If you’ve been watching the Trump-Clinton debates, you know what a ridiculous circus it’s turning out to be. So using the “debate” idea, let’s talk about something that’s very top-of-mind for customers right now.
Do I sell now, or do I wait until 2017?
Now let’s be clear… not everybody can choose their timing. Sometimes outside influences make the choice for us. Our industry even has a mneumonic for the most common reasons – death, divorce, debt and downsizing. The “Four D’s”.
If you do have a choice about timing, however, then you’re faced with an interesting dilemma. Imagine Bob and Sue, who have been feeling like their home is a little small, but it’s still somewhat functional. They don’t really want to be living in the home this time next year… so when should they move?
Let the debate begin! Here are some talking points to help you (and Bob and Sue) decide on your best course of action:
HOW CERTAIN DO YOU WANT TO BE?
Right now, you know what the market is doing, what interest rates are in place, and you have factual information about today’s market. The further you glance ahead into the future, the less you know. Markets go up, markets go down. But doing something now gives you a clearer picture than the vast unknown of next year’s market.
WHAT ABOUT MARKET CONDITIONS?
This builds on the first point. When markets change, they tend to change for ALL properties. So if homes go up, your current home AND your next home will both increase in value. If the market is down, then both go down. There is a slightly higher gain for the higher priced home in an up-market, meaning the spread is a little wider, but it’s usually not life changing. If you’re buying and selling this year OR next year, you can rest easy that market conditions will be somewhat similar on both sides. The wider the gap between property values, the less relevant this advice becomes.
We’ve never understood the fascination with spring markets. Sure, there are more buyers looking, but you can have a LOT more competition with other listings – inventory is highest in the spring months too. The balance between inventory and sales is generally pretty consistent throughout the year – spring has high sales and high inventory, whereas winter has less sales but also lower inventory, which can sometimes be a VERY good thing. Lack of competition as a seller, and a lack of alternatives for a buyer (especially a motivated buyer) can often lead to a quick sale for top dollar.
CHANGES ON THE HORIZON?
Right now, the biggest looming change in the market will come from interest rates. When rates go up by 1%, it lowers your maximum purchase price on a mortgage by about 10%. As of the date of this article, the Feds have indicated that rates will likely remain where they are… however some major government lending policies have just been introduced (read this for more details) that will change the game for many buyers.
First-time buyers should know that interest rates and prices tend to have an opposite effect – when one is high, the other is low. Higher interest rates will put pressure on prices to decrease, but the monthly payments will likely be similar. So buying now or later will probably cost the same amount this year or next year.
HOW MUCH PREP WORK DO YOU NEED TO DO?
If you’re selling a home, how close is it to being ready? Are there any projects that need to happen to maximize your sale price? If you’re not sure about this one, request a Room-By-Room Review Guide.
If you’re buying, do you have all your financial ducks in a row? Is your credit score adequate? Do you have the longevity at your job that a lender would need to see? Plus, how much will your next home cost? Have you explored your options and do you know what budget you would need to be happy? A wise friend once told me that in order to get from where you are to where you want to be, you need to know two things: (1) where you are, and (2) where you want to be. Sounds simple, but it’s true. We can help fill in the details between those two steps.
So… what does that mean for Bob and Sue?
Bob and Sue need to carefully analyze their situation. There’s no “one size fits all” advice for when to move. Between the talking points above, and some experienced advice from a real estate professional, Bob and Sue can come up with a great plan to help them get where they need to be… and you BOTH can avoid the chaos we see at the U.S. debates. Good grief!