Articles and Advice

Are You Getting A Value On Your Home?

In this seller's market, it can be hard to tell whether an asking price is a deal or not. Here's how you can evaluate prices.

If you've been thinking about purchasing a new home, now may be a good time to make a move. According to financial experts, 2021 is a good year for home buyers looking for good investments. Although home prices are likely to rise, qualified buyers can still lock in low interest rates to find the right home at an affordable price.

Experts agree that we are currently in a seller's market. Home prices rose in 2020 and are still rising in 2021, especially in certain areas of the country. According to the National Home Price Appreciation Report, the Northeast had the highest home price growth of 5.5%, followed by the West (3.3%), the Midwest (3.2%), and the South (2%). Homes in the medium to high price range of about $485,000 saw the biggest rise in appreciation from 6.6% in May 2020 to 14.6% in November 2020.

Buying in a Seller's Market

As home prices continue to rise, what does this mean for buyers? Since prices are high and inventory is low, buyers are facing unique challenges. In some areas of the country, homes are becoming less affordable and less available, especially for first-time homebuyers. Even with record-low mortgage rates and FHA loan programs designed to help buyers on a tight budget, the current real estate market is very competitive.

Buyers must be smart about their finances and prepared to act when the right property comes along. First-time home buyers may even have a slight advantage because they don't have to sell a home before investing in a new one. Although finding a home in today's market may be more difficult, it's not impossible. Here are tips that can make buying a home in a seller's market a little easier and less stressful.

Learn About Market Condition

Even in a seller's market, there are a lot of good real estate deals out there. Don't assume that all available properties in a seller's market are overpriced. Take the time to learn about homes for sale in desired areas and compare prices based on location, square footage, upgrades, and property amenities.

Explore Possible Appreciation

The area you choose to live in can have a significant impact on home prices. You should investigate proposed and future projects planned in the area. New developments such as shopping malls, new schools, improved roads, and more bus and metro stops can translate to bigger profits down the road.

Look at Unsold Properties

If the home you're considering is priced in the same range as homes that did not sell, there's a good possibility that the home you're looking at is overpriced. If there are several similar homes on the market in the same area, listing prices should be lower, not higher, unless there is something that validates a higher price, such as:

A bigger lot
A home addition or renovation
Solar panels
A built-in alarm system
A new roof
New copper plumbing
New appliances
Interior upgrades.

Consider Income Opportunities

If you're on a tight budget, consider possible income opportunities the home may provide. Some mortgage lenders will consider future income generated by the property when reviewing your loan application. Buyers using Fannie Mae loans are allowed to include future rental income in their lending guidelines if the property falls under one of these categories: (1) a principal residence with 2-4 units where the borrower occupies one of the units, (2) a 1-4 unit investment property.

While buying a home in a seller's market presents challenges, it's not impossible if you research and prepare to make an offer at just the right time.

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Are You Getting A Value On Your Home?

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