Top 5 Threats to Your Home Equity in 2011 and How to Fight Them
Selling your home in Minnesota or elsewhere this year? Consider these items when evaluating when to sell and how to protect your equity-
1. Distress Sales in your immediate neighborhood
For most Minnesota homeowners your neighborhood will be affected by distress sales such as foreclosures and short sales. One of the pieces of advice that we give our sellers is to watch your neighborhood closely, and don’t sell if there is a current foreclosure on the market in your immediate area. Put some time between selling your home and the most recent distressed sale. For example in Eden Prairie and Lake Minnetonka- two areas we sell in frequently, most neighborhoods will not have the relentless presence of reo or foreclosures properties. They will periodically show up throughout the year and sell at various levels ranging from terrible to just below average. This will obviously put downward pressure on prices but it will not force you to compete with those homes unless you are on the market at the same time.
2. An outdated home
Is your home outdated? If your home is more than 10 years old you may need to freshen it up to get the most money out of it. Statistics show that sellers who take care of their home and invest in frequent updates get more return on their home that homeowners that simply defer these updates.
3. Overpricing your home
First of all do your own research so you know the basic facts of your market. Real Estate websites like Trulia.com and Zillow.com will provide you with unbiased data on the current housing market. Then hire a Realtor that has experience selling homes in your general area. Also make sure your Real Estate Agent is bold enough to tell you the truth and not just buy your listing by overpricing it. In over 1000 transactions we have done, this is consistently an item we run into. Agents want a listing so they tell the seller what they want to hear. 1 Year later the home is “market worn” and gets little attention from buyers since its been sitting on the shelf for so long. This forces sellers to over compensate by getting to a level of value that brings people in on price alone.
4. Lack of Financing options
If your home is in the upper end, financing may be extremely difficult unless the buyer has lots of cash. If your home is a starter home it may need some work and probably wont qualify for low down financing due to tougher lender guidelines. Our advice is to be creative regarding the buyers financing. If you have a ton of equity it sometimes makes good business sense to carry back a second mortgage. This will allow a traditional lender to fund the large percentage while controlling their risk. If you don’t have a ton of equity, line up an investor who would be interested in carrying a mortgage for a buyer. The interest rate will be higher but the terms may be better and most likely easier for a buyer to qualify than a traditional bank
5. No Strategy or Plan for Selling.
As Realtors in MN we run into bad marking plans as well as good ones every single day. The difference between success and disaster many times comes down to being strategic and understanding the specific game plan for marketing and selling the home. This includes looking at a detailed marketing plan and honing in on who the target buyers will be. This can save time and therefore equity. If you put better quality buyers in front of your home more frequently, you will sell quicker and for more money without question. This can only be achieved by having a game plan and executing that plan everyday.
For more information on the Minnesota Housing Market or Selling your home in MN, visit www.JoeAndCindy.com or call 952 943 1324 for No-Obligation Consultation.