Do They Owe More Than The House is Worth?
It was common back a few years ago that homeowners around the country found themselves owing more on their house than the house was worth or what they could sell the house for. When the real estate market collapsed in 2007-8 anyone who bought a home in the previous years and took out a mortgage without putting 20% or more down were now faced with home values and sales prices tumbling below what they paid for their house. For some it was catastrophic when circumstances required them to sell and they couldn’t, many homeowners went into foreclosure or the “lucky” ones were able to do a short sale. Fast forward to today where the real estate market in some parts of the country has started to rebound with home prices climbing and a lack of inventory has created a sellers market again.
Where you live and more importantly what you paid for your house and whether you used a downpayment is what matters today if you plan on selling. While the doom and glum of the recession has been replaced by stories of rising prices, low interest rates and multiple offer situations, keep in mind that all real estate is hyper-local and what may be happening 20 miles from where you live may not be the case in your neighborhood. Did the seller take out a home equity loan to make repairs or pay for college,a boat or a new car? Have they refinanced and taken out equity or rolled closing costs into the new mortgage?
How well was the house built And How Has It Been Maintained?
The original title of this paragraph started with “How Old Is The House?” but that is not as important as how well the house was built. A very well built home can last generations and should at least last one, a poorly constructed house using cheap materials and inexperienced labor can cause innumerable problems and cost thousands of dollars in ongoing repairs and corrections. I have been in homes built thirty, forty years ago that could stand up to any house being built today where you just feel the strength and quality of the materials and how they have easily weathered the past decades with many more ahead. I have also been in homes built in the last three years that will make the home owners wallet suffer.
Of course the more important point is how well has the house been maintained and who’s been doing the maintenance? It does not take long for a small unattended problem like a slow leak to cause major damage to a house or termites if left alone to dine on sub flooring or untreated wood. Regular annual or twice a year maintenance on a HVAC system can extend the life of the unit by years as does changing the filters often. How old is the roof and what condition is it in, if it leaks what sort of damage has been done. These two items cost thousands of dollars to replace in any home and the AC needs to work and the roof can’t leak or you’re not getting a loan. Structural damage caused by poor drainage over time or termites or settling can also cost thousands to fix and that falls on the seller.
Can They Afford To Pay Closing Costs And Fees?
Real estate commissions are not fixed and differ with each company and agent but if using 5% as an example a seller will need to pay that amount from the proceeds of the home sale so for a $200,000 home that would be $10,000. It is very common in some markets for the seller to help pay some of the closing costs for the buyer. In theory the concept being that the seller having equity in the home could afford to take less while a cash strapped buyer willing to purchase needs help getting the closing costs and down payment together. Some sellers baulk at paying closing costs and the buyers may have to pay more for the house than it was listed for to cover the costs which always raises the question of getting the house to appraise. If the competition is new construction the sellers could be up against builders who are more than willing to pay closing costs
Will They Be Able To Buy A New House?
What happens in a “Catch 22” situation where the seller has to move but wants to either stay in the area or move to an area that has turned into a sellers market and they find themselves priced out of the housing market. The seller becomes the buyer and the shoe is on the other foot, they are the ones looking for closing costs and concessions. Selling your existing home and buying a new home is a major undertaking and if the seller has not thought the situation through thoroughly they could end up in an apartment after their house sells and they can’t find a house they can buy. As a buyer you won’t know about any of this unless it blows up in your face which it rarely does but it’s mindful to be aware of it. Have a plan B. Sellers often need to sell their existing home to qualify for a loan on a new property, so they will only qualify if their house gets sold and they pay off the existing mortgage and get a new one. Because most sellers will only accept a contingent offer from a buyer whose current house is already under contract, sellers don’t typically make offers on homes until they have theirs under contract and that can be tricky. Buyers remorse is a lot more common than sellers remorse and they can often walk away within the due diligence period, when sellers change their minds it goes to the attorneys and courts to figure out.
When The Sellers Home Decorating Is Hideous To A Homebuyer.
I have seen some home decorating that makes me stop and take a breath as in “what were you thinking?” but to each his own and its their house who am I to judge. The problem arises when buyers feel the same way and think the decorating habits or lack thereof in a home they would otherwise love…are hideous. Often and more importantly the home improvement projects the seller undertook to do themselves when hiring a professional would have been a much wiser and cost effective proposition. Tiled flooring comes to mind, which when done correctly by either a professional or homeowner who knows what they are doing and pays attention to detail looks great and adds value to a home.
Tile floors or walls installed poorly is a big turn off to home buyers and often sends them looking for other poorly done handyman jobs around the house. Wallpaper, outdated carpets, bathroom and light fixtures are all issues with older homes that can force a seller have to bite the bullet and make the necessary updates just in order to get the house sold. A painful expense that sellers must endure and get no benefit from although in rare cases if the property is unique enough or is in high demand the may get away with selling it with the Seventies/Eighties Look.
What It Costs To Replace A Roof Etc.
The major components of a house cost thousands of dollars to replace, some like the HVAC unit or the roof have to function. However as a home buyer looking at a 20 year AC unit (replacement range $3,000-$9,000) or a 25 year old roof ($8,000-$20,000) that are both functioning they will likely be asking themselves when will the functioning stop and I have to start writing massive checks for my new home. Windows are also very expensive to replace and while normally functional the older versions are a huge source of energy loss and are prone to leaks and rotting. Certain siding requires regular maintenance and painting and if left to deteriorate can cause severe damage to a home and require expensive repairs. Appliances have sorter and shorter lifespans some give up after a ridiculously short time period. We replaced our stove (replacement cost $500-$1200) after about fifteen years and the comment from the installer was “you won’t have this one that long!” very comforting. Instead the buyers will want the sellers to make the repairs and so can they afford to?
Here are some additional home buying and selling articles from professionals around the country.
Easy Ways to Make Your Home More Appealing to Buyers Bill Gassett
Should I Sell My Home Empty Or Staged? Kyle Hiscock
10 Steps to Buying a House Ryan Fitzgerald
If you need more information about buying a home in Clayton, Johnston County or the Triangle of NC or if you are a seller looking for the best ways to get your house sold we can help. Call David at (919) 601-2268 or email firstname.lastname@example.org