The housing market has been blazing hot, due in large part to effects of the coronavirus pandemic. Low inventory of available houses, record low mortgage rates, and high drive from some buyers to move (including people who may have realized they need more space to work from home, or plan to move before the new school year) combine into a perfect recipe for a serious seller’s market. Stories of people bidding over asking price, sight unseen, or homes selling for more than $100,000 over list price are popping up everywhere.
So if the market is so perfect for sellers right now, why should homeowners think twice before listing their homes for sale? Often, if something seems almost too good to be true, there may very well be potential downsides you may not have considered. A charged market can result in both the best and worst time to sell a house, depending on individual factors about your life and your personal finances. Before you take the plunge into a roiling real estate market, check for these signs that selling in a hot market might not be the best move for you.
You Recently Refinanced
Homeowners who are struggling to make mortgage payments have a few options. Sometimes, a change in income is drastic enough that selling the home and looking for a more modest option is the best solution. Other times, refinancing an existing mortgage can give homeowners breathing room to stay in their current home.
Today's mortgage interest rates are averaging around 3%, or even a little lower. Even if mortgage interest rates are expected to rise in 2021, staying in the 3.0-3.5% rate for much of the year, that’s still lower than historical average mortgage rates in recent years.
If you recently chose to refinance your mortgage to a more comfortable monthly payment, it may make more sense to stay in your home and reap the value of that new financing plan.
You Don’t Have a Renovation Budget
In a market full of heated bidding wars, it may seem almost laughable to spend a lot of time and money on renovations before listing your home. You may be asking yourself: are renovations worth it in a seller’s market?
This is the case of the war of competing adages. One school of thought says renovating and staging your home is the key to more interest from potential buyers and quicker sales. Another says, in a seller’s market so fierce, why waste time and money on home improvement when demand is high and buyers are snapping up new listings almost immediately?
The real adage to follow, as always, is “location, location, location.” Check your local market and ask your real estate agent for input. It may be that your area is hot enough that buyers will bite, and even compete, on houses without the need for renovations. If your local market is a little slower or your house is noticeably out of date compared to similar homes, a few renovation tweaks may make you more competitive and earn a better sales price.
Here's advice for home sellers on what to fix and what not to fix:
- Concentrate on lower-cost, quick, cosmetic updates that increase your curb appeal in photos.
- Fresh paint, a power-washed exterior, new fixtures like ceiling fans and doorknobs, and light landscaping (e.g., planting the flowerbed) can make a home look more updated and move-in ready.
- Fixing leaks and removing signs of old water damage can help you put your best foot forward during an open house.
- Unless your local real estate agent recommends it, major renovations, like a full bathroom or kitchen remodel, are probably overkill. Home buyers may be fine with renovating to their tastes.
- Steer clear of “personality.” Potential buyers may not agree with your taste in accent walls or backsplash. Rearranging bedrooms, such as creating a master suite on a separate floor, may also backfire and put off buyers with children who want to keep close.
- Staging is critical. In a seller’s market, where buyers may have to pay top dollar to be competitive, buyers want to feel sure they love their new home. Declutter and stage photos for optimum light and space to show your house is well worth the asking price.