The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
5 Reasons You Should Consider Selling Now
The decision to sell right now has been a difficult one for many. Seems everyone is waiting on the bottom… Waiting on a return of the housing market. The truth of the matter is that while we may well be bumping along the bottom of the market now, we are still a long way away from the recovery of the market and we will see further declines in housing prices, as inventory levels continue to rise. As you have read here before, I don’t believe that we will see a true stabilization of the market before 2016 at the earliest… and it could be even longer perhaps 2020. So if you plan on moving anytime in 2011 or perhaps even the next couple of years, you may want to strongly consider selling your house now rather than waiting. Here are five reasons why:
1. Increased Buyer Activity…
There is currently an increase in the number of buyers attending open houses and searching online for a home. This surge dramatically increases the exposure for your house. The best chance of getting quality offers (perhaps even multiple offers) is RIGHT NOW!
2. Distressed Property Sales will continue to increase for the near term.
The good news is that the number of people paying their mortgage on time is increasing. This will lead to fewer new distressed property listings once the current backlog is put on the market. The not-so-good news is that there is still a large inventory of existing foreclosures and short sales that will still be coming to market.
The Wall Street Journal:
Why It’s Time to Buy
“Despite all the gloom, there are growing indications that it is a good time to buy… The long-term benefits of home ownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.”
LPS (Lender Processing Services) reported in their latest Mortgage Monitor that:
- There are still twice as many loans going 90+ days delinquent as are starting foreclosure (pointing to a growing back log – future foreclosures).
- There are almost three times more foreclosure starts as there are foreclosure sales (indicating a still growing inventory of foreclosures).
- Distressed property inventory levels are almost 45 times the rate of monthly foreclosure sales (current sales levels are unable to absorb the current level of foreclosures and short-sales).
This backlog of properties that will start coming to the market in about 90 days as banks clear up their paperwork problems. These properties sell at deep discounts. They will be your competition. Based on the existing home inventory plus all the additional inventory about to be added, we are looking at up to six years to work through that inventory pointing to a continued decline in home prices… So you can expect to get less for the your home next month than you will three months down the road… less next year than this year!
3. Interest rates are up over the last six months.
Recent Interest Rates
Also bouncing along the bottom last fall at historical lows, interest rates have climbed over 1/4% in the last six months. Every time the rates increase 1/4%, approximately 250,000 buyers are eliminated from qualifying for a mortgage. In an environment of volatile rates, waiting could mean that there will be fewer buyers eligible to purchase your house. It also could mean that you will pay a higher rate on the next home you buy.
4. Qualifying for a mortgage is about to get even more difficult.
Besides increasing rates, there are other factors that will hinder a buyer’s ability to qualify for a mortgage as we move forward. Lending standards have been getting tighter over the last year. And as the government debates the new proposed risk retention guidelines for mortgages with less than 20% down (QRM – Qualified Residential Mortgages), banks are gearing up for even more stringent standards.
Morgan Stanley recently stated: “Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit.” This may impact any potential purchaser for your property and may also impact your next purchase.
5. It’s time to get on with your life.
Maybe the most important reason to sell now is so you can get on with your life. Do not allow a less-than-stellar housing market prevent you from reaching your goals. Think about the reasons you decided to move in the first place. Are these reasons still important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the difference in sales price worth putting off our plans? Only you and your family know the answer to that question. If you plan to sell this year or even next, the reasons above prove that selling now makes more sense than waiting to later.
Sit down with a trusted real estate professional today to fully understand the best option for your individual situation.
May the market be with you.
Research for this column was based personal research and from information extracted from the KCMBlog.com (Keeping Current Matters / Steve Harney ©)
