With the real estate market in Berks County and much of the United States booming, it might be tempting to consider selling your home to take advantage of soaring prices.
But while most homes will move near or above their maximum value right now – and quickly – the idea that sellers automatically stand to cash could be wrong.
“Yes, it’s a sellers market,” said Hilary Notario, a real estate agent at RE / MAX of Reading. “Inventories are low and interest rates are low, which means values are high for the seller.
“However, the flip side is if you turn around and buy. Once you contract, that’s the problem for the seller.
Homeowners who are considering selling and are aware of the difficulty of being in the market today have undoubtedly studied the conundrum. You can almost certainly unload your property and get a premium back, but where will you go and what will you pay?
And although by far the most striking example, this is just one aspect sellers should carefully weigh before putting up a “for sale” sign in the front yard.
Just because homes are bought with seemingly little regard for price or condition doesn’t mean sellers should fly. Notario, who has 14 years of industry experience, recommends formulating a plan in advance.
Here are some of his suggestions:
The selling price is not everything
The first potential pitfall is to read that home values have gone up and immediately consider dollar signs in your head. If you’re then going to turn around and buy, you’re also buying high – or spilling your equity, essentially.
In other words, it is not necessarily the bottom line numbers that determine the majority of home sales.
“The key here, I believe, is interest rates,” Notario said. “Once interest rates go up, your purchasing power goes down, so I really don’t think that has anything to do with values at this point.
“If you buy at a low rate, 2.5, 3%, that’s cheap money. If those rates go back up to 4% and 5%, you won’t be able to afford that $ 300,000 home or $ 400,000 if you’re at the limit. You may have bought a bigger house because of the rate.
Be ready to move
It sounds obvious, but the reality is that many buyers don’t fully realize how competitive the market is until they research and their offers fall short of a few homes. It is incredibly stressful, even if your current residence is not under contract.
Add the pressure of a looming settlement deadline and not really knowing where you’ll be resting your head at night, and all of a sudden you’re courting disaster.
“You should make registration conditional on finding suitable accommodation,” Notario said, offering other solutions if the need arises to lift this possibility. “Get pre-approved, start looking ASAP and maybe consider a short term rental or stay with a family member”
Building a new home can also eliminate competition and provide a concrete window for moving day, Notario said – although construction delays have become more common.
While it’s true that buyers are forgoing inspections and even buying homes on sight in order to bolster their offerings, Notario still advises sellers to fix their properties.
Sure, some buyers may be willing to ignore the condition of a property or feel comfortable with a “senior fixer” – but their bank might not feel the same.
“An FHA loan won’t accept peeling paint, for example,” Notario said. “A seller who is preparing to put up for sale needs to consider these kinds of things and make the repairs ahead of time. “
Hire an agent
There is a feeling that any home will sell for above its true value at this time, which has encouraged more homeowners to attempt to list the property themselves.
While you could very well move it this way, Notario offered some compelling reasons why you should always hire a real estate agent to handle the listing.
“FSBOs (for sale by owner) are very common right now,” Notario said. “The owners think, ‘Hey, this is a sellers’ market, I can do it myself.’
“The downside is that they don’t have access to marketing, which is expensive. FSBOs generally sell for less than homes with an agent. “
Real estate is cyclical, Notario reminds us, and the current bubble will eventually burst – or at least deflate. It could be when interest rates go up. This could be when COVID market protections are lifted, resulting in an anticipated backlog of foreclosures.
Perhaps the most powerful reminder is not to get caught up in chaos and follow the advice of the professionals.
Your house is not something to play with.
“Some of these salespeople got a little pushy,” Notario said. “But when they become buyers, they are brought back to earth. “