The NORWOOD-SALVANT TEAM

Your Richmond VA Real Estate Team

Dennis and Scott

Making the Case to Sell

By Leave a Comment

Go ahead and Google “Is it a good time to buy a house 2017.” I got 62 million hits. 

Now go ahead and Google “Is it a good time to sell a house 2017.” I got 24 million hits. 

Interesting, right? People are 3 times more likely to want to buy a house than they are to sell one. This suggests a little supply and demand problem.

Why are there 3 times more articles and blog posts about buying a home versus selling one?

I know one reason. It’s a heck of a lot easier to buy a home than it is to sell one. Another thing: if you’re trying to give advice on either side of the equation, it’s a lot easier to deliver the right message for the buy side. So whether it’s agents or people writing about this world, like me, buying advice is the easier advice to give.

Here is what the sellers are up against:

  • selling your homeSellers, in many cases, may still be working against all the debt that we collectively racked up in the race to 2007’s bubble.
  • Sellers, in all cases, want to show a profit on their real estate, and many folks might still be short.
  • Sellers, in many cases, are left with no down payment after payment of commissions and other expenses.
  • Sellers, in many cases, are the ones who bear appraisal risk (and this is a significant issue).
  • Sellers, in many cases, have to deal with the wildcard of timing—how can I get this done quickly so my plan falls into place?

Each of the above is a fair concern to have. But they shouldn’t be deterrents to selling, especially today as the house market continues to get its legs back.

If you are toying around with the idea of selling, things are looking good.

For one thing, if there are so many people interested in buying houses—several times more, according to Google—then that could prove to be an advantage in getting people to your open house.

Take a look at inventory, especially if you’re in what we might call a stronger market. It’s down right now, meaning you’ve got quite a bit of leverage.

Basically, a lot of the noise and hype that drove us to the bubble has washed away and the market continues to approach the pre-bubble trend line. The path from 1990-2003 with a couple tweaks here and there for economic factors puts us on a strong value path.

Maybe that’s still a little too much jargon. Put another way, we’re in a pretty normal market.

Here is what’s happening:

neighborhood If you have a good property in a mature neighborhood that perhaps is feeling the effects of a lack of inventory, you’re likely in a very good position. You can be a little aggressive in your pricing. But pay attention to the most recent comparables. Use the higher comps in your market and/or the pending properties as the best pricing guide.

If that same quality property is in a neighborhood where there’s a decent supply in balance with demand, then ask your Realtor to help you understand the absorption rate, or how long on average it’s taking for a property to go into contract. This should help you understand your timing. If you’re in a good school district, you should follow the trends for the number of days on the market and ask/sold ratios. Really important to get a good grip on comparables.

If your property comes with some vulnerabilities or if there’s a lot of supply in the area, be conservative in your pricing. Know that you need to price it attractively for it to stand out.

Above all, make sure you’re working with someone who knows the market well so you get the best possible advice.

Of course, we would be happy to help…

Pre-Qualification & Pre-Approval?

By Leave a Comment

What are these “letters” and why do I need them?

If you’re eyeing the idea of purchasing a home, then chances are you’re already wondering how much the bank will lend you toward a purchase. And when the time comes to make an offer, rest assured, sellers will be wondering the same – whether or not you’re capable of borrowing enough to follow through on an offer. The best means for tackling these questions is by securing a pre-qualification or pre-approval letter from a qualified lender.

MORTAGE LENDINGPrequalification letters are based on a very basic set of verbally provided information, which a loan officer uses to generate an idea of how much you may be able to borrow. That information includes such things as current income, a list of assets and your monthly financial obligations—all of which are weighed against current lending guidelines. But here’s the thing you should know about pre-qualification: Without providing more complete details, along with official documentation to back them up, a lender’s opinion is only preliminary. In other words, their estimate is only as good as your word. Informed sellers know this and may take your offer “with a grain of salt.”

Pre-approval letters are similar to pre-qualification letters, but the pre-approval process takes things a step further for added assurance. When you’re pre-approved for a loan (not just pre-qualified), a lender has secured all of the documentation necessary to verify and weigh your finances against bank requirements. This process, called “underwriting,” leaves you one quick step away from actually securing a loan. In addition to telling you exactly how much you’re allowed to borrow, it also leaves you with an exact idea of things like how much cash you’ll need and what your monthly payment will be. Don’t get me wrong, there are still plenty of things to do before you can close on a purchase (like appraisals and inspections, for instance), but with a pre-qualification letter in hand, you’re ready to follow through quickly on a purchase.

They both have their place

If you’ve stumbled upon that perfect listing sooner than expected and need to act fast, then a pre-qualification letter is your ticket to attaching some level of assurance to your offer (it takes about 15 minutes). On the other hand, if you’re just getting started, why not begin the process with pre-approval, so you can generate the strongest possible offer?