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The eternal question of whether it's the right time to buy or sell a home is a perennial favorite among internet searches. Timing the real estate market perfectly is challenging, and the decision to buy or sell should be based on individual circumstances and objectives. While waiting for favorable market conditions can be tempting, it's essential to weigh the potential benefits against the risks and make informed decisions with the guidance of a trusted real estate professional.
In 2024, economic conditions, interest rates, and regional market dynamics play a pivotal role in answering this question. The answer involves a nuanced analysis of individual circumstances, financial goals, and the broader economic outlook. Consulting with a trusted local real estate professional can provide personalized insights based on the current conditions in your specific market.
Licensed real estate agents estimate the fair market value of a property by doing a Comparable Market Analysis (CMA). With this method, the agent uses the Multiple Listing Service (MLS) to locate the three (or more) homes that have sold in the last 6 months that are the most comparable to your home. Then they make adjustments for the ways in which your home is different from each of the others, and then average the adjusted values. The CMA adjustments are very subjective, and there is great variation between REALTORS® as to how much detail they include and the number and amount of the adjustments they make, so be sure to ask any prospective REALTOR® to explain their CMA in detail.
That’s a strategy that sounds good, but, in fact, is more likely to result in a lower price. Here’s why… The first few weeks a house is on the market is when it will have the most activity. If a house is overpriced, it has to compete with houses at that higher price level, which are almost certainly larger or have newer/more luxurious features.
The overpriced home is unlikely to attract an offer. Worse yet, those first weeks are when real estate agents preview the house. If it’s overpriced, they may not even bother to show it to their buyers. Eventually, the seller will have to drop the price – and may end up with an even lower price because buyers will wonder why the house has been on the market so long and may factor that into their offer.
Offering a competitive fee to the buyer's agent can attract more realtors to show your property to potential buyers. This not only increases visibility for your listing but could also lead to more showings. A competitive fee motivates buyer's agents to present your property to clients, potentially speeding up the sale.
Per Florida law, when property defects or environmental hazards are not disclosed to the buyer, the seller is guilty of misrepresentation if those issues are not readily observable by the buyer. The buyer may be able to rescind the sales contract or if the sale has already closed they can sue you for damages. However, Florida law does not require a seller to complete a formal property disclosure form. So if you have nothing to disclose you are technically not required to complete the form. Nonetheless, completion of the form is highly recommended – it will jog your memory on past issues that you may have forgotten about and the absence of the disclosure might make potential buyers wary. You should consult an attorney if you have specific questions on what to disclose or how to disclose it.
Your agent should require that the prospective buyer provide a letter from their lender along with their offer. That letter should state a dollar amount, type of loan, and terms of the loan that they are qualified to receive. There are two types of these letters – one is called a “pre-approval” and the other is called a “pre-qualification”. While, the lender will check the buyer’s credit before issuing either of these letters, a pre-approval is better than a pre-qualification. Before issuing a pre-approval the lender will generally require the buyer to provide documentation of their sources of income, but with a pre-qualification they will just accept what the buyer tells them.
Sales contracts typically contain several “contingency” clauses, or stipulations that the sale is subject to. For example, with a mortgage contingency, if the buyer is unable to obtain financing within the specified timeframe, neither the buyer nor the seller is required to complete the purchase. Another common contingency is for the buyer to inspect the property. In this case, the buyer has a specified number of days from the date the contract is signed to back out of the contract if they are not happy with the results of the inspection.
The buyer may get out of their commitment to buying the house if it is due to a circumstance allowed for in the contract as a contingency. However, if a buyer refuses to purchase the home even though they are contractually obligated to do so, then the seller is generally entitled to receive the deposit that was put in escrow at the time the purchase contract was signed.
The amount that is given as a deposit is a negotiable item in the contract itself. Be sure that you negotiate a large enough deposit to deter the buyer from backing out of the contract. Typically, you’ll want to get at least 1% of the purchase price.
Although it is best to make the showing of your home as easy as possible for agents and their clients, as the seller, you have the option of requiring appointments to be made and can specify when and how those showings will be done. However, the easier the home can be shown, the better the chances for it to sell quickly. Agents who are in the area may bypass a home which is not readily available to show, thereby curtailing the chances of that home being sold to their client.
Consulting an attorney is always a good idea. But understand that there are two standard real estate contracts used by REALTORS® in Florida and these contracts were created by attorneys and approved by the Florida Bar. These contract forms have blanks where transaction specific information is added in. Your REALTOR® should require that all offers are presented on one of these two forms. However, if you have any questions or concerns about the content of the forms, consult an attorney.
For first-time home buyers or those unfamiliar with the home-buying process, understanding the steps involved is crucial. This frequently googled question about real estate reflects the desire for a comprehensive guide to achieving success.
In a nutshell, buying a home involves getting pre-approved for a mortgage, teaming up with a local agent, creating a must-have list of your priorities, touring homes, making an offer, conducting an inspection, and closing the deal. Working with a top agent is the most important step, as they can help you stay on track at every point.
For first-time home buyers or those unfamiliar with the home-buying process, understanding the steps involved is crucial. This frequently googled question about real estate reflects the desire for a comprehensive guide to achieving success.
While home shoppers these days can look at hundreds of homes online, they only hoof it to check out 10 homes on average before they put in an offer. But keep in mind, “This varies tremendously for each person,” says Will Johnson, a Realtor® in Hendersonville, TN, and founder of Sell and Stage. “Some people find their home within hours of hunting. For others, it takes months.” If you want to streamline the process, it can help to really hone in on a particular neighborhood you’re keen on; that said, if you feel limited by your options, it may be time to expand to surrounding areas.
While buyers often wonder if a home inspection is truly necessary, most Realtors unequivocally say yes, yes, and yes. “A home inspector takes a weight off of your shoulders by looking into the condition of the roof, electricity, heating and air, plumbing,” says Johnson. “Ensuring these things work prevents you from paying to fix them in the future. If some things are not up to par, you can negotiate with the seller to get those fixed before you sign the paperwork.”
The national average for down payments is 11%. But that figure includes first time and repeat buyers. Let’s take a closer look.
While the broad down payment average is 11%, first time homebuyers usually only put down 3 to 5% on a home. That’s because several first-time home buyer programs don’t require big down payments. A longtime favorite, the FHA loan, requires 3.5% down. What’s more, some programs allow down payment contributions from family members in the form of a gift.
Some programs require even less. VA loans and USDA loans can be made with zero down. However, these programs are more restrictive. VA loans are only made to former or current military servicemembers. USDA loans are only available to low to-middle income buyers in USDA-eligible rural areas.
For many years, conventional loans required a 20% down payment. These types of loans were typically taken out by repeat buyers who could use equity from their existing home as a source of down payment funds. However, some newer conventional loan programs are available with 3% down if the borrower carries private mortgage insurance (PMI).
We highly recommend that you go with a local mortgage broker, not an internet lender and not necessarily where you bank locally. The reason you want to go with someone local is that you can count on better customer service because that lender gets their business from word-of-mouth not from advertising. If they don’t provide excellent service they will not be getting more business and they know that. The reason you may not necessarily want to go with the local bank where you keep your accounts is two-fold. First, the customer service representative at your local bank very likely does not deal in mortgages and the person they refer you to (especially with larger banks) may not be local. But also, by going directly to a bank you will not have the same number of mortgage options to choose from and may miss out on a product that would be great for you. By contrast, a good mortgage broker will work with many banks and private money lenders, and therefore will be able to offer you more alternatives. Ask your REALTOR® to give you some names of local lenders they recommend.
When you make an offer on a home, your agent will ask for a check to accompany it (checks are the same as cash, and the deposit is typically 1% to 2% of the purchase price). Earnest money is made in good faith to demonstrate - to the seller - that the buyer’s offer is genuine. Earnest money essentially takes the home off the market to anyone else and reserves it for you.
The check (or sometimes cash) is deposited in a trust or escrow account for safekeeping. If a deal is struck, the earnest money is applied to the down payment and closing costs. If the deal falls through, the money is returned to the buyer.
Important: if the terms of a deal are agreed upon by both parties, but then the buyer backs out, the earnest money may not be returned to the buyer. Ask your agent about the ways to protect your earnest money deposit and the ways to protect it – such as offer contingencies.
Ask your lender to provide you with an estimate of closing costs. When you purchase a home with a mortgage, the vast majority of closing costs that are traditionally paid by the buyer are related to the loan. If you do not think you will have enough cash to cover the down payment on the loan and the closing costs, then it may be possible to negotiate with the seller to pay some of your closing costs (of course they will expect to recoup that amount in a higher sales price).
You can start looking for insurance immediately upon identifying the home you want to purchase. In fact, it is recommended that you know how much your insurance will be prior to the end of the inspection period. If the insurance is going to be significantly more than you expected you may feel the need to cancel the purchase.
If you are working with a REALTOR®, do not approach the owner directly. Once you do that, you’ve cut your REALTOR® out of the process and they will no longer be able to assist you if you choose to purchase that home. Most sellers are willing to work with a REALTOR®, but the REALTOR® must contact the owner first and work out the arrangements before you go to see the home. So, if you come across a for-sale-by-owner home that you are interested in, send the information to your REALTOR® and let them make the arrangements.
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