5 Factors That Affect The Sale Of Any Home

Selecting the “right” person to market your home is very important and worth careful consideration.

Owners directly control four of the five factors that affect the sale of any home: price, location, condition, terms, and the agent you select.  The one thing you can’t control is the location of the home, but you can adjust the other factors to compensate for failings.

The seller controls the price of the home which determines its positioning in the marketplace.  If it is priced too high, it will take longer to sell and, in some cases, for less than what it should have sold for because when it doesn’t sell immediately, it is assumed that there must be an issue with it.  If it is priced too low, the owner will not realize as much of their equity as they should.

Not pricing the home in the proper search brackets could keep the property from being exposed to potential and likely, buyers.  For example, if a home is priced at $399,000 to follow an age-old retail marketing principle, many of the most likely buyers will never know about it because they are searching for properties in the $400,000 to $450,000 range.

The seller also controls the condition of a property which affects not only the marketability of a home but indirectly, the price.  Homes in the best condition appeal to more buyers because for the most part, they are using their available cash for the down payment and closing costs and may not be able to afford to make cosmetic or more expensive improvements to the property.

Clutter can keep buyers from seeing your home, and more importantly, it will keep them from seeing themselves in your home.  There are three basic causes of clutter: there is too much stuff in the home; there is not enough space in the home, and there is no organization.

Selling a home is about positioning it to sell which sometimes means temporarily or permanently getting rid of things that make the home look small or distract the buyers from seeing its potential for them.

Terms are the financial preferences established by the seller.  In a competitive market with multiple bids, a seller may not have to offer any terms such as financing, appraisal, or inspection contingencies.  This will restrict the number of buyers who are financially able to pay cash and are willing to do so.

In lower price range homes, there could be a wealth of qualified buyers that need to use low down payment options, closing cost assistance from the seller, or other things.  When the seller consents to offer a variety of terms, the market of potential buyers increases.  The seller can still select the most qualified if they are not limiting protected classes.

The fourth marketing factor that the seller controls is the agent they select to represent them in the sale of the home.  Selecting the “right” person to market your home is very important and worth careful consideration.

Your agent will be the manager of the entire marketing process. They’ll position your home to be competitive with the other homes in your price range and area while attracting the broadest range of buyers possible.  Your agent will offer advice on what needs to be done before the property is offered for sale.  Your agent can also offer recommendations for a variety of service providers if work needs to be done.

There are a lot of professionals involved in the sale of a home like lenders, title officers, appraisers, inspectors, insurance agents, surveyors, and the buyer’s agent, just to name a few.  Your listing agent will coordinate the communications between the other professionals and negotiate directly with them.  Your agent’s role as third-party negotiator is critical and you need to feel confident in their ability to serve your best interests.

  1. Price
    • Too high; not realistic
    • Doesn’t acknowledge the Internet search range
  2. Location
    • A poor location can negatively affect the price 
    • Since location cannot change, must adjust the price for a poor location
    • Condition
    • Clutter
    • Drive-up appeal
    • Deferred maintenance
    • Odors
    • Carpets
    • Lack of updates
  3. Terms (applicable to certain price ranges)
    • Buyer concessions like closing costs
    • Incentives like home warranty, appliances, floor covering, etc.
    • Buy-down interest rates
  4. The Agent you select
    • Experience
    • Knowledge of neighborhood
    • Promotional expertise

For more information, download my Sellers Guide.

McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Are Home Prices and Rates Going To Continue To Rise

Make an appointment with your real estate professional to get the facts on what your home is worth, the mortgages available, and the logistics to put it together for your best advantage.

One of the most talked about questions in the real estate market has to do with “Will prices continue to rise now that interest rates have increased dramatically this year?”

It is understandable to think that if the Federal Reserve is using interest rate increases to slow consumer demand, that it would also slow homebuyer demand to moderate prices.  Unfortunately for would-be homebuyers, it isn’t the case.  High inflation, strong economic growth, low unemployment, and increased wage growth have been associated with high home price appreciation.

In a recent newsletter from First American, Chief Economist, Mark Fleming stated that historically, 90% of total inventory is from existing homes and homeowners are not moving as often as in the past.  Prior to 2007, the average tenure was five years.  After the housing crisis, between 2008 and 2016, the length of time spent in a home went to eight years.

Lawrence Yun, Chief Economist with the National Association of REALTORS® when talking about the May 2022 statistics: “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially … almost doubling … to cool home price appreciation and provide more options for home buyers.”  Median sales price rose to a new high of $403,800, up 10.8% from July 2021, while sales are down 20% year over year and inventory increased slightly to 3.3 months from 2.6 months in July of 2021.

In the beginning of 2022, Fannie Mae, Freddie Mac and NAR predicted home price appreciation would be 7.6%, 6.2%, and 5.1% for the year.  Their revised forecast has been increased to 16%, 12.8%, and 11.5%.  Buyer demand still exceeds inventory levels which is driving prices higher.

While the Fed does not set mortgage rates, it does determine the Fed Funds Rate which is charged by banks to each other for overnight funds.  The increases often affect the U.S. Treasury rates to increase and there is generally a reaction when the 10-year U.S. Treasury Note yields increase for the 30-year mortgage rates to increase also.

The National Association of REALTORS®, on their website, states “The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”  The Index uses the 30-year fixed rate mortgage as provided by Freddie Mac’s Primary Mortgage Market Survey (PMMS).

Mortgage rates have gone up over 2% in the first half of 2022.  That dramatically affects the affordability of the home even if the price didn’t increase, which it did.  A $360,000 mortgage at 3.05% in December 2021 would have a principal and interest payment of $1,528 for 30-years.  At 5.22% as of August 11, 2022, the P&I payment is $1,981 or a difference of $453 dollars or a 30% increase.

As of May 2022, homeowners are now staying in their homes 10.6 years.  Part of the reasons can be contributed to the pandemic, but a large degree is attributed to the lack of inventory.  Existing homeowners can sell their home for premium prices and in unusually short time frames, but the problem is finding a home to replace it.

The demand for housing still exceeds the supply and price are continuing to rise, although, maybe not as the same pace as 2021.  Many economists predicted that price appreciation would slow but CoreLogic reported “Home prices nationwide, including distressed sales, increased year-over-year by 20.9% in April 2022 compared with April 2021.  In the same report, CoreLogic predicted “…home prices are forecast to increase on a year-over-year basis by 5.6% from April 2022 to April 2023.”

Another frequent question homeowners have is whether to wait to see if prices moderate and interest rates decline.  The probability is more likely for prices to continue to increase along with mortgage rates.  The consequences of waiting, in hopes of lower prices and rates, could totally price a person out of the market for the home they want.

Using a $400,000 home that could be purchased today at 5.22% on a 90%, 30-year mortgage, the P&I payments would be $1,981.  If the price appreciated only 5% in the next year and the mortgage rates were to go up by 1%, the payment would increase by $339 a month.  If a person stayed in the home for 7 years, the increased cost would be $28,458 and if they stayed for full term, it would cost them $121,965 more by waiting.

Increases in rates and prices have forced some people out of the market, at least temporarily.  For the fortunate ones, who can still afford to buy, even with the increases, acting now could save them tens of thousands and maybe hundreds of thousands depending on the price of the home.

Make an appointment with your real estate professional to get the facts on what you home is worth, the mortgages available, and the logistics to put it together for your best advantage.

McKee Smith, REALTOR®, has years of experience in the DFW area housing market. He knows the many unique features of Dallas and Fort Worth area home sales. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Now Is Still A Great Time To Buy A Home

The media is exaggerating “doom and gloom” in the market! Here’s a interview with Charles Mentesana on why it is still a good time to buy!

Here are a few highlights:

  • Since you no longer need to offer $50k to $100k over the asking price, you might end up with a lower payment even with higher interest rates.
  • Sellers are making far more concessions than they were just two months ago.
  • Home ownership is a proven way to build wealth.

McKee Smith, REALTOR®, is an experienced real estate agent that specializes in the Dallas and Fort Worth market. He understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Indecision Can Be Expensive

Connect with McKee Smith, REALTOR®, to find out the facts about the market because good information can make a difference in making a good decision.

With all that is going on in the world – a global pandemic, supply chain issues, highest inflation in 40 years, the economic effects of a war in Ukraine – it can be overwhelming to think about when the right time is to buy a home.

On a local level, there is a pent-up demand for homes that has been building for years.  Builders haven’t kept up with the demand for new housing for almost 15 years.  Low inventory, especially in the past three years, has driven up prices nationally in 2021 by 20% and even though, the rapid appreciation seems to be moderating, in June, NAR reported that the median price home was up 13.4% from one year ago.

Then, of course, there are mortgage rates that have gone up by 2% since the beginning of 2022.  Appreciation and rising interest rates are a double whammy for people looking for their first home or to move up. It is completely understandable that many people are faced with so much that they are sitting on the sidelines waiting to see if things will improve.

Let’s look at a hypothetical situation where buyers have the money for a 10% down payment on a $400,000 home but have decided to wait for three years to see if things improve.  They need to park their money somewhere safe so that it will be available when they feel comfortable buying but also earn as much as they can to ward off the effects of historically high inflation.

If they were to put the $40,000 into a certificate of deposit for three years that pays 2%, they would earn $2,448 in interest.  With current inflation at 8.5%, the purchasing power of their down payment would diminish.

A slightly riskier alternative would be to invest it in the stock market or a mutual fund.  Assuming they picked the right stock or fund that earned 7%, their $40,000 would grow to $49,002 in the same three-year period.

The problem is that homes are appreciating much faster and the buyers would either pay more to get the same home or to pay the same price in three years, the home would not have the same amenities.    

If the buyer purchased the home today that appreciates an average of 5% per year, the equity in the home in three years would be $118,000 based on two dynamics: appreciation and amortization.  The wealth position at the end of the three years in the home is almost three times what it would be with the certificate of deposit and over twice as much as the stock investment.

Homes have appreciated more than inflation over the last fifty years.  The average home price appreciation from 1970 to 2020 was 7.16% compared to the average inflation for the same period which was 4.3%.  In 2021, home prices were up close to 21% nationally compared to 7% inflation. 

Connect with your real estate professional to find out the facts about the market, the various mortgages available, what you can expect to buy, and if you have a home, what it will sell for.  Good information can make a difference in making a good decision.  Download my Buyers Guide.

McKee Smith, REALTOR®, is an experienced real estate agent that specializes in the Dallas and Fort Worth market. He understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

David Weekly Homes in Elements 55+ at Viridian

I visited David Weekly Homes in Elements at Viridian. It’s a 55+ community in Arlington. Here is a video with more information!

Here are a few highlights:

  • Lots of floor plans in three lot sizes
  • Over 100 lots are available!
  • Amenities center was voted the “Best in Texas”

McKee Smith, REALTOR®, has years of experience in the DFW area housing market. He knows the many unique features of Dallas and Fort Worth area home sales. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Moving Down In An Up Market

There are options available to coordinate the sale of your home and the purchase of your new one. Ask McKee Smith, REALTOR®, for details.

Selling and buying a lower priced home in an “Up” market can be to your advantage.  The advantage is to maximize the sales price of your existing home and replace it with a less expensive one.

Moving down in an “up” market may be to your advantage in multiple ways.  It is possible that your present home doesn’t meet your current needs like it once did.  Making a move can allow you to “re-balance” the equity in your home to better reach your future goals.

The “up” market maximizes the sales price you can expect to receive, and it will free the equity in your home. A lower priced home will result in reducing your housing costs with lower property taxes, insurance, utilities, and maintenance…while improving your liquidity position.

It is not required to reinvest the proceeds of the sale.  You may decide to get an 80% loan-to-value mortgage on the replacement home to get the best interest rate and avoid private mortgage insurance.  This would allow you to put the excess proceeds into an income producing or growth investment, start a business, fund an education, buy a second home, take a spectacular trip, gift a down payment to a relative, or any other different projects.

The expression “other people’s money” describes borrowing money and using it to invest with the expectations of earning more than the rate you’re paying.  Mortgage interest is one of the most attractive ways to borrow money because it is generally the lowest rate compared to other types of loans while having the option to get a fixed-rate mortgage for up to 30 years.  Most other borrowed funds involve short terms and floating interest rates.

Rental real estate could be a possibility to invest part of the funds.  There is a shortage of available rentals which has caused rents to increase like homes have appreciated.  Single-family homes for rentals provide large loan-to-value mortgages at fixed interest rates for long terms on appreciating assets with defined tax advantages and reasonable control not found in many other investments.  For more information, download our Rental Income Properties Guide.

Homeowners who have owned and occupied their principal residence for two of the last five years are entitled to exclude up to $250,000 of gain for single persons and $500,000 of gain for married persons filing jointly.  For more information, see IRS topic #701.

Contact your real estate professional to find out more information like potential sales price, what net proceeds you can expect to receive on a sale, available replacement homes, and the types of mortgages and rates available.

McKee Smith, REALTOR®, has been selling and buying homes in Dallas and Fort Worth for many years. He knows and understands the intricacies of the DFW housing market. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Good Records Can Reduce Capital Gains

The best is to record the expenses and receipts as close to when they are made instead of having to dig through boxes or forgetting what was done altogether!

Regardless of whether you’re entitled to $250,000 or $500,000 of exclusion when you sell your home, prices have gone up so much in the past two years, that you may be approaching the limit where you might have to pay tax on the excess when you sell.

Any improvements you have made to the home during your ownership can be used to raise your basis in the home which will reduce your gain.  It is worth the effort to start reconstructing the list, both big ticket items and lower priced items that qualify.

While repairs to your home do not count as improvements, other money that either materially adds value, appreciably prolongs the useful life of the property, or adapts a portion of the property to a new use will qualify.  Hopefully, you have contracts and agreements on the major items and receipts on things over $75.

If you have photographs before and after the improvements were made, it can help prove that they were made. 

The best proof is to record the expenses and receipts as close to when they are made instead of digging through boxes and invariably, either not finding them or worse yet, forgetting what was done altogether.

Download more information on this from IRS Publication 523 and the Homeowners Tax Guide.

McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!

Green Meadows Development in Celina with Pacesetter Homes

On Aug. 8, 2022, I visited the Pacesetter Homes in the Green Meadows development in Celina, Texas. If you’re looking for a newly built home in a highly rated school district like Celina, you should consider one of these!

This development has some special features for everyone:

  • HOA includes front yard mowing
  • Prices from $550,000 to $700,00
  • In the highly rated Celina ISD
  • Master planned community
  • Incredible amenities including pool with slides, trails, community garden, sports complex, and more
  • 10 minute drive (according to Google maps) to a grocery store
  • Much, much more!

Watch the video to see this great development. For extra fun, count how many times I said “great” in the video!

For more information on the Celina ISD, here is a link to their ranking information on Niche.com.

This video is just a tease of all that is available. Contact me for more information on these or any newly built homes in DFW.

When Are Negotiations Over?

Experienced agents know negotiations continue through inspections, repairs, financing, contingencies and much more!

The primary negotiation in a home purchase takes place when the contract is agreed upon which includes the price, closing and possession.   With inventory down over 19% in the past year and multiple offers being more of the norm than the exception, the first round of negotiations can be challenging.

Buyers and sellers alike feel relieved once it has resulted in an agreement, but experienced agents know there is more to come if there are contingencies for financing, inspections, or other things.  The competition for the home may be so tough that the buyer waived their rights for what would be normal contingencies.

Financing is one of the most common contingencies in normal situations but when multiple offers are involved, the cash offers tend to have the advantage.  If you don’t have the resources to make a cash offer, the next best position is to be pre-approved with a commitment letter from the lender.  Arrange for the lender to confirm the pre-approval directly with the listing agent prior to the listing agent presenting the offer.

There have been buyers who know they don’t have the cash to close and apply for a mortgage anyway and try to reinsert the provision outside of the contract.  Experienced listing agents will advise the seller to have the buyer provide proof of funds necessary to close and verify that they do indeed exist.

The purpose of an inspection is for the buyer to receive an objective evaluation of the condition of the home and its components to identify existing defects and potential problems.  The expense for inspections can be several hundred dollars and it’s reasonable for buyers not to want to spend the money before they find out if they can come to terms with the seller.  From a different perspective, sellers want to know quickly if the buyer is going to reject the home due to the inspections because they could be losing time.   For that reason, inspection time frames are limited to a few days from acceptance of the offer.

Sometimes, buyers will expect sellers to make all the repairs listed on the report and this is where the second round of negotiations begins. If the seller refuses, the negotiations can go back and forth until the other party accepts the offer on the table.

When purchasing a new home from a builder, it is expected for everything to be in working order; after all, it is new.  However, it is reasonable to expect that existing homes, that are not new, have a different standard.  While it’s understandable that buyers would want to be aware of major items that are not in “working order”, normal wear and tear of components based on their age should be expected.

In a highly competitive seller’s market, buyers might do whatever they can to get their contract accepted, realizing that there is another place to negotiate when they’re not competing with other buyers’ offers to purchase.

The negotiations involved in a home purchase are not complete until the buyer and seller have signed the papers and the title has passed to the buyer.  Up until the closing is finished, any item that comes up could prolong the negotiations.

For this to be a WIN-WIN situation, both seller and buyer must feel good about the negotiations that led to the transaction closing.  Neither party should feel that the other party had an unfair advantage over them.

McKee Smith, REALTOR®, has years of experience in the DFW area housing market. He knows the many unique features of Dallas and Fort Worth area home sales. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified.  Remember – McKee has the keys to selling your home!