home pricing

Have Home Values Hit Bottom?

February 23, 2023 by khproperties Leave a Comment

Whether you’re already a homeowner or you’re looking to become one, the recent headlines about home prices may leave you with more questions than answers. News stories are talking about home prices falling, and that’s raising concerns about a repeat of what happened to prices in the crash in 2008.

One of the questions that’s on many minds, based on those headlines, is: how much will home prices decline? But what you may not realize is expert forecasters aren’t calling for a free fall in prices. In fact, if you look at the latest data, there’s a case to be made that the biggest portion of month-over-month price depreciation nationally may already be behind us – and even those numbers weren’t significant declines on the national level. Instead of how far will they drop, the question becomes: have home values hit bottom?

Let’s take a look at the latest data from several reputable industry sources (see chart below):

The chart above provides a look at the most recent reports from Case-Shiller, the Federal Housing Finance Agency (FHFA), Black Knight, and CoreLogic. It shows how, on a national scale, home values have changed month-over-month since January 2022. November and December numbers have yet to come out.

Let’s focus in on what the red numbers tell us. The red numbers are the change in home values over the last four months that have been published. And if we isolate the last four months, what the data shows is, in each case, home price depreciation peaked in August.

While that doesn’t guarantee home price depreciation has hit bottom, it confirms prices aren’t in a free fall, and it may be an early signal that the worst is already behind us. As the numbers for November and December are released, data will be able to further validate this national trend.

3 Best Practices for Selling Your House This Year

February 17, 2023 by khproperties Leave a Comment

A new year brings with it the opportunity for new experiences. If that resonates with you because you’re considering making a move, you’re likely juggling a mix of excitement over your next home and a sense of attachment to your current one.

A great way to ease some of those emotions and ensure you’re feeling confident in your decision is to keep these three best practices in mind.

Price Your Home Right

The housing market shifted in 2022 as mortgage rates rose, buyer demand eased, and the number of homes for sale grew. As a seller, you’ll want to recognize things are different now and price your house appropriately based on where the market is today. Greg McBride, Chief Financial Analyst at Bankrate, explains:

“Price your home realistically. This isn’t the housing market of April or May, so buyer traffic will be substantially slower, but appropriately priced homes are still selling quickly.”

If you price your house too high, you run the risk of deterring buyers. And if you go too low, you’re leaving money on the table. An experienced real estate agent can help determine what your ideal asking price should be.

Keep Your Emotions in Check

Today, homeowners are living in their houses longer. According to the National Association of Realtors (NAR), since 1985, the average time a homeowner has owned their home has increased from 5 to 10 years (see graph below):

This is several years longer than what used to be the historical norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you bought or the house where your loved ones grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from the sentimental value.

For some homeowners, that makes it even harder to negotiate and separate the emotional value of the house from fair market price. That’s why you need a real estate professional to help you with the negotiations along the way.

Stage Your Home Properly

While you may love your decor and how you’ve customized your home over the years, not all buyers will feel the same way about your design. That’s why it’s so important to make sure you focus on your home’s first impression so it appeals to as many buyers as possible. As NAR says:

“Staging is the art of preparing a home to appeal to the greatest number of potential buyers in your market. The right arrangements can move you into a higher price-point and help buyers fall in love the moment they walk through the door.”

Buyers want to envision themselves in the space so it truly feels like it could be their own. They need to see themselves inside with their furniture and keepsakes – not your pictures and decorations. A real estate professional can help you with tips to get your house ready to sell.

Want to Sell Your Home? Price it Right

January 31, 2023 by khproperties Leave a Comment

Last year, the housing market slowed down in response to higher mortgage rates, and that had an impact on home prices. If you’re thinking of selling your house soon, that means you’ll want to adjust your expectations accordingly. As realtor.com explains:

“… some of the more prominent pandemic trends have changed, so sellers might wish to adjust accordingly to get the best deal possible.”

Why Pricing Your Home Appropriately Matters

Especially today, your asking price sends a message to potential buyers.

If it’s priced too low, you may leave money on the table or discourage buyers who may see a lower-than-expected price tag and wonder if that means something is wrong with the home.

If it’s priced too high, you run the risk of deterring buyers. When that happens, you may have to lower the price to try to reignite interest in your house when it sits on the market for a while. But be aware that a price drop can be seen as a red flag by some buyers who will wonder what that means about the home.

To avoid either headache, price it right from the start. A real estate professional knows how to determine that ideal asking price. They balance the value of homes in your neighborhood, current market trends, buyer demand, the condition of your house, and more to find the right price. This helps lead to stronger offers and a greater likelihood your house will sell quickly.

The visual below helps summarize the impact your asking price can have:

Homes that are priced at current market value are still selling. To make sure you price your house appropriately, maximize your sales potential, and minimize your hassle, let’s connect.

What We Look At When Pricing a Home

April 18, 2019 by khproperties Leave a Comment

When you put your home up for sale, there is a lot that happens “behind the scenes” in order to come up with the right price. You’ve heard about comparable sales (or “comps” as they’re often referred to) and they are hands down one of the best ways to determine the asking price for your home. There’s rarely a perfect apples-to-apples comparison, so a pricing decision often relies on comparisons to several recent sales in the area. It’s both an art and a science and finding the balance between the two is the key to successfully pricing a home. Here are a few of the things we look for when working on pricing your home and preparing a CMA (comparative market analysis).

Location. Homes in the same neighborhood typically follow the same market trends. Comparing your home to another in the same neighborhood is a good start, but comparing it to homes on the same street or block is even better. We typically will start with a very narrow focus (street level, neighborhood) and then widen the scope to look further out if we’re not finding a lot of sales in the area.

Date of sale. We don’t want to use homes that sold too long ago as market conditions shift over time. A good rule of thumb is to look within the last three months, although exceptions can be made for unique properties that are not as easy to define. The closer the date, the better for comparable purposes as even a couple of months can shift the market in a different direction. Other factors, like time of year should also be considered (ie a home in the springtime market is more likely to sell faster and for a higher price than one sold in December).

Home build. Look for homes with similar architectural styles, numbers of bathrooms and bedrooms, square footage, and other basics. We will often try to compare to the same builder or floorplan if possible. Knowing who built in a neighborhood and where else they have built can be a huge help in knowing where to look for potential comparable sales.

Features and upgrades. Remodeled bathrooms and kitchens can raise a home’s price, and so can less flashy upgrades like a new roof or HVAC system. We want to be sure to look for similar bells and whistles. If properties with similar upgrades can’t be found, adjustments can be made to compensate although it is worth noting that these upgrades never come with a dollar-to-dollar value.

Sale types and terms. Homes that are sold as short sales or foreclosures are often in distress or sold at a lower price than they’d receive from a more typical sale. These homes are not as useful for comparisons. Other items like seller paid closing costs and concessions should be looked at as well. A home that sold for $10,000 over asking price that included $10,000 in seller paid closing costs isn’t the same as a house that sold for $10,000 over asking with no seller concessions.

image courtesy of AlanH2O

How to Price Your Home for Sale

January 27, 2016 by khproperties Leave a Comment

Knowing how to price your home for sale is serious business. Price it too low and you may be leaving money on the table, price it too high and your home might languish on the market. Your home is the product, but you have years of memories of your life in that home, so you have certain emotional attachments to it. It’s not easy, but sometimes you have to take a cold, hard look at the home as if it wasn’t yours at all. Think like a buyer when you list your home for sale. Finding the right price is both an art and a science and there are quite a few things you should consider before you list your home.

Don’t Believe The Hype

Sellers often say, “My neighbor sold their house down the street for…” There are a few issues using this as the basis for the price you list your home at. First, it’s not all that uncommon for your neighbor to brag a little. We see it quite often. The neighbor tells everyone they sold the house for $250,000, when it reality they sold it for $220,000. Let an agent pull the house up on the MLS for you and show you what it sold for. Second, the neighbor’s house might not be anything like yours. We use comparative analysis on homes in order to find the price – in other words, we don’t compare apples and oranges. Similar homes need to be compared to get the most accurate picture of a home’s value. Lastly, if your neighbor sold your house more than 3 months ago, what they sold it for may not matter at all. We’ll talk about the market in a few moments, but what’s happening in the market now matters more than what happened in the past.

Tax Value From The Appraisal District

We’ve said it before, we’ll say it again – the value of the home according to property taxes is not an accurate way to price a home. If your agent thinks it is, you should run. The appraisal districts in Texas (such as BCAD, the Bexar County Appraisal District) do not appraise the value of the home the same way an appraiser would. The word “appraisal” is the issue – what the taxing authorities do is find a “tax assessed value” not an “appraisal value,” although more people will often call it an appraisal value, so it gets a bit confusing. The object of any homeowner should be to get the taxing authority to believe that the home is worth much less than it is (ie, lower property taxes) and there is even a protest procedure that helps homeowners do just that. Basing your pricing (or your purchasing decisions) off of the tax records is a terrible idea and you should avoid it at all costs.

The Zestimate

We know you’re going to visit Zillow at some point. It’s the most popular real estate website on the planet. But, we have to say it – beware the Zestimate. Zestimates are an automated algorithm that calculates what Zillow thinks your home is worth. Knowing that fair market value is based on the current market conditions and comparable sales and that Texas is a non-disclosure state (we don’t make sales price data public), it is next to impossible for Zillow to figure out the value of your home, even with all the computing power they possess. Don’t take our word for it – read what Zillow has to say about Zestimate accuracy in Texas on their own website. Counties like Bexar are rated “one star” which they define as “Tax assessor’s value, or unable to compute Zestimate accuracy” (and you know that the tax assessor’s value isn’t a good indication of value as we just discussed). Even in states where sales prices are disclosed, Zillow shows that their accuracy is not absolute and advises sellers to have an agent show them the value of their home. Zestimates should be used as starting points for the conversation – not absolutes. (This applies to you buyers reading this as well!)

Upgrades and Value

You added granite countertops, top of the line appliances, built an addition to the house, had a water heater repair, got a water filtration system repair, or installed a new hot water heater (which you can get through sites like a-lumination.com/electrical-services/electric-water-heaters/), and built an incredible pool oasis. You loved your home, took pride in it, and paid a lot of money to make it even better with all of these upgrades. Problem is, you’ll never recover that money on a dollar for dollar basis. Much like a car when you drive it off the lot, the value of your upgrades in terms of the sale will always be less than what you paid for them. Kitchens and baths tend to give you the most bang for your renovation bucks, but even then, it’s rare that you will be able to recoup that cost. Provide your agent with a list of all of those upgrades as they definitely can improve the value of your home, but remember – it still comes down to comparable sales in your area. If you’ve over-improved your home, this can be very hard to swallow. Upgrades and additions should be similar to those found in your area. This also applies to square footage – having the biggest home in the neighborhood can often be detrimental to your price per square foot. If all the houses in the neighborhood are selling for the $200Ks, it’s very hard to sell one in the $300Ks even if the square footage justifies a higher price.

The Market Matters

The market is the heart of all pricing. Without the market, we would just be taking shots in the dark at the value of your home. A real estate agent will run “comps” on your home, looking for similar properties in the area (often within the same neighborhood) that have recently sold in order to compare those homes with yours. This is what we call a comparative market analysis (or CMA). It’s not just looking at the recently sold homes though, there a lot of factors to consider. One story vs. two story. Proximity to roads or commercial zones. Possible flood plains. Upcoming zoning changes or city ordinances. How many homes are currently on the market. The condition of your home. All of these factors play into the final pricing of your home and some of them can change the price drastically. Looking at the recent sales in the area, the agent can get a basic idea of what homes are selling for, but they must take into account all of these other factors and use their experience and knowledge to come up with a price. The agent’s job is to sell your home, so they don’t want to overprice it, but they also don’t want to underprice it. Sometimes the market shifts while your home is up for sale too, so price adjustments may be necessary. Look for an agent that can speak about your local market, not just general market conditions city, state, or nationwide. If you’d like to see an example of how conditions can vary from neighborhood to neighborhood, take a look at this post about San Antonio neighborhood homes sales and look at the differences in price growth through the different neighborhoods (from 0.01% to 44.1% – that’s a huge difference).

The final thing to remember is this: price your home right and it will sell. Some homes take longer than others and you should discuss your goals in selling with your Realtor. They can help you weigh your options and can balance the pricing to meet your needs. Need a faster sale because you’re trying to move out of state? Need to squeeze every penny out of the sale to pay for your kid’s college tuition? Want to sell so you can downsize? There are many motivations to selling and knowing what motivates you will help your agent find the best possible solutions for you.

image courtesy of Serge Arsenie

Can You Ask a Buyer to Pay More For a Home Than It’s Worth?

November 13, 2013 by khproperties Leave a Comment

Why would anyone pay more for a home?

Before we discuss the possibility of someone who wants to pay more for a home than what it is worth, we need to consider what we’re talking about when we say worth. Is it the appraised value, assessed value, or fair market value of the home?

Assuming we’re talking about the fair market value of the home, the answer is: yes. You can ask a buyer to pay as much for the home as you’d like. Will you get it? Probably not.

Two problems creep in immediately if you’re asking a buyer to pay more than the home is worth. One, why would a buyer pay more for a home than what it is worth, when they can get a home of similar quality at a better value? Two, the home won’t appraise for a higher value than the appraiser thinks it is worth. The bank is not going to approve a large increase in the loan amount vs. the appraised value of the home. So unless you can find a foolish cash buyer, you’ll want to price your home right the first time.

If your home is on the market for less than it’s worth, there may be reason for a buyer to pay more for your home. Consult with a Realtor if you have questions about what your home is worth.

image courtesy of Michael Dunn~!