The three main types of costs home sellers need to know about

Are you planning on selling your home in the near future? Now is a great time to sell; many homeowners have a ton of equity in their properties. However, you should know that selling your home isn’t all profit. There are costs you need to pay that you don’t want to be caught off guard by. That’s why today, I’m sharing a few of the most common costs associated with selling your home and a few things you can do to prepare for them. 

1. Costs before the sale. These are all the things you should do before listing your home on the MLS including items like inspections, repairs, renovations, and cleaning. While most of these things aren’t 100% necessary, every agent will recommend you do them if you want to get the most money possible for your home. For example, a clean home with a few simple repairs and cosmetic upgrades will get way more attention from buyers than a home that’s listed as is. That’s why I always recommend having a pre-listing meeting with your agent to go over which pre-listing costs will improve your sale and fit your budget. 

“Work with your agent to find out which pre-listing items are worth it for you.”

2. Costs of selling. These are the costs that come with a real estate transaction and include things like listing agent commission, buyer’s agent commission, marketing costs, and more. Depending on who your agent is and what they offer, the cost of their commission could range from 3% to 6%. Plus, many agents also offer different commission packages, so you can customize what type of service you get based on your budget. 

3. Closing costs. These costs go towards transferring the ownership of a property from one person to another and include things like title fees, escrow fees, mortgage insurance, seller concessions, notary fees, and more. While seller concessions can be negotiated, and closing costs can vary based on the value of your property, you can generally expect to pay between 0.5% and 1% of the total sales price at closing. 

Planning for a home sale is a lot of work, but we can help. Just call or email us today, and we’ll help you analyze and break down how much cash you need to sell your home. We look forward to hearing from you!

Going over the key reasons it’s worth it to fix your home before selling.

Recently, a lot of sellers have been asking me, “Should I make repairs before listing my home?” The short answer is yes. While we’re still in a seller’s market, the truth is that there aren’t as many buyers as there were during the peak a few years ago. The good news is that buyers still looking to purchase a home in this environment are very serious about moving. However, due to higher interest rates and home prices, your property needs to be in great condition to stand out. That’s why today, I’m sharing three things you can do to get your home in perfect market condition before selling: 

1. Have a pre-listing meeting. Meet with your agent before you list to go over which repairs are really worth it. Not every fix is worth your hard-earned money, so invest in repairs that will improve your home’s condition and net you a higher return on your investment. It might be worth it to pay for a pre-inspection before you list. This way, you can find exactly what might turn buyers away and fix it before you hit the open market. 

2. Choose between cosmetic and high-maintenance repairs. Most repairs fall into one of two categories: cosmetic repairs and high-maintenance repairs. Cosmetic repairs are usually optional and won’t be a sticking point in negotiations. However, they can net you a higher return on your investment. High-maintenance repairs take longer and require a larger investment, but they often fix major issues that need to be addressed if you want good offers from buyers. 

3. Proper repairs expand your buyer pool. The condition of your home is the most important factor you can control when selling because it expands your buyer pool. In today’s market, there are fewer buyers due to interest rates and higher home prices; however, you can still attract a lot of demand with a property in good condition. If you do the proper repairs, you’ll have more offers coming in from better-qualified buyers. Work closely with your agent to create a strong marketing strategy, and you might even create a bidding war and naturally drive up your price. 

I always recommend sellers do repairs before listing, but it’s more important in this market than it ever has been before. If you’re wondering which repairs are worth doing or want to discuss a pre-listing strategy, just give me a call or send me an email. I’d love to hear from you!

Sellers’ guide to understanding the pros and cons of paying buyer’s fees.

With all the hype in today's news about the National Association of Realtors settlement and agent commissions, it’s easy to be confused. That’s why today, I will answer the question that’s on every seller’s mind: Should sellers still pay buyer’s agent’s commissions? The simple answer is yes, and here are three reasons why:

1. Setting a rate upfront avoids negotiations. If sellers don’t set the rate you're willing to pay a buyer's broker upfront, it will become part of the negotiation process which can sometimes be challenging and time-consuming. However, by stating upfront that you are willing to pay a certain percentage for buyer representation, you simplify the negotiation process and make your property more attractive to buyers.

2. Offering a competitive rate will help your home sell. Offering a competitive commission to a buyer's broker opens your home to more buyers as buyers won’t have to worry about setting aside extra funds or negotiating broker fees themselves, which makes your listing more appealing. Ensuring that buyer's representatives know they will be compensated fairly can significantly expand your potential buyer pool and make your listing more competitive.

3. Offering no commission to buyers comes with risks. With the new NAR settlement, buyers’ representatives are required to have a buyer-broker agreement signed before showing homes. This means that if the seller does not offer to pay the buyer's broker, the buyer is legally obligated to do so. If your home is at the top of a buyer's price range, having the buyer pay the broker's fee might put your home out of reach financially. While you technically have the option to offer 0% commission, it is not advisable because it limits the number of buyers who can afford your property and makes your home less attractive in the market.

Paying a buyer's broker commission when listing your property ensures your home remains visible to the widest possible audience, simplifies the negotiation process, and keeps your property competitively priced. If you have any questions or if you’re considering selling your home, reach out to me by calling 505-603-2435. I look forward to talking with you!

Three important things to disclose before your home is sold.

When making an offer on a house, a property disclosure is one of the first things buyers get from the seller. This is also referred to as a real estate disclosure form or a home disclosure. The specifics vary by state, but most states require some type of seller disclosure. The goal is to add transparency to the transaction.

In this disclosure, a seller provides written information about known things that could impact the property's value. While there are many different things a seller must disclose, I’m going to highlight three of the most forgotten (and impactful) items:

1. HOA information. If the home is located within a homeowners association, you should disclose that fact. Associations generally impose monthly fees on homeowners, and they can impose rules on their membership that a prospective buyer might or might not find acceptable. You also need to know about the HOA's financial health and provide this information to the buyer so they can make an informed purchasing decision.

"The goal is to add transparency to the transaction."

2. Repairs. If your home has major structural issues, you have to disclose them to a potential seller. In addition to repairs that need to be made, you must also disclose repairs that have been completed. Buyers need to know the home's repair history so they can have their home inspectors pay extra attention to problem areas. You may also want to disclose electrical or plumbing repairs and any other problems you would like to know about if you were going to buy the home.

3. Federal seller’s disclosure requirement. If your home was built before 1978, federal law requires that you disclose that the property may produce exposure to lead from lead-based paint. It was federally banned for consumer use during that year. Sellers of homes built before 1978 must also provide buyers with an EPA pamphlet titled "Protect Your Family From Lead In Your Home.” Then, they must give buyers 10 days to conduct a paint inspection or risk assessment for lead-based paint and include a "lead warning statement" in the contract.

The key thing to remember about disclosures is that when in doubt, disclose. Failing to disclose something you were aware of beforehand could lead to a messy legal situation.

If you have further questions about what you need to disclose when selling your home or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

Here’s what you need to know about how interest rates affect real estate.

By now, you’ve probably heard a ton about interest rates, especially as they relate to the housing market. People talk about them like they’re life and death for our housing market, but why is that? Recently, I’ve received a lot of questions from clients about how interest rates actually affect our housing market, which is why today, I’m sharing three of the biggest impacts of interest rates in real estate:

1. Interest rates affect mortgage payments. When you hear about the Federal Reserve raising or lowering interest rates, they aren’t directly changing mortgage interest rates. However, the two numbers are closely related, and mortgage rates tend to follow federal interest rates pretty closely. This means that when interest rates go up, it becomes more expensive to borrow money for a mortgage. Due to these higher mortgage payments, it becomes more expensive for non-cash buyers to purchase homes. Similarly, homes become more affordable when interest rates decrease. 

2. Interest rates affect home prices. Since housing affordability is directly related to mortgage interest rates, demand tends to be greatly affected by rates. This means that if interest rates rise and demand falls as a result, housing prices will be likely to decrease—or at least stop increasing. On the other hand, lower interest rates are associated with rapidly increasing home prices. For example, this is what spurred on the great housing market frenzy during the COVID-19 pandemic. 

"There are opportunities in every housing market, no matter what interest rates are."

3. Interest rates affect housing activity. Since rates affect home affordability, demand, and home prices, they also affect activity. Many homeowners don’t like to move when interest rates are high, especially if they have a lower rate locked in with their current mortgage. As a result, homes tend to spend more time on the market when interest rates are higher, and they fly off the MLS when rates are low. 

While it may sound like it doesn’t make sense to move at all when rates are high, the truth is that there are a lot of creative solutions to higher-rate markets. Plus, there are a few unique benefits to moving when rates are higher. For example, competition tends to flood the market when rate decreases are announced. If you want to beat the rush and get started on your next move, please call or email me. I am always willing to help!

Here are the top three reasons why you should consider buying ASAP.

Are you contemplating the significant milestone of buying a home but feeling unsure about the timing? In today's ever-changing market, it's natural to question if now is the right moment to dive into homeownership. Let's explore three key reasons why purchasing a home now, rather than later, could be a beneficial investment:

1. Home values appreciate over time. One of the strongest arguments for buying now is the historical trend of increasing home values. Despite short-term fluctuations, real estate has consistently proven to be a solid long-term investment. By entering the market sooner, you can capitalize on any general market uptick, positioning yourself for potential appreciation.

2. Navigating interest rates. Currently, we find ourselves in a high-interest-rate environment, which might seem daunting. However, the future trajectory of interest rates is unpredictable. If rates rise further, buying now secures a more favorable deal. Conversely, if rates drop, you can always refinance, locking in your purchase price and loan amount while benefiting from lower rates.

"While the decision to buy a home should never be rushed, there are compelling reasons to consider making the move now."

3. Building equity now vs. renting. Choosing to buy a home now sets you on the path to building personal equity. In contrast, continuing to rent contributes to someone else's equity. Homeownership is a cornerstone of wealth-building, with many millionaires attributing their success to real estate investments. By paying off a mortgage, you not only reduce your loan but also potentially benefit from market appreciation, turning your living expenses into an investment in your future.

While the decision to buy a home should never be rushed, there are compelling reasons to consider making the move now. Whether it's the potential for home value appreciation, navigating current interest rates, or starting to build your own equity, each factor plays a crucial role in your journey toward homeownership. If you're ready to discuss real estate investments and wealth-building, I'm here to help. Feel free to reach out via phone, email, or visit my website anytime for more information.

Here’s the impact that inflation may have on homebuyers this year.

Inflation has been in the news quite a bit lately, so many of you are wondering if that means you should hold off from purchasing a home. If that describes your situation, there are a few things to consider. 

The first is affordability. If you’re struggling to pay your rent, current mortgage, or may struggle with the extra costs of a home purchase, you may want to wait and see what’s going to be best for your financial situation. You want a nest egg to fall back on, just in case. That being said, over the last 30 years, home values have outpaced inflation. Purchasing property is a great way to protect your money; history shows that you won’t lose out by purchasing a home. 

In 2021, inflation increased by about 7.5% in the U.S., but housing markets rose by around 20%, depending on the area. Some of the major housing authorities such as Fannie Mae, the National Association of Realtors (NAR), and Zillow are predicting an 11% growth in home price appreciation this year, and some are predicting much higher rates. Even if inflation continues at 7% or escalates to 10%, housing appreciation will beat it. 

"Over the last 30 years, home values have outpaced inflation."

Despite the upward trajectory of prices, it’s still an excellent time to buy. Interest rates are destined to climb a little, but even if they do, you’ll still win out due to inflation. Rents will also tick up with inflation, along with multiple other things, but according to the data, historically, housing has been a good hedge against inflation. 

If you have questions or would like to discuss your particular situation, I’m always available to provide advice or help in any way I can. Just call or email me; I would love to help you.

Here's what earnest money is and how it can sometimes be refundable.