year, but aren’t expected to fall. Prices are forecast to climb at an average of 10.3% this year. Existing-home sales fell for the sixth consecutive month to a seasonally adjusted annual rate of 4.81 million. Sales were down 5.9% from June and 20.2% from one year ago.
Not all homes are necessarily flying off the shelves now, due to higher rates. This is where pricing your home right, making needed repairs if applicable, and staging when necessary is crucial. Are homes still receiving multiple offers? Absolutely, but you are now typically seeing this happen with floor plans and locations that are in the highest demand only. The bottom line is that sellers are facing the need to pivot at their Real Estate Agents’ directive, but many are not understanding why the market shift has created a change in sales strategy.
Many realtors are currently having a tough time convincing sellers that it is no longer the sellers’ market that it was. Some sellers are simply not wanting to take care of repairs, stage their home, or price the home at market value - believing that those multiple offers will come anyway. A rate lock is also knocking buyers out and many first-time home buyers have never seen 6% interest rates before now. Adjustable-rate mortgages are more popular this summer than they've been since right before the Great Recession.
How Staging Increases Value in Today’s Market
Staging your home before putting it on the market, can increase its value by 6% to 20%. Additionally, over 83% of buyers find it easier to visualize a property as their future home when it's been staged! Home staging has become an essential tool for selling homes quickly and for top dollar. There are different ways you can utilize a staging service. You may simply need consulting on what areas to declutter and how to rearrange. Another option could be to have a stager manage the job for you. There are many options with varying costs associated. Any staging is better than no staging when it comes to selling your home!
Home Improvements That Generate an ROI
How do you know what home improvements will actually bring a return when you decide to sell? As mentioned in Homes & Gardens, A good rule of thumb is to spend 10 percent of your home’s value to remodel a kitchen, and 5 percent to remodel a master bathroom.' Keep in mind that what’s considered desirable by buyers is always relative and depends on what the general expectations are in your neighborhood.
DIY projects are extremely trendy, but you may not have time or you simply don’t want to do the work. There are plenty of smaller changes you can make that, cumulatively, can provide a good return on investment when selling. Real estate investor Deb Cleveland, Founder of Small Town Dynasty, recommends going through your home and making strategic replacements; for example, 'if your budget will afford it, picking light fixtures that all have the same finish that goes with the look of your home or 'installing new door knobs and kitchen cabinet pulls to match the finish on your light fixtures.’ This can tie your look together giving it a high-end decorator look on a budget.'
Kitchen upgrades typically provide the highest return – around 50% to 75% – followed by flooring. Lower-cost improvements such as painting and landscaping might provide a bigger bang for your buck and be a safer investment. Again, it depends on the market and location. Always ask your real estate agent for assistance in determining what upgrades make the most sense for ROI.
How To Approach Home Repairs in Today’s Market
First and foremost, ask your agent, what – if anything – should be fixed or upgraded. Their job is to advise sellers where to make money by pointing out which repairs and upgrades are necessary and where to save money by leaving some projects undone. Because they know the neighborhood, as well as what the market is doing, real estate agents can provide sound insight into what work would bring a good return on investment and what work could be just a waste of time.
Most of the common issues that come up during inspections are roofing problems or aging, wiring that is not up to code, plumbing issues, and foundation cracks. Some of the questions that sellers should be asking their agents are: Which repairs are mandatory? How much do they cost? Can you DIY or should you hire a professional? Should you even bother with the repairs? There are many things to consider when making repairs. Just don’t panic as no home is perfect.
In Summary
Just as there are repairs and upgrades needed, there are also items to avoid fixing that simply won’t make a difference in the selling price of your home. Be sure to consult with your realtor on minor electrical issues, cosmetic flaws, and other questionable repairs. After all, the state of the housing market doesn’t wipe out the need for due diligence, but you’ll want to be sure you are making informed decisions.
