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Harmful Home Pricing Myths

by Melissa Thompson


When you are putting your home on the market to sell, your top priority is money.  As in, how much money can you get for your house?  And it should be.  Owning a home is likely the largest financial investment you will ever make and it is only natural that you want to get the most profit possible when you sell.  Setting the right asking price can mean the difference between selling quickly or having your home languish on the market for months.  The following myths can be harmful when trying to decide on the best price to ask for your house:

  • YOU’LL GET A BETTER OFFER IF YOU WAIT -  Receiving an offer right away when you list your house can give you a false sense of confidence that it is a hot commodity.  You may think that if this buyer was willing to make an offer so quickly, then surely many other people will be interested in your property as well.  But the truth is, you might not get another offer…at all, let alone for more money.  With no other offers guaranteed, it may be in your best interest to accept the first offer if it is a fair one. 7 Reasons to Accept the First Offer on Your House
     
  • YOU SHOULD LEAVE ROOM TO NEGOTIATE WHEN PRICING YOUR HOME -  You want top dollar for your home.  Of course you do!  But overpricing it, thinking that will leave room for you to accept a lower offer, may backfire on you.  Buyers might see the high price and not even bother looking at the property.  And if you keep dropping the price, buyers might wonder what is wrong with the place.  Price it fairly to begin with and you are more likely to achieve a successful, profitable sale.
     
  • YOUR HOME IS WORTH MORE THAN YOUR REALTOR SAYS IT IS -  An experienced, professional Realtor will be able to tell you how much your home is worth based on the current market.  You should trust your Realtor.  While online estimates might tell you that your home is worth more (yay!) or less (boo!) than your Realtor states, they are likely not accurate.  Trust your Realtor over the internet. It’s as simple as that.
     
  • YOU CAN GET BUYERS TO PAY FOR HOME IMPROVEMENTS YOU MADE IN ORDER TO SELL -  While some home improvements have a better return on investment (ROI) than others, you are not likely to get back all that you spend getting your house ready for the market.  It is wise to educate yourself about which home improvements will help you sell, which will get you a better ROI than others, and which might not be worth bothering. Six Best & Worst Home Improvements for Your Money
     
  • REDUCING THE ASKING PRICE IS A SIGN OF WEAKNESS -  Nobody wants to drop the asking price of a home. But it’s important to remember that time is money.  And if time is passing and nobody is showing any interest in your home, you are still stuck paying the mortgage, taxes and insurance. This will be especially stressful if you have already purchased a new home. Lowering your price a little may be all it takes to generate interest and who knows? You might end up getting your original asking price anyway!

If you are in the market to buy or sell a home in the Memphis area, contact professional Realtor Melissa Thompson and let her help you with all your real estate needs! Give her a call today at 901-729-9526!

Photo Credit: wsj.com

Increase Your Home Value with these Designer Tips

by Melissa Thompson


When designing and decorating your home, unless you plan on living there forever, it’s important to consider resale value.  Since your home is likely your largest asset, you want to be sure to get the highest return on your investment when you sell it.  So, design upgrades should not only appeal to your aesthetic desires, but should also have a positive impact on resale value.  Here are some tips for renovations that designers have found to be most beneficial in helping houses sell:

  1. Choose a design that makes a room feel bigger than it is.  If you select and place furniture to fit the scale of a room, it will go a long way in making the space feel larger than it actually is.  Even though buyers will know the square footage, the perception of rooms being larger will have a powerful impact. When rooms feel more spacious, buyers see more potential in the home.
     
  2. Stick with tradition.  If you are redesigning a room, don’t feel like you need to get rid of everything you have and purchase all new things. Keep some of the home’s traditional elements. You’re never going to please every potential buyer, but making too many changes can backfire. People like to see homes that stay true to their roots.
     
  3. If you don’t have a walk-in closet in your master bedroom, add one.  A roomy, functional walk-in closet will add value to any home. Buyers see it as a luxury and are always excited to see one.  It might feel like an expensive upgrade, but it is one that will pay off in the long run.
     
  4. Don’t neglect the kitchen.  Of all the rooms in your home, an upgraded kitchen is the one that will get you the best return on investment.  The kitchen is the heart of the home. Even if you don’t love cooking, and order out more than you cook, it’s still used for eating, drinking, and storage.  You don’t even have to do a lot to make your kitchen stand out.  Even small upgrades like new light fixtures and hardware will add value to your home.
     
  5. The more storage your home has, the better. Buyers seek homes that provide a lot of storage space.  You truly can’t have too much!  If your home is lacking in storage, adding some will increase its value.  You may have to be creative, but it will be worth it! 7 Sneaky Ways to Add More Storage All Over Your House
     
  6. Fresh paint makes a huge difference.  You don’t have to make huge changes to make your home more appealing.  A simple, fresh coat of paint can give your home a whole new look and feel.  It’s one of the most cost-effective ways to update your home.  When choosing colors, stick with neutrals because they are a safer choice when selling your home.
     
  7. Be environmentally friendly. Millennials purchasing homes are looking for energy efficient, environmentally friendly options. You will not only reap the benefits of living in a more energy efficient home, but you will impress potential buyers who want to do their part in protecting the environment. 4 Eco-Friendly Upgrades for Your Home
     
  8. Bathrooms get you a lot of bang for your buck.  Second only to kitchens in importance to retail value, an upgraded bathroom is sure to impress potential buyers.  Since they are small spaces, little changes like replacing an outdated vanity, changing light fixtures, and updating hardware can go a long way. 

Whether you plan to be in your home for a long time, or you’re thinking of selling soon, make smart choices with your home design upgrades for your own enjoyment and for a great return on your investment.

If you are in the market to buy or sell a home in the Memphis area, contact professional Realtor, Melissa Thompson, and let her help you with all your real estate needs! Give her a call at 901-729-9526 today!

Photo Credit: pinterest.com

Home Sellers - How to Set the Right Price for Your Home

by Melissa Thompson


When you decide to sell your house it’s easy to get overwhelmed with all the details you need to think about.  The best thing to do is take things one step at a time. One thing that you will have to do is set a price for you home.  Deciding how much you want to ask for your home is complicated.  As the owner, the value you place on your home may be different that the value a potential buyer places on it.  You not only have a financial investment in it, but also and emotional one.  But when buyers think of value, they are thinking primarily about price.  The asking price for your property can attract buyers, or it can turn them off completely. A home that is not priced right can sit on the market for a long time, which can lead potential buyers to think there is something wrong with it.  The first step toward determining the right price for your home is to hire an experienced, professional Realtor who can use their expertise and knowledge of the market to assist you.

Working with your Realtor is crucial.  But it is also vital that you have a clear understanding of what your home is worth.  Learning about your home’s fair market value will help you evaluate the price your Realtor recommends.  Remember that you and your Realtor are a team and together you can decide on a price that will be profitable for everyone.

The first thing to do when trying to determine the right price for your home is to do some research. You can use an online  Estimating Tool  to plug in your address and find approximately how much your house is worth. They base their estimates on your home’s square footage and real estate data they have collected, such as recent home sales in your local market. But it’s important to remember that these results are very general and do not speak to your specific situation.  If the online estimate does not align with your Realtor’s advice, lean toward your Realtor’s suggested price. 

Another important aspect to consider when pricing your home is how it compares to other similar homes in the area.  Your Realtor will likely run the average sales prices of at least three Comps to assess your home’s value.  There are several factors that go into choosing “comps”. They are: age, location, square footage, and number of bedrooms and bathrooms. Your Realtor will look at the difference between each comp’s listing price, and the price at which it sold. Then there will be research into price reductions and why they happened, if relevant.  Meanwhile, your Realtor will also rely on their own knowledge of the local market.  When selecting comps, your Realtor will generally look for properties that sold in the previous three months, within a one-mile radius of your home. In addition, you will want to figure out what your competition is. So, your Realtor will check out properties that are currently for sale in your area to find out how your home compares to them. 

Understanding the current real estate market in your area will also have a large impact on your pricing strategy.   If you’re in a Seller's Market, that means demand from buyers is high and the number of homes on the market is low. In this market, you may be able to price your home slightly higher than market value. However, if it’s a Buyer's Market, buyers are at an advantage and you might have to price your home slightly below the market value to entice buyers. Your Realtor can help you navigate the current market in your area so that you price your home right.

If you are in the market to buy or sell a home in the Memphis area, contact professional Realtor, Melissa Thompson, and let her help you with all your real estate needs. Give her a call at 901-729-9526 today!

How Much Do You Need to Make to Buy a Home in Your State?

by Melissa Thompson

It’s no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C.

States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required.

Below is a map with the full results of the study:

GoBankingRates gave this advice to anyone considering a home purchase,

“Before you buy a home, it’s important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs — primarily your mortgage payments — shouldn’t consume more than 30 percent of your monthly income.”

As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!

Bottom Line

If you are considering buying a home, whether it’s your first time or your fifth time, let The Melissa Thompson Team help evaluate your ability to do so in today’s market! 901-729-9526

By: KCM Crew

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A New Housing Bubble Forming…Not Before 2024!

by Melissa Thompson

A recent report by CoreLogic revealed that U.S. home values appreciated by more than 37% over the last five years. Some are concerned that this is evidence we may be on the verge of another housing “boom & bust” like the one we experienced from 2006-2008.

Recently, several housing experts weighed in on the subject to alleviate these fears.

Sean Becketti, Freddie Mac Chief Economist

 “The evidence indicates there currently is no house price bubble in the U.S., despite the rapid increase of house prices over the last five years.”

Edward Golding, a Senior Fellow at the Urban Institute’s Housing Finance Policy Center

 “There is not likely to be a national bubble in the way that we saw the first decade of the century.”

Christopher Thornberg, Partner at Beacon Economics

 “There is no direct or indirect sign of any kind of bubble.”

Bill McBride, Calculated Risk

 “I wouldn’t call house prices a bubble.”

David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices

 “Housing is not repeating the bubble period of 2000-2006.”

A recent article by Teo Nicolais, a real estate entrepreneur who teaches courses on real estate principles, markets, and finance at Harvard Extension School concluded that the next housing bubble may not occur until 2024.

The articleHow to Use Real Estate Trends to Predict the Next Housing Bubble, looks at previous peaks in real estate values going all the way back to 1818. Nicolais uses the research of several economists. The article details the four phases of a real estate cycle and what defines each phase.

Nicolais concluded his article by saying:

“Those who study the financial crisis of 2008 will (we hope) always be weary of the next major crash. If George, Harrison, and Foldvary are right, however, that won’t happen until after the next peak around 2024. 

Between now and then, aside from the occasional slow down and inevitable market hiccups, the real estate industry is likely to enjoy a long period of expansion.”

Bottom Line

The reason for the price appreciation we are seeing is an imbalance between supply and demand for housing. This has created a natural increase in values, not a bubble in prices.

Let’s the expert’s at The Melissa Thompson Team help you with all your Real Estate needs. 901-729-9526 or [email protected] 

By: KCM Crew

YOUR HOMESEARCH STARTS HERE            FIND OUT WHAT YOUR HOME IS WORTH  

2 Ways to Get the Most Money from The Sale of Your Home

by Melissa Thompson

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive the maximum value for your house?

Here are two keys to ensure that you get the highest price possible.

1. Price it a LITTLE LOW 

This may seem counterintuitive, but let’s look at this concept for a moment. Many homeowners think that pricing their homes a little OVER market value will leave them with room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price but will instead have multiple buyers fighting with each other over the house.

Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly under priced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”

The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

Let’s get together and find out how much your house is worth!  901-729-9526 or [email protected]

By: KCM Crew

YOUR HOME SEARCH STARTS HERE            FIND OUT WHAT YOUR HOME IS WORTH  

Housing Prices are NOT Heading for Another Crash

by Melissa Thompson

As home values continue to increase at levels greater than historic norms, some are concerned that we are heading for another crash like the one we experienced ten years ago. We recently explained that the lenient lending standards of the previous decade (which created false demand) no longer exist. But what about prices?

Are prices appreciating at the same rate that they were prior to the crash of 2006-2008? Let’s look at the numbers as reported by Freddie Mac:

The levels of appreciation we have experienced over the last four years aren’t anywhere near the levels that were reached in the four years prior to last decade’s crash.

We must also realize that, to a degree, the current run-up in prices is the market trying to catch up after a crash that dramatically dropped prices for five years.

Bottom Line

Prices are appreciating at levels greater than historic norms. However, we are not at the levels that led to the housing bubble and bust.

Contact your local expert’s at The Melissa Thompson Team 901-729-9526 or [email protected] for all your Real Estate needs!

 

By: KCM Crew

America Needs Your House!!

by Melissa Thompson

The biggest challenge in today’s real estate market is a lack of housing inventory. How big of a challenge is the housing shortage? Here are what four industry economists are saying on the issue (emphases added):

Mark Fleming, First American’s Chief Economist

“The underlying fundamental issue is an overwhelming lack of supply… The supply of newly constructed homes is also sagging, adding to the supply challenges. Over the last eight years, housing demand has increased by 5.9 million, but the net new number of housing units has only increased by 3.5 million.”

Svenja Gudell, Zillow’s Chief Economist

“Everyone has been talking about tight inventory but I think we are OK calling it a straight up inventory crisis at this point. We just don’t have enough homes.”

Sean Becketti, Freddie Mac’s Chief Economist

“House prices today are higher than they were at the peak in the summer of 2006, near-record-low mortgage rates have boosted housing demand, and sales volume is robust. The spoiler is the lean inventory of houses for sale.”

Lawrence Yun, National Association of Realtors’ Chief Economist

“Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

Bottom Line

If you are considering selling your house soon, now may be the time to get it on the market. The lack of competition could lead to a faster sale at a higher price.

Contact your local expert’s at The Melissa Thompson Team at 901-729-9526 or [email protected] to find out how much your home is worth

 

By: KCM Crew

Home Prices Up 6.64% Across the Country!

by Melissa Thompson

Some Highlights:

  • The Federal Housing Finance Agency (FHFA) recently released their latest Quarterly Home Price Index report.
  • In the report, home prices are compared both regionally and by state.
  • Based on the latest numbers, if you plan on relocating to another state, waiting to move may end up costing you more!
  • Alaska & West Virginia were the only states where home prices are lower than they were last year.

​​Contact your local expert’s at The Melissa Thompson Team 901-729-9526 or [email protected] for all your home buying and home selling needs!

By: KCM Crew

Will Appraisals Continue to be a Challenge in 2016?

by Melissa Thompson

Will Appraisals Continue to be a Challenge in 2016? | Keeping Current Matters

First American Title issues a quarterly report, the Real Estate Sentiment Index (RESI), which “measures title agent sentiment on a variety of key market metrics and industry issues”. Their 2015 4th Quarter Edition revealed some interesting information regarding possible challenges with appraisal values as we head into 2016.

“The fourth quarter RESI found that title agents continue to believe that property valuation issues will be the most likely cause of title order cancellation over the coming year.”

This shouldn’t come as a surprise. In a housing market where supply is very low and demand is very high, home values increase rapidly. One major challenge in such a market is the bank appraisal. If prices are jumping, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the price when performing the appraisal for the bank.

Another monthly report by Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation. Here is a chart showing that difference for each month through 2015.

Will Appraisals Continue to be a Challenge in 2016? | Keeping Current Matters

Bottom Line

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. That is why we suggest that you use an experienced real estate professional to help set your listing price.

 

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