Many people eager to sell their homes have held hopes that the proposed tax reduction would give a much-needed boost to the stagnant real estate market. If you're one of those hopefuls, allow me to set the record straight. While I believe the tax situation may cause a small spark, it's not a long-term solution to the slow housing market, nor is it even a major contributor to the difficulty in selling homes today.
I've said before that properly pricing your home is one of the most critical factors in getting your home sold within a reasonable timeframe. In today's buyers' market, that remains a solid fact. Let's look at some solid data that supports it. The National Association of Realtors noted an 8.4% drop in existing local home sales last March, and that was the largest one-month drop since January 1989. And our region isn't immune to foreclosures either. RealtyTrac noted in June that the top 500 zip codes for foreclosures included the following: 33023, 33024, 33025, 33027 and 33029. Look familiar?
Yet as bad as you think it is here, it's worse elsewhere in the country. According to RealtyTrac, June marked the eighth consecutive month where median home prices dropped nationwide-and that's the longest period of falling prices on record. And while in the past year existing home sales have dropped by 6.2% here in the South, they have fallen by 8.2% in the Northeast, 9.1% in the West and 10.9% in the Midwest.
Pricing your home in today's market doesn't mean matching the price tag to the assessed value. The hard truth is that you'll likely have to drop your price below what it's worth if you really want to sell your home. A lot of my clients believe that the housing slump is temporary. Brace yourselves, but I think things are going to get worse before they get better.
Don't despair! Despite the scary statistics I've noted above, you can still successfully sell your home-if you accept the existing market variables and play the game right. In order to do so, you need to understand what I believe is one of the most important factors affecting home sales today. It has everything to do with buyers but nothing to do with the fact that they rule the roost when it comes to negotiating a contract. In fact, it has to do with a multi-tiered factor that buyers have absolutely no control over: the rising rate of foreclosures and its byproducts-tougher lending conditions and less money available for lending.
MarketWatch, a subsidiary of Dow Jones, reports that foreclosures are at a 50-year high. And that number doesn't take into account the more than $800 billion in adjustable rate mortgages (ARMs) that are due to reset in the next 12 to 18 months. "In October alone, more than $50 billion in ARMs will reset," says Mark Zandi, chief economist and co-founder of Moody's Economy.com. This will affect the market's reaction and recovery.
It has been reported that a foreclosure bubble is getting ready to burst. Not only will such an event keep home prices down, but the resulting financial losses will negatively impact lenders. The increasing foreclosure rate has already led dozens, if not hundreds of lenders to go out of business or file for bankruptcy. As a result, more stringent guidelines have been implemented for future loans, which will make getting approval for a mortgage-once a fairly simple detail in the home-buying process-a very difficult task for many buyers, and that's taking into account that we still enjoy some of the lowest interests rates in history. The situation has already become so dire that GE will no longer be in the mortgage business; they plan to sell their existing loans, valued at more than $3.7 billion dollars.
So not only do you have to find a buyer willing to buy your home for the set price, but that buyer needs to qualify for the loan amount in question. Your first step then, of course, is to reasonably price your home. To do that, you need to accept the realities of the market, including the financial landscape that will likely continue to change. If you're set on selling your home in the near future, you may need to lower your asking price by more than you had anticipated. But by cutting your losses now, you'll still come out on top in the end.
www.SidneyJimenez.com Certified Distressed Property Expert, helping homeowners in Broward and Palm Beach Counties, FL avoid forelcosure. Call me today 954-665-9449 or by email Info@SidneyJimenez.com
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