DEAR BERNICE: My husband just received a job promotion that will require us to move from Virginia to South Carolina. He starts his new position in January. Our girls are 2 and 4, so we don’t have to worry about when we sell in terms of their preschool.
I was wondering if it would be smart to list our home over the holidays or to wait until after the first of the year. We have owned our home for 10 years. It’s in a good school district. There are not many houses for sale in our area, so we’re thinking it might be smart to sell sooner rather than later. What’s your opinion? –Cheryl S.
DEAR CHERYL: There’s no question that showing activity generally slows down between Thanksgiving and the first of the year. Part of this is due to the fact that many agents decide to take vacations during that time. Personally, I had some of my best months for sales in December, especially when I stayed in town rather than taking time off.
There are several advantages to having your property on the market in December, especially if you decorate your house for the holidays. A warm fire and the smell of homemade cinnamon rolls (even if they came out of the can) will make your house more appealing.
If your neighbors decorate their houses, that’s an additional plus, especially if there is any type of neighborhood competition. Most buyers are drawn to communities where the residents take pride in their property.
Even though there are fewer buyers looking over the holidays, those who are looking are usually very motivated to buy. Like your family, they often have to move quickly.
The last few months of the year often see an uptick in investor activity. An investor may be purchasing because the current interest rates are very favorable or to pick up some additional tax write-offs in this tax year.
The wild card in your decision is the fact that the lenders appear to be sitting on a huge inventory of REOs ("real estate owned" by the bank through foreclosure). The estimates about how many properties are actually involved vary dramatically. For example, some experts believe Freddie Mac has about 350,000 properties in their portfolio of REOs.
Others put the estimate closer to 1 million. Regardless of which number is correct, there are probably a similar number at Fannie Mae and even possibly at FHA. This doesn’t even take into consideration the additional REO portfolios held by both large and small lenders. …CONTINUED
No one is really certain why these properties are being held off the market. One school of thought argues that the government is going to come in and take these toxic assets off the banks’ books. Given the current political environment, that seems unlikely. Most experts seem to be in agreement that these assets will begin to be released in 2010.
The reason this matters to you is that if you wait, you may be competing with a sizable amount of REOs in your market. If there is an excessive amount of inventory, the rules of supply and demand apply. The greater the supply, the lower the price. Thus, selling now, rather than waiting, is probably a smart idea.
In terms of making the move, hold off on purchasing your new home until you have closed on your current home. The current lending environment is very difficult. Ask for your buyers to be "preapproved," not just "prequalified." Preapproved buyers have had their credit checked, their source of funds verified, and their employment verified.
It would also be smart for you to go through the preapproval process as well. This way, if there are issues that you need to address on your credit report, you can handle them prior to purchasing.
Since you’re moving to a new area, many people prefer to rent the first few months after they move. This allows you to learn more about traffic patterns, neighborhoods, as well as where the amenities that matter most to you are located. You need to balance this choice with the fact that interest rates are at an all-time low.
For example, if you stay in your home the full 30 years, a 1 percent increase in the interest rate will result in approximately 25 percent more in interest payments. On a $200,000 loan, that’s almost $50,000. If the rates increase by 2 percent, that amount doubles to almost 50 percent.
On that same $200,000 loan, that’s almost $100,000 in additional interest. To determine the exact dollar amount for your situation, search "mortgage calculators" on Google.
Given the current environment, putting your home on the market now is probably an excellent idea. Make sure your buyer is well qualified and don’t forget to interview at least three agents for the job of marketing your home.
Ask the agents for a written marketing plan as well as referrals from their past clients. Most importantly, make sure your agent will be working hard to sell your home over the holidays.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com and find her on Twitter: @bross.
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