Pent-up demand for housing has created a brisk late spring market.
Stay-at-home orders and the highest unemployment in recent memory, postponed the typical fast paced spring sales market for six weeks. Since restrictions were lifted on May 7th, real estate transactions have resumed with new listings attracting multiple offers as they have in previous non-pandemic years.
Reduced Inventory
The inventory of homes is currently lower than normal because the lockdown made it impractical for sellers to list while buyers were unable to physically visit homes. In addition, some sellers have postponed listing to avoid having strangers walking through their homes during a public health disaster.
Multiple offers are common again
With more buyers competing for a very limited supply of properties, modestly priced homes below $200,000 are receiving competitive offers exceeding the asking price by an average of 10%. More expensive properties sitting on the market longer. This is consistent with previous years, so it’s safe to say that the real estate market is healthy and home values will continue to climb.
Favorable Mortgage Rates are Encouraging Buyers
In spite of economic uncertainty, mortgage rates are at an historic low of 3.24%. This translates to a 30 year mortgage based on $4.35/month for each $1000 of borrowed money. These low rates make it affordable for many buyers to offer above the asking price
when and additional $10,000 will mean only an additional $43.50 in the monthly payment.
What if you offer more than the home is worth? Your lender is a partner in this investment. He will hire an appraiser to determine if the property is worth the purchase price. If the home doesn’t “appraise” you can either re-negotiate the price or walk away.
Buyers always need to buy and some homeowners always need to sell. Thus, even during the COVID-19 emergency, real estate transactions are moving forward.
Workers in the Michigan real-estate industry including agents, appraisers, brokers, inspectors, surveyors, and registers of deeds have resumed normal activities.
New Guidelines for Buying and Selling
BHHSTomie Raines Realtors® are dedicated to taking steps to reduce the spread of the virus while continuing to work with buyers and sellers.
Showings, inspections, appraisals, photography, or final walk-throughs are performed by appointment and must be limited to no more than four people on the premises at any one time. All participants must continue to maintain proper distancing.
Showings may only be arranged for owner-occupied homes, vacant homes, vacant land, commercial property, and industrial property. Rental properties can only be visited if vacant and having been thoroughly cleaned.
Showing Precautions
Required Form. All persons visiting the home are required to sign a form stating that during the last 14 days, neither they nor any members of their household have been exposed to, diagnosed with or quarantined as a result of COVID-19 or have experienced a fever, cough, shortness of breath or other cold or flu-like symptoms. These forms are kept on file and can be made available to a seller upon request.
Seller are to prepare home for safe showings. Sellers are expected to turn on all lights and leave closet doors, cabinet doors and kitchen draws open for viewing. This makes it easier for buyers and their agents to view the home without touching light switches or surfaces and possibly contaminating them.
Buyer’s agents are providing buyers with shoe coverings, masks, hand sanitizer and/or disinfectant wipes for each home visit and disposing of these materials when leaving the home.
Purchase offers and paperwork
Before the pandemic, buyers wishing to make an offer would meet at the agent’s office to discuss and sign the purchase offer. Now, all meetings and paperwork are electronically done from home. The BHHSTomie Raines agent initiates a ZOOM meeting for a face to face discussion and all paperwork is filled in and signed online…with no physical contract.
Even the earnest money, a good faith deposit needed to create a valid contract, can be digitally transferred through ACH (Automated Clearing House) into our escrow account.
COVID-19 and the coronavirus pandemic has forced the real estate industry to rethink almost every aspect of this business — new showing rules, online meetings, and closing deals remotely, but always prioritizing safety and service over sales.
In a survey released this year, the National Association of Realtors found that 83% of buyers’ agents said that staging helps homebuyers visualize themselves living in the home and influences them enough to make higher offers.
Sellers’ agents report that homes sell faster and for more money. Over half said that staging sells a home faster, and about 22% say offers improve by 5%, while 17% reported improved offers of up to 10%. Two percent say offers increased by over 20 percent.
These are just a few of the advantages to staging your home to sell, but there are other benefits for home sellers.
Staging gives you a deadline. Getting your home ready to sell can seem overwhelming, but you don’t have to list it until it’s complete. Online photos and agent showings should showcase your home at its best – decluttered, freshly painted and staged with new furniture and accessories.
Staging gives you great ideas. You’ll learn a lot about making rooms flow, creating focal points, improve lighting, and how to use color.
Staging helps you decide what to keep or discard. If your furnishings are hand-me-downs, out of date, or not your taste, why take it all to your next home? Staging can help you determine what you love so you’ll have far less stuff to move.
Improved Listing Photographs. Buyers make decisions about whether or not to visit a home based on the photos they see on line. Staging will help the photographer prepare an online presentation that will attract buyers to your home.
Ask your Berkshire Hathaway HomeServices Tomie Raines Realtor for professional staging advice when preparing to sell your home.
Many homeowners start with basements when they need extra space at home. A basement can make a great playroom for kids, a work-out room, office, or even an extra bedroom. A finished basement can be a very useful space, but if you’re wondering about finishing your basement just for the resale value, there are a few factors to consider first. Determining the value of finished basement spaces means determining their function, type and cost first.
Spacious Finished Basement with Carpet and Hardwood Floors
If you are remodeling your basement to increase the resale value of your home, it is important to know that basement space is not appraised in the same way as above-ground space. First, below-grade space is not a part of the gross square footage of a home. All basements, by their nature, are below-grade, including walk-out basements. This means, even if your basement space looks and functions the same as your above-ground space, it won’t be included in the total square footage.
However, a finished basement can still add to your home’s value. Property appraisers adjust home price based on the “utility” of the finished basement space. Though this space won’t be added to your total square footage, a home with a finished basement will be more valuable than another home without a finished basement, assuming all other features are equal.
What is the Basement’s Function?
The function of the basement, and how well this function is accomplished, will help to decide the value of the finished basement. The needs of the home will also impact the value of this space. If, for example, a home has only one bathroom, but has an second full bathroom in the basement, this can increase the value substantially. This is also true for extra bedrooms.
For a basement to fulfill its function, it must be habitable. This means there are no problems with flooding, mold, or poisonous gases coming from the ground, such as radon. This also means that the heating, cooling and ventilation systems are in full working order. In some basements, it might be relatively inexpensive to create a habitable area. In other basements, it may be a costly challenge.
What Type of Basement Do You Have?
There are three main types of basements; walk-out, standard, and garden. Which type of basement you have will impact its value. Here is a basic breakdown of the value of basements by type.
Walk-out: this is the most valuable type of basement. It will be found in homes built on sloping properties, where part of the basement is underground and part is on ground-level. It often includes a sliding glass door for entry and exit, which provides the namesake.
Standard: A standard basement has no natural light, or very little light coming from small windows just above the ground. This is the most common type of basement, and the least valuable.
Garden: This type of basement is a mix between the previous two. It has larger windows and more above-ground area than a standard basement, but doesn’t have a walk-out. Most of the basement is still underground, but it will have more natural light than a standard basement, so it is generally more valuable. These homes are advertised as having daylight windows.
MICHIGAN BASEMENTS
You have probably heard about a “Michigan basement.” This is a type of standard basement that is common in homes built prior to 1940 in the greater Lansing area. Michigan basements usually have concrete blocks, stone, or brick walls, and concrete, stone or dirt floors and they’re usually less than eight feet tall. These types of basements can be finished, but it may be expensive. You should consider the costs carefully before moving forward.
Finished Basement Value vs Expense
Many homeowners look to their basement for extra space because it is easier and more affordable than making an addition. A home addition requires building the space from scratch, while the important structural elements are already present in the basement. This means finishing a basement is around 50 to 60% cheaper than a home addition. If you need extra space in your home, a finished basement may be the most affordable way to do it.
Basements can pose problems that can quickly increase expenses, however. If your basement has problems with flooding, mold, or moisture, as many basements in Michigan do, you will need to take proper precautions first. Installing drainage systems and waterproofing will be imperative to keep the space functional. If this isn’t done properly, your basement area can get ruined by water damage, and cleanup costs will erode the value of the finished basement.
Should You Finish Your Basement?
If you need extra space or you want a particular type of room in your home, you can most likely finish your basement for a fraction of the cost of a new home addition. However, if you are considering finishing your basement solely for improved resale value, it’s a good idea to consult your Berkshire Hathaway Home Service Tomie Raines Realtor to give you a better idea of how your home compares with others in the area, and whether or not a finished basement will be a wise investment.
The U.S. Department of Housing and Urban Development recently revised its condominium loan policies to allow consumers greater access to mortgage loans that are federally guaranteed through the Federal Housing Administration (FHA). After Oct. 15, 2019, as many as 60,000 additional condo units (nationwide) will meet FHA-certification, making them eligible for buyers to purchase with an FHA loan.
The new guidelines will extend project certifications from two years to three, allow for single-unit mortgage approvals, allow a higher owner-occupant vs. renter occupancy ratio, and increase the number of units eligible to be purchased with FHA loans in a single project.
The FHA certifies eligibility for both condo projects and individual units, but according to the National Association of REALTORS, only 17,792 FHA condo loans were originated in the past year, out of approximately 8.7 million condo units nationwide.
The new relaxed guidelines are a significant improvement as condos are often more suitable and affordable to many singles, couples and small families who wish to take advantage of easier qualification, low-down-payment FHA loans – particularly first-time buyers.
Any impediment to buying a property can impact its desirability and market value. With approximately 84% of homebuyers purchasing a condo for the first time, the relaxed rules will promote more “affordable and sustainable homeownership, especially for credit-worthy first-time buyers.” The result should also make condos more marketable and easier to resell since the pool of available buyers and loans will be larger.
Buyers tend to think bigger is better, but a smaller home may actually feel more spacious than a similar home with a larger footprint. That’s what makes the emphasis on size over livability so frustrating – it’s not really an accurate gauge for living space.
Living space is roofed, enclosed, heated, cooled and finished out. But, because there is no accepted standard way to consistently measure interiors, square footage is typically measured from the exterior of the home as length times width. This is so that banks, tax appraisers, roofers, painters, real estate professionals and others can have a handy number to enable them to commoditize, price and negotiate homes and services.
Interiors are always smaller than exterior square footage suggests. The thickness of the exterior walls, insulation, wall boards and drywall can vary. Some spaces aren’t for walking around, like the empty space beneath stairwells, or the code-required space around water heaters and other systems.
If you’re shopping for a home and see descriptions online, you know there’s a lot of difference between 3,400 sq. ft. and 1,400 sq. ft., but a few feet more or less between similar homes doesn’t matter. If the home’s interior is well-planned, spaced appropriately, furnished wisely, and clutter-free, it will feel like there’s more living space.
If you’re selling a home, I can help you find ways to make your home appear more spacious. You can start with letting in more light and eliminating extra furnishings.
You’ve done everything right, or so you think. You’ve painted, landscaped and staged, but your home isn’t selling as fast as you thought it would. Here are some surprising reasons why buyers may have the wrong impression.
Poor photography. Don’t take pictures of anything that won’t help your home sell. Make your eye see details, like mail sticking out of the mailbox, trash receptacles on the front lawn and tricycles in the driveway. Take the time to remove anything that doesn’t enhance your home’s presentation.
Pets. Barking dogs can be intimidating, distracting and sometimes dangerous. Secure your pet in a crate during showings, board them, or take them with you. Otherwise, buyers won’t feel comfortable viewing your home.
The car park. If you have a two-car garage and two cars, put both cars in the garage. If you have more vehicles than garage spaces, with cars on the street, it makes your home appear too small for the number of occupants.
Being too controlling. When you limit the times your home can be shown, you’re handicapping homebuyers who may only be able to come at that time.
The wrong price. Your home is in a neighborhood of similar homes in vintage or size. If homebuyers don’t see the reasons why your home is worth more than other similar homes, they’ll move on to the next listing.
You can count on your Berkshire Hathaway HomeServices network professional to help you avoid similar mistakes and sell your home in a timely manner.
While any time is a great time to buy or sell a home, knowing whether market conditions favor buyers or sellers will help you to improve your own position and to navigate your transaction more easily.
A seller’s market takes place when financial conditions are positive. New employers are coming to town, there are plenty of jobs, workers are receiving bonuses and raises, and there’s a general sense of optimism that encourages people to buy their first home or move up to a bigger, better home. This creates demand for homes, higher home prices and often a shortage of available homes for sale. Homes don’t last long on the market, and soon, there are shortages for entry-level homes and other price points.
A buyer’s market reflects a receding economy. Employers stop hiring and salaries stagnate. If major employers exit the market, workers have trouble finding other employment. Confidence wanes, and sellers find that there’s less demand for their homes. Soon, inventories of homes for sale increase, bringing prices lower. A buyer’s market means buyers are cautious and expect sellers to sweeten the pot by presenting updated homes in premium condition.
Buyer’s and seller’s markets can be as localized as a single street within a neighborhood, a zip code, or a suburb. It’s all about the economy’s impact on demand.
Are you in a buyer’s or seller’s market? If you’re not sure, your Berkshire Hathaway HomeServices network professional can show you the sales trends for your area and price range.
The era of real estate-focused reality television is encouraging too many homeowners to put aesthetics before function in their remodeling projects, industry experts note in a recent Forbes.com article. For example, the trend toward no-door kitchen cabinetry, which has been made popular by home improvement shows, isn’t a smart choice for a homeowner who isn’t a neat freak or who doesn’t have matching dishes.
“Everyone wants a kitchen or bathroom that looks like it belongs in a showroom, but when you’re remodeling, there is such a thing as getting too into aesthetics,” the Forbes.com article reads. “If you make your remodel look magnificent but forget to take function into account, odds are good that you’ll be itching to remodel again sooner rather than later.”
Put Function First Experts suggest choosing timeless updates that can stand the test over many design cycles. Remodeling experts also say it’s critical to put function first before embarking on a home improvement project. That may mean having to let go of a few aesthetic details in the process if they don’t work in your home style, are beyond your budget, or just don’t make sense for your lifestyle.
Before taking on a remodel, experts recommend that homeowners ask themselves: How does this space function, and what do I wish was different? Will a renovation change how I use the space then?
Skipping the Permit
Obtaining a proper permit for the renovation could ensure fewer “function” issues after the work is complete, contractors say. Inspections of the renovation by local authorities are also crucial when an owner decides to sell later. Any issues with the work could derail a sale if they haven’t been addressed. A permit also protects the homeowner: A buyer who gets hurt as a result of unapproved work in the home could successfully sue the seller.
For homeowners who embark on home remodeling projects themselves, the responsibility of filing and getting a permit for the work falls on them. A professional contractor can help navigate the process and ensure everything is up to code.
