I'm re-posting this blog from March, 2018. At the time, Sellers were worried about home values going down because of high interest rates -- 4.45% at the time. (Buyers would love to have those rates today.) This blog is timeless because it makes the point that it's not interest rates. It's about supply and demand. That is true whether rates are 4% or 10%.
In 2023, buyers were convinced that rising interest rates would mean a deluge of cheap properties. No matter the list price, buyers told me, "that's too high. I'm gonna wait until prices come down." Instead, prices were being squeezed up because of the low inventory and those buyers missed out on some great houses.
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Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.
Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:
“For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move.
Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home.
Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.”
The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:
“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.
They went on to reveal that the Freddie Mac National House Price Index is…
“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”
The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%.
Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.
There is a maxim in the home staging world, "Clutter eats equity." Clutter makes spaces look smaller, detracts from a property's selling features, and prevents buyers from feeling "at home" in your house or condo.
Because buyers these days usually take their first "tour" of your property online, you should also pay close attention to two-dimensional visual "clutter" in listing photographs. The first target: rugs.
Yes, rugs! Those lovely floor coverings that make your house feel "homey" in person will overwhelm the same room when viewed on a computer or smartphone screen. When we're staging one of our listings before the professional photographs, rugs are the first things to go. To understand why, in this article, we take you on a brief trip through design theory and in particular the principles of gestalt. Call this the Blackburn Coastal Realty Advanced Seminar.
"Gestalt" is a theory of psychology that deals with how we perceive visual elements. According to design guru Steven Bradley writing in the web design bible Smashing Magazine, gestalt "lies at the heart of nearly everything" designers do. The theory's essential observation is that the eye perceives a group of objects as a unified whole before it sees them as individual objects. Check out the link for some intriguing demonstrations of gestalt design principles in your own perception of images.
One of the essential principles of gestalt is the concept of "visual weight." Just as physical weight is a measure of the force gravity asserts on an object in three-dimensional space, visual weight measures the ability of an image to draw the eye's attention in two-dimensions. In a photograph, the element with the most visual weight is the one that attracts your eye first and holds it the most.
Just look at the difference!
With the concept of visual weight in mind, consider the area rug. Lowly in stature but often quite expensive, an area rug does tremendous decorative work in three-dimensions. Not only is it an expression of the home owner's (hopefully good) taste, it helps define areas and directs the flow of movement through a room. It also protects and preserves hardwood floors, often a prime property asset.
But in two dimensions, that gorgeous Persian rug becomes a visual black hole. No amount of creative lens work, lighting, or digital retouching can distract from its insistent visual pull. Forget the floors underneath, or the sensational water view, or the gleaming granite countertops. Gestalt design principles dictate, and our years of experience have borne out, that the first visual element a potential buyer sees in that photograph is a rug that detracts from everything else about the property. That rug weighs down the room, sucking up all the square footage and eating up your equity.
It couldn't be more clear - rugs eat equity!
You can actually measure how much equity rugs will eat. In real numbers, a twenty square foot rug in a market where homes sell for $200 per square foot risks leaving $4,000 of your equity on the...er...floor. A corollary to the maxim that clutter eats equity is that flat surfaces - floors, countertops, mantlepieces - sell. Cover them up in your online listing when home staging and, in effect, you risk losing their value in the buyer's offering price.
At Blackburn Coastal Realty, we use psychology-driven design and marketing insights to maximize the selling value of your home. To learn more about how we use gestalt design principles in our home staging to get the most profitable effect in two and three dimensions, contact us today.
Positive comments are welcome below (especially from relatives who do not owe me money) and will be posted on our website. Negative comments will be posted on my dartboard office wall.
Photo Credit: Michael Tunnell
Here in the Gulf Beaches area of Tampa Bay, it's a Seller's market. Inventory is tight, and buyers learn quickly they need to jump on new listings and make lightning-fast offers. That should make it easy for sellers to get top dollar for any property. In a market like this, it would be unusual for a sales contract to unravel over some minor hiccup like a home inspection or appraisal, right?
Wrong. In our experience, this actually increases the chances of a sale falling through over a trivial issue. Why? Because the speed at which buyers have to move in this market gives them no time to grow an emotional bond with your property. Instead, the stress of acting quickly makes buyers feel cornered, defensive...even skittish. They overreact to perceived imperfections. "I'm uncomfortable moving so fast with so much money at risk," their thinking goes, "so this place had better be perfect." When your property turns out to have even the smallest, most fixable flaws, or the appraisal comes in just a little below their offer, buyers in this Seller's Market are more prone to head for the exits or demand a price adjustment!
A broken deal can hurt your property's selling price because it increases the "Days on Market" ("DOM") metric. The longer your home is on the market, the higher that number is and the more likely buyers are to assume something is wrong with it. The result: your list price drops or, worse, you can't sell at an acceptable price at all!
So, what do you do? Well, you could just sit back and hope the market cools off, but that wouldn't make sense. This is the time for you to maximize your selling price -- you just have to know how. You could obsess about finding any flaw in your property that might scare buyers. Yes, it's good to evaluate your property with a critical eye, but overdoing it could mean wasting money on improvements that don't bring a higher price.
Instead, try to empathize with the stressed-out buyer's mindset and ask yourself, "How can I help buyers develop a strong emotional bond with my property in the short time available to fall in love with it?" Here are two strategies we have found can make a difference:
One critical mistake sellers make in this market is assuming they don't need to pay attention to aesthetics at all - since it will fly off the shelf no matter how it looks. Sellers also tend to over-value their own decorative taste and figure that if they love how their property looks, buyers will too. Your interior decorating was a personal choice you made for yourself, not for others. Decorating is not staging. We encourage you to step away from your own taste and let us help you stage your property so that the buyer's first impression is that they have walked into their own home, not someone else's.
How a property is listed and marketed conveys important information to a buyer. Research suggests that the timing of when your home appears on the market, the number of photographs in the listing, precision with which it is priced, and even the number of people at an open house can affect buyer behavior, tapping into their desire for certainty and security in a turbulent buying process. We encourage our clients to consider these insights, and we show them how the smallest adjustment in presentation, or how showings are scheduled can help buyers feel safer making an offer.
Accept the facts: hiccups in the inspection and appraisal process happen, and they are mostly out of your control. After you've done what you can on that front, focusing your energies on creating the right environment for your potential buyers in a Seller's Market can go a long way to ensure that the offer you accept will be the price you achieve at the closing table.
To learn more about how to take advantage of this Seller's Market, Contact Blackburn Coastal Realty today for a confidential consultation. Our marketing plan guarantees maximum exposure through pricing, staging, agent accessibility, and visibility, both online and offline. Our goal is the successful sale of your Gulf Beaches of Tampa Bay home, and at Blackburn Coastal Realty, we don't just achieve that goal - we go above and beyond it.
Positive comments are welcome below (especially from relatives who do not owe me money) and will be posted on our website. Negative comments will be posted on my dartboard office wall.
Last week, we shared “7 Factors To Consider When Choosing A Home To Retire In.” For some homeowners, these seven factors can be taken into account with a home renovation, but is it worth it to remodel or change floor plans?
Let’s say you have a 4-bedroom colonial style home in a great school district. The neighborhood is amazing, and you are very comfortable there, but your kids are all grown up and the original benefits of the home no longer apply.
You’ve always wanted a huge master suite and are considering merging 3 of the smaller bedrooms on the second floor to achieve this dream.
In the short term, you are over the moon excited about your newly renovated oasis.
In the long term, when you go to sell your home down the road, you’ve now taken a 4-bedroom home in a great school district and turned it into a 2-bedroom home. Your pool of potential buyers has shrunk significantly and so has the value of your home (unless you are able to find someone who has the exact needs you have today!).
Why not consider listing your 4-bedroom home now and moving into a gorgeous 2-bedroom with a master suite? Your house can become a home for the next family looking for that perfect neighborhood with a great school district to raise their kids in!
You may even be able to achieve your dream in the same area you love, without having to give up your favorite restaurants and grocery stores.
If you are debating a major renovation that would change the layout of your home, before you pick up that sledgehammer, let’s get together and discuss the available listings in our area that might meet your needs today!
Recently, Freddie Mac published an Insight Report titled Nowhere to go but up? How increasing mortgage rates could affect housing. The report focused on the impact the projected rise in mortgage rates might have on the housing market this year.
Many believe that an increase in mortgage rates will cause a slowdown in purchases which would, in turn, lead to a fall in house values. Ultimately, however, prices are determined by supply and demand and while rising mortgage rates may slow demand, they also affect supply. From the report:
“For current homeowners, the decision to buy a new home is typically linked to their decision to sell their current home… Because of this link, the financing costs of the existing mortgage are part of the homeowner’s decision of whether and when to move.
Once financing costs for a new mortgage rise above the rate borrowers are paying for their current mortgage, borrowers would have to give up below-market financing to sell their home.
Instead, they may choose to delay both the sale of their existing home and the purchase of a new home to maintain the advantageous financing.”
The Freddie Mac report, in acknowledging this situation, concluded that prices are not adversely impacted by higher mortgage rates. They explained:
“While there is a drop in the demand for homes, there is an associated drop in the supply of homes from the link between the selling and buying decisions. As both supply and demand move together in this way they have offsetting effects on price—lower demand decreases price and lower supply increases price.
They went on to reveal that the Freddie Mac National House Price Index is…
“…unresponsive to movements in interest rates. In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”
The following graph, based on data from the report, reveals what happened to home prices the last six times mortgage rates rose by at least 1%.
Whether you are a move-up buyer or first-time buyer, waiting to purchase your next home based on the belief that prices will fall because of rising mortgage rates makes no sense.
When it's time to sell your largest asset, you want to make the most money possible. There's a lot of pressure to get it right. But there's so much information out there! You need help interpreting the data - you need someone to guide you through your options and make choices that will deliver the best outcome.
So, you decide to hire a real estate agent to help you. Make the wrong choice, and you may end up forfeiting thousands of dollars a different agent could have helped you achieve. Here are three things to watch for in order to avoid that mistake:
During the Florida real estate bubble, Realtors treated beach homes and beach condominiums like shares of stock in a company. Forget amenities, forget condition, forget updates; beachfront property became a commodity. In determining what a property was "worth," all that mattered was the prices paid for similar beach properties in the past.
We all know how that turned out.
And yet, today many Realtors continue to treat real estate market listings like stock quotes. They assume that historical sales prices of "comparable" beach properties are the only reliable benchmark for pricing homes and that they are soothsayers who can predict which way the market winds will blow. Those are huge mistakes.
The fact of the matter is, no two beach properties are identical, and no real estate agent has a crystal ball. Two beach condominiums with the same floor plan, in the same building, and with the same asking price may perform
very differently in the market. Why? Because if an agent relies on comps alone to set the list price, he's only looking at WHAT buyers did. To keep a seller from leaving money on the table, a Realtor has to know WHY home buyers paid more for one property than another.
How do you avoid a Realtor who sets list prices by referring only to comparable sales? Dodge the Realtor who touts impressive-sounding (but ultimately arbitrary) metrics like SP/LP Ratio (percentage of list price the sale fetched), and ADOM for their listings. A real estate agent who focuses solely on these metrics has an incentive to underprice listings to keep his numbers up. That's good for the Realtor but very bad for the seller.
Because no buyer can put all emotion aside when purchasing a home, pricing your property to get top dollar requires a more nuanced approach. Selling a beach property for top dollar is an exercise in matching an emotion-driven buyer with a unique asset, not selling a commodity to a theoretically rational person.
Listings should be marketed based on assumptions about how home buyers behave, many of which predict buyers to act irrationally. For instance, buyers tend to exhibit a phenomenon known as "anchoring," in which the accuracy with which a property is priced affects their judgment of whether the asking price is accurate. Likewise, the number of potential buyers present at an open house has been shown to constitute "social proof" of the asking price's accuracy. Relying on these crucial insights about buyers' emotional behavior can give you an edge that helps you "beat" the real estate market and get higher prices than comparable sales figures might suggest.
Revolutionize your home selling experience - let us apply our knowledge of buyer behavior and innovative marketing strategies to your property so you can sell for more. Contact Blackburn Coastal Realty today for a confidential consultation.
Positive comments are welcome below (especially from relatives who do not owe me money) and will be posted on our website. Negative comments will be posted on my dartboard office wall.
Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report. According to the report:
“The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.”
Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.
However, at the same time, Zillow issued a press release which revealed:
“If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”
Here are two graphs that help show why home prices are exactly where they should be.
The first graph shows actual median home sales prices from 2000 through 2017.
By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.
However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.
The blue bars on this graph represent where prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.
Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.
It’s difficult to know when is the best time to sell, or how to get the most money for your house, but you don’t need to go through the process alone.
You may be wondering if prices are projected to rise or fall…or how much competition you may be facing in your market. The free eGuide on the left will answer many of your questions and likely bring up a few things you haven’t even thought about yet.
Click Here to receive your copy of the eGuide, and feel free to get in touch if you have any questions.
If you're currently trying to sell a home or are thinking about doing so in the near future, you have probably heard of the practice of staging. This professional service for dressing up your home for pictures and viewings is most often thought of as a pure issue of presentation.
Sure, the right furniture arranged elegantly makes your house look more like a magazine and creates more dynamic pictures for your listing, but there are actually more subtle technical reasons to the home staging process as well. It's not just about appearances - staging makes it easier on several levels for buyers to imagine themselves living in a home they're investigating or touring!
Here are five of the less obvious reasons why staging your home makes the home selling process easier by increasing home sale prices and speeding up closings across the board.
When you're taking a tour of online home sale images, one thing you may notice is that it is radically more difficult to tell how big empty rooms are or how much of your furniture they will be able to hold. In fact, it's often challenging to tell much difference between large spacious rooms and smaller bedrooms!
Staging a home provides artfully placed furniture that gives the listing images and touring guests a much clearer idea of how big the rooms are and what uses they could be put to. This makes it easier for home buyers to visualize their own furniture in the space or imagine something new and fun they've always wanted to do with a home. Did you know home buyers stay in a vacant home an average of only 5 minutes but linger in a staged home an average of 40 minutes?
In the centuries of real estate history, it's been proven that the best way to sell a property is to make the prospective home buyers feel at home. You want them to be imagining themselves living in and enjoying the space before they even realize it, and you want them to think that this home will be perfect for the next stage of their life.
This means you want to make it welcoming and ready for them to start their new life immediately. It may seem counterintuitive, but it's true: a vacant house simply does not give the psychological impression of being ready to move in and start a life, but a staged home does!
Some rooms have a clear and appealing purpose like kitchens, utility rooms, and bedrooms. However, for office/sitting rooms and living/family rooms, it can often be difficult for buyers to imagine how to best use the space.
You can utilize staging to show off a great family conversation space, mark the best place to put a television, subtly divide an overly large room, or show off how extra space can be used for special purposes like a personal gym or playroom. When buyers see how the home could be used, they have an easier time imagining their own ideas to use the space and the home selling process becomes much faster.
Of course, staging isn't all furniture and decor! Often it goes deeper, taking care of both minor repairs and visual updating. After all, the best way to sell a home is to make it look as close to new as possible. It's the Shiny Penny Theory - almost everyone picks the shiniest penny in a pile. It's not technically worth any more than the others, but it's the one that gets their attention.
Most buyers are looking for something with neutral wall tones and open living spaces. Staging is a great way to update areas that look particularly dated based on the era the home was built or last renovated in. The lifetime of a trend is about 10 years, so if your home was updated 12-15 years ago, buyers may not consider it up-to-date and move on to the next one. Homes that are refreshed with the current trends in wall color and decor are much more likely to appeal to today's home buyers and give the impression that the home is ready to move into.
In many situations during the home selling process, the sellers are not fully moved out while they're trying to sell a home. If you're going to be staging while your own things are still in the house, it's important not to give the impression that potential buyers are intruding.This involves artfully removing most signs of occupation.
Ideally, you want the house to give the impression of being like a hotel suite waiting for someone to unpack their luggage and personalize. This means you must remove your own personality markers from the home. You don't want buyers to get distracted by trying to paint a picture of you in the house - you want them to paint a mental picture of themselves in the space! Stagers can help you identify signs of territory that you may not notice because it's been your home for so long.
Staging is an incredibly useful aspect of selling a home and almost every seller does it to some extent or another. If you need help staging your home to be sold or you have any other questions about the home selling process, contact us now! Blackburn Coastal Realty is your first source for selling a property on or near the Gulf Beaches of Tampa Bay.
Positive comments are welcome (especially from relatives who do not owe me money) and will be posted to our website. Negative comments will be posted on my dartboard office wall.
