How To Get The Most Money When Selling Your House

How To Get The Most Money When Selling Your House | Simplifying The Market

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

1. Price it a LITTLE LOW

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

How To Get The Most Money When Selling Your House | Simplifying The Market

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price, but instead will have multiple buyers fighting with each other over the house., 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 underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This too may seem counter intuitive. The seller may think they would net 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.

Research posted by the Economists’ Outlook Blog revealed that:

“The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

How To Get The Most Money When Selling Your House | Simplifying The Market

Bottom Line

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

from Simplifying the Market™

Buying a Home: Saving for a Down Payment

Saving for a down payment to buy a house can seem overwhelming unless you break it down into small, actionable moves. It will likely take a while to accomplish, but with a couple of shortcuts and a never-thought-of-that hack or two, you might get it done sooner than you expected.

Find the best mortgage

Four basic steps can get you to your goal: Knowing how much you’ll need, socking the money away, tapping any available outside sources to seed your fund and gaining a small edge with interest.

1. Know how much down payment you need

Most lenders are looking for a 20% or higher down payment on a conventional loan, but there are options where you can put down much less. However, with a smaller down payment, you’ll likely be required to pay for mortgage insurance. That protects the lender from you defaulting on the loan. If there is no mortgage insurance requirement, there can be other upfront or ongoing fees. You’ll always want to be aware of loan costs.

Some low-down-payment programs you might qualify for include:

GSE-backed loans: Fannie Mae and Freddie Mac, the government-sponsored enterprises that help drive the mortgage market, are both currently backing 97% loan-to-value loans. That enables lenders to offer 3% down payment mortgages to qualified buyers.

FHA: The Federal Housing Administration offers 3.5% down payment mortgages through participating lenders. FHA loans are also easier to qualify for and have slightly lower rates than conventional mortgages.

VA: Eligible veterans, as well as active duty service members and their families, can qualify for Veterans Administration loans. A VA mortgage requires no down payment or mortgage insurance.

USDA: Homebuyers in rural and suburban areas may be able to qualify for home loans offered by the U.S. Department of Agriculture. USDA loans offer low rates and 100% financing.

2. Down payment savings hacks

Whatever your down payment goal, it can help to mount a multi-tiered attack. Here are some savings hacks:

  • Automatic transfers from your checking account to your savings can help to make the process mandatory — and maybe a little less painful.
  • The $5 bill savings plan. Every time you receive a $5 as change, you set it aside. One woman claims to have saved $36,000 with this little trick, though it took 12 years.
  • Save raises and bonuses rather than spending them.
  • Set aside tax refunds.
  • Keep the change. At least a couple of banks have variations on this theme. For example, Bank of America allows debit card users to sign up for a service that rounds up purchases to the nearest dollar and puts the change into a linked savings account.
  • Use cash rewards credit cards to get cash back on purchases and put the rebates in savings.
  • Snag a few bucks here and there. Got a checking account a few bucks over a round number? Take the extra and transfer it to savings.
  • Keep the car and save the payment. Paid off your car? Resist the urge to buy new and save the monthly payment.
  • Start fast, and the momentum will build. Seed your down payment fund with a bonus or other windfall. A quick start might motivate you to see the balance build even bigger.
  • Visualize your goal. Slap big, beautiful photos of your dream house on the refrigerator, near your office workspace — and wrap a small one around the primary credit card in your wallet. You might charge less and save more.
  • Use an app to track progress. Mint, SavedPlus, Dollarbird and other budgeting tools may give you even more incentive to save.

3. Tapping other funding sources

If you’re not a disciplined saver, skip the next three paragraphs. Tapping retirement accounts for help with your down payment can really set you back in your life-after-work plans. But it’s an option we’re obligated to discuss.

First-time homebuyers can withdraw up to $10,000 from an IRA without penalty to purchase a home. If you’re married, that could mean applying as much as $20,000 to your down payment, because both spouses can draw $10,000 from their respective IRAs. Of course, you’ll have to pay the income tax due on the withdrawal, unless you have Roth IRAs.

Most 401(k) plans allow you to take a “loan” from your savings and pay yourself back, with interest. This can sound appealing, until you consider the possible impact of taking such a large lump sum out of the market during the time it will take for you to repay the withdrawal. Plus, if you change jobs or get laid off, the entire balance comes due, or you’ll have to pay the income tax, plus a 10% early-withdrawal penalty. Some plans even charge fees for loans and limit the payback term to five years.

Seeding your savings with either of the above strategies might jumpstart your efforts, but each can have some serious long-term consequences.

Better yet, investigate state and local programs that offer down payment grants or assistance, as well as tax credits and help with closing costs. These programs are often run by Housing Finance Agencies (HFAs) or through grants issued by the U.S. Department of Housing and Urban Development (HUD). (Click on your state and then “Homeownership Assistance” in the left sidebar.)

NerdWallet also offers other down payment and home buying resources.

Find the best mortgage

4. Using interest to gain an edge

Now that you have a plan to save for your down payment, where do you put the cash? Your first thought might be to invest it, with the hope of supercharging your return on what may be a meager starting balance.

Unless your target date for buying a home is way down the road — say eight, 10 years or more — don’t do it. The stock market is too volatile for short-term savings. One severe market downturn can set you back significantly, not to mention discourage your ongoing efforts. Instead, take a look at these options:

High yield savings accounts: These days, “high yield savings account” is a bit of an oxymoron. But with easy access, total liquidity and FDIC insurance, it’s a common choice for short- to mid-term savers. Banks, especially online versions, like Capital One 360Ally and Synchrony offer decent rates. Be sure to check with your local credit unions, as well.

Money market accounts and funds: Money market accounts and funds can also be good options for the short-term saver. Money market accounts are insured and offered by banks and credit unions, while money market mutual funds are not insured and available at investment brokerages.

As with savings accounts, it takes a bit of shopping to find decent returns.

Certificates of deposit: Perhaps the best option is buying certificates of deposit(CDs) timed to mature around the time you expect to have the bulk of your down payment saved. CDs offer a slightly higher rate than savings accounts or money markets, but that’s because your money is locked up for the term of the CD: six months, one year — even two, three years or more.

The fact that your money is inaccessible unless you pay a penalty may help keep those of us easily tempted to tap savings on track.

While all of these options may currently have skinny returns, as interest rates rise, your profits will too. Besides, saving for a down payment may be more about keeping the cash out-of-sight and out-of-mind rather than scoring big returns. And each of these savings options can easily be set up for automated transfers from your checking account.

This article originally appeared on NerdWallet.

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Existing Home Sales Inch Up In January [INFOGRAPHIC]

Exising Home Sales Inch Up In January [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Existing Home Sales rose to an annual rate of 5.47 million, representing an 11% increase year-over-year.
  • Inventory levels remain below the 6-month supply needed for a normal market at a 4.0-month supply.
  • Lawrence Yun, NAR’s Chief Economist, warns: “The spring buying season is right around the corner and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand.”

from Simplifying the Market™

Low Inventory Causes Home Prices to Accelerate

Low Inventory Causes Home Prices to Accelerate | Simplifying The Market

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price report earlier this month. The report revealed that home prices are not only continuing to rise but that the increases are accelerating. Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

“Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead.”

Here are the percentage increases of home prices for the last two quarters:

Low Inventory Causes Home Prices to Accelerate | Simplifying The Market

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by CoreLogic in a recent blog post:

“With demand strong and inventory thin, the share of homes selling for the list price or more has also returned to pre-bust levels. With inventory tight, homes are more likely to sell above the asking price.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year. However, as Construction Dive reported, the amounts of cash necessary to buy a home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.”

Bottom Line

If you’re thinking of selling and moving down, waiting might make sense. If you are a first time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.

from Simplifying the Market™

Mortgage Rates Again at Historic Lows

Mortgage Rates Again at Historic Lows | Simplifying The Market

Just two weeks ago, we posted an article discussing where mortgage interest rates may be heading over the next twelve months. We quoted projections from Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors. Each predicted that rates would begin to rise slowly and steadily throughout 2016.

However, shaky economic news and a volatile stock market have actually caused rates to drop six out of the last seven weeks, and have remained at 3.65% for the past two weeks.

Mortgage Rates Again at Historic Lows | Simplifying The Market

Rates have again fallen to historic lows yet many experts still expect them to increase in 2016. The only thing we know for sure is that, according to Freddie Mac, current rates are the best they have been since last April.

Bottom Line

If you are thinking of buying your first home or moving up to your ultimate dream home, now is a great time to get a sensational rate on your mortgage.

from Simplifying the Market™

Thinking of Buying A Home? What Are You Waiting For?

Thinking of Buying A Home? What Are You Waiting For? | Simplifying The Market

With spring right around the corner, you may be wondering if you should wait to enter the housing market. Here are four great reasons to consider buying a home today instead of waiting.

  1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.2% a year for the next 5 years.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

  1. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained below 4%. Most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost three-quarters of a percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

  1. Either Way You Are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

  1. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Bottom Line

If you are ready and willing to buy, find out if you are able to. Let’s get to together to discuss finding you your dream home.

from Simplifying the Market™

Future Home Values: Where Do The Experts Think They Are Headed?

Future Home Values: Where Do The Experts Think They Are Headed? | Simplifying The Market

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 3.7% over the course of 2016, 3.3% in 2017 and 3.2% in the next two years, and finally 3.1% in 2020 (as shown below). That means the average annual appreciation will be 3.3% over the next 5 years.

Future Home Values: Where Do The Experts Think They Are Headed? | Simplifying The Market

The prediction for cumulative appreciation slowed slightly from 21.6% to 17.7% by 2020. The experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 10.9%.

Future Home Values: Where Do The Experts Think They Are Headed? | Simplifying The Market

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

from Simplifying the Market™

Are the Kids Finally Moving Out?

Are the Kids Finally Moving Out? | Simplifying The Market

During the recession, many young adults graduating from college were forced to move back in with their parents. This caused new household formations to drop dramatically from the long term average of 1.2 million formations annually to half that number. However, this may be the year this turns back around.

According to the Urban Land Institute’s report, Emerging Trends in Real Estate, household formations will increase dramatically. They project that 3.68 million additional households will be formed in the next three years. This brings household formations back to pre-recession numbers of 1.2 million a year.

What will happen in 2016?

One of the key indicators to an improving housing market is household formation: How many people are moving out and forming an independent living unit? Many of the people “moving out on their own” will be those Millennials who can finally move from their parents’ basements to their first home.

Not every person moving out will decide on an apartment. A certain percentage of consumers will decide that homeownership is a better option for themselves and their families.

Jonathan Smoke, Chief Economist at, believes:

“Demand for for-sale housing will grow and will continue to be dominated by older millennials, aged 25 to 34. This demographic has the potential to claim a third of home sales in 2016 and represent 2 million home purchases.”

What about household formations moving forward?

And Louis Keely, the President of The Demand Institute, predicts strong household growth will continue over the next ten years:

“We expect new household formation to be robust over the next decade as the large millennial generation ages and forms new households of their own.”

Bottom Line

Here come the Millennials!! They will finally be entering the housing market in 2016 and will dominate real estate sales over the next decade.

from Simplifying the Market™

Homeownership Finally Makes Political Debate

Homeownership Finally Makes Political Debate | Simplifying The Market

Finally, the issue of homeownership has become a platform talking point in this year’s presidential debate. Yesterday, one of the candidates running for President spoke out about the importance of homeownership in America.

Hillary Clinton detailed a new economic agenda yesterday. In announcing her new agenda, she remarked:

“Homeownership is about more than just owning a home. It is about putting roots down in a community with better schools, safer streets and good jobs. And it is about building wealth, as homeowners build equity in their home one mortgage payment at a time…We must make sure that everyone has a fair shot at homeownership.”

This post isn’t political!

It doesn’t matter that it was Clinton who said it first. It doesn’t matter that she is a Democrat.

What matters is that EVERY candidate for our country’s highest office realizes the important role homeownership plays in the development of our nation.

The fact that homeownership was finally brought to the forefront of the debate is great news – no matter which way you lean politically.

from Simplifying the Market™