position realty

Results, No Excuses

When Do Mortgage Points Make Sense?


Right now, mortgage rates are rising fast following several years of record lows. This leaves potential homebuyers wondering how they can beat the rates, and one option is buying mortgage points. With mortgage points, you can save money, but they don’t always make sense in every situation.

Mortgage points are a fee you, as a borrower, would pay a lender to reduce your interest rate on a home loan. You’ll hear it referred to as buying down the rate.

Each point you’re buying will cost 1% of your mortgage amount. If you’re getting a $400,000 mortgage, a point would cost $4,000.

Each point will usually lower your rate by 0.25%. One point would reduce your mortgage rate from, let’s say, 6% to 5.75% for the life of your loan.

However, there’s variation in how much every point will lower the rate. How much mortgage points can reduce your interest rate depends on the loan type and the general environment for interest rates.

You can buy more than a point, or you can buy a fraction of a point.

Your points are paid when you close, and you’ll see them listed on your loan estimate document. You receive the loan estimate document after applying for a mortgage, and you’ll also see them on your closing disclosure, which you get right before you close on your loan.

There are also mortgage origination points and fees you pay to a lender for originating, reviewing, and processing your loan. These usually cost 1% of the total mortgage.

These don’t directly reduce your interest rate. Lenders might let a borrower get a loan with no origination points, but usually, that’s in exchange for other fees or a higher interest rate.

To determine when mortgage points make sense, you have to calculate what’s known as your breakeven point. This is when borrowers can recover what they spent on prepaid interest. To calculate this, you start with what you paid for the points and divide that amount by how much money you’re saving each month with the reduced rate.

Let’s say the figure you get when calculating your breakeven point is 60 months. That means you would need to stay in your home for 60 months to recover what you spent on discount points.

If you’re buying a home you plan to stay in for a long time, then the additional costs of mortgage points to lower your interest rate can make financial sense.

If you doubt you’ll stay in your home for the long term, it’s probably not right for you.

If you don’t stay in the home for long enough, you will ultimately lose money.

At the same time, as you consider whether or not mortgage points are right for you, you should consider your down payment. You could be better off putting money towards a more significant down payment than points. If you make a larger down payment, you might be able to secure a lower interest rate. Plus, if you make a down payment of at least 20%, you can avoid the added cost of PMI.

Bigger down payments mean you’re lowering your loan-to-value ratio or the size of your mortgage in comparison to the value of your home.

The takeaway is not to assume that buying mortgage points is always the right option. You need to consider how long you will stay in the home and your breakeven point.

Seller Concessions:
In today’s market, sellers are offer large concessions to get their properties sold and as your realtor, we can help you lower your interest rate by having the seller pay for all or a portion of the rate buy-down. Give us a call today to find out how you can save thousands over the life of your loan.

Position Realty
Office: 480-213-5251

Four Things That Will Hurt Your Credit Scores


Credit scores are simply a numerical reflection of your current credit and payment patterns. Typically, the higher the score the better the credit. Building solid credit, especially at a young age, is relatively easy to do. Open up a credit account and pay it back on time. Conversely there are things that will lower your credit scores. Here are four of them.

The first and foremost is your payment patterns. Scores will drop precipitously when payments are late. Not late if your payment is due on the 15th and you pay on the 17th, but more than 30 days past the due date. That’s when scores will drop the most and the quickest. Avoiding these late pays will help scores but making payments more than 30 days past the due dates certainly will. They’ll fall even further if a payment is made more than 60 and 90 days late.

The next way your scores can falter looks at the outstanding balances compared to credit lines. If for example a credit card has a $5,000 limit and the balance is say $4,500, scores will fall and your overall credit profile will be damaged. Going over the credit line will cause scores to fall even more.  Scores will improve when the balances are kept near one-third of credit lines. For a $10,000 limit then the scores will rise if the balances are approximately $3,000-$4,000. Interestingly, keeping balances at zero won’t actually help scores. The scoring system looks at payment history and if there are no balances there won’t be any payments to observe.

A bankruptcy filing, be it Chapte 13 or 11, will of course hurt scores. Lenders can work around a bankruptcy if it can be shown the bankruptcy was out of the borrower’s control. A situation where there is a divorce and there are disputed credit accounts is perhaps one example. Another would be a death or extended illness in the family.

Finally, credit inquiries can negatively impact scores. There are two types of inquiries, a hard and a soft inquiry. A soft inquiry is when a credit card company takes a peek at your credit profile to see if they want to extend a credit offer. These have no impact as they’re not initiated by you. A hard inquiry however is a different story. A hard inquiry is a direct request by you for a new account. An isolated hard inquiry won’t hurt credit but several such inquiries within a shortened period of time will.

Position Realty
Office: 480-213-5251

Getting Help with a Down Payment


A down payment is something you’re likely going to need to get a mortgage to buy a home unless you’re using a Veterans Affairs (VA) loan. Saving up for a down payment is one of the more significant barriers for many people that prevents them from achieving homeownership.

A down payment is an initial payment you make when you buy a house. Down payments are usually calculated as a percentage of the purchase price. The amount can be as little as 3%, but conventional mortgages are generally around 20%.

The specifics of a down payment requirement depend on the type of mortgage you’re applying for, the kind of property you’re buying, and your financial situation.

If you can make a larger down payment, you might be able to get a lower interest rate or buy a more expensive house. Large down payments can also mean you’re responsible for smaller monthly mortgage payments.

Lenders require down payments because it helps reduce their risk exposure. You’re investing in the home, so if you were to stop making your mortgage payments, you’d be walking away from a lot of money. Down payments also reduce how much a lender has to give you to make the purchase.

Not everyone has a large chunk of cash sitting aside to use to buy a house, however. There are down payment assistance programs available, some of which are detailed below.

The Basics of Down Payment Assistance Programs

Down payment assistance programs usually come from state housing finance agencies. Sometimes these programs are also managed and offered by cities and counties and nonprofit organizations.

Types of assistance might include:

• Grants, which are a gift of money that doesn’t need to be repaid.

• Forgivable, zero-interest loans, which don’t have to be repaid as long as the borrower still owns the home and lives in it after whatever the period is—usually somewhere around five years.

• Deferred payment, zero-interest loans, often require no payments until the home is sold, the mortgage reaches the end of its term or the mortgage is refinanced.

• Low-interest loans are available and have to be repaid over a certain period of time. These help homeowners spread their down payment and closing costs over a more extended period rather than having to come up with the money all at once.

Who Can Access Down Payment Assistance?

Most programs offering down payment assistance are geared toward first-time buyers, but not all.

Even if you’ve already owned a home and a program says it’s for first-time buyers, often the program will define a first-time buyer as someone who hasn’t owned a home in the past three years.

There are also programs for specific demographics, like teachers or first responders.

Most down payment assistance programs will require that you complete specific steps, which vary depending on the program itself. For example, you might have to meet income limits or take a homebuyer education course. You could be required to buy in a particular location or stay below a certain maximum purchase price. Sometimes you’ll have to contribute your own money to your down payment too.

How Can You Find a Program?

If you’re interested in learning more about down payment assistance programs, you can contact the housing finance authority in your state or your local city or county government. The U.S. Department of Housing and Urban Development (HUD) also has state-specific information.

The Consumer Financial Protection Bureau has a tool that will link you to housing counselors where you live.

If you are going to apply for a mortgage and use down payment assistance, you’ll have to find a list of mortgage lenders who are approved to work with that particular program. Often, the local agencies and programs assisting can connect you with experienced loan officers.

Position Realty
Office: 480-213-5251

How Does a Pocket Listing Work?


If you watch real estate shows, you might occasionally hear a reference to a pocket listing. A pocket listing is a way for real estate agents to intentionally keep a home off the Multiple Listing Service (MLS) as they look for the right buyer.

A pocket listing isn’t publicly listed, even though it’s for sale. The real estate agent does private showings with potential buyers instead of putting it on the MLS, which is public-facing.

Pocket listings aren’t the same as having a coming soon listing. Coming soon is a way for an agent to designate that a home isn’t listed yet, but shortly will be on the market.

Pocket listings aren’t illegal, but they are frowned upon. The National Association of Realtors, the largest real estate agent professional organization in the country, essentially banned pocket listings for members in 2019. The NAR handbook says that within one business day of marketing a property to the public, the listing broker has to submit it to the MLS.

The NAR wants to ensure cooperation among real estate agents, which was one reason it cracked down on pocket listings. The organization also wants to ensure competition, meaning all buyers have a chance for a listing, and sellers get the chance for the best price.

Some agents can bend the rules to ensure they’re compliant with NAR guidelines while still keeping a listing to themselves.

The policy of the NAR is that listings must be added to the MLS within one business day of the seller signing the listing contract. If a seller signs with a listing agent on a Friday, for example, the agent can use the weekend to do private property marketing.

Why Do Sellers Like Pocket Listings?

It sounds somewhat counterintuitive to do a pocket listing, but there’s a reason some sellers prefer this option. Sellers might like pocket listings because they want to maintain privacy. They control who has access to the property and when, and everyone won’t know they’re selling immediately.

Some sellers like pocket listings to test the market to see what the response will be like to their selling price. With pocket listings, it’s possible to adjust the price without making it look like a price cut that would otherwise show up on the MLS.

The third reason for a pocket listing is that the seller might already have a buyer. A seller might want a listing agent who will sell their property to a specific buyer.

There are ways outside of a pocket listing to achieve the things above, though.

For example, if someone wants the privacy of their listing, they can ask their agent to put the details in the agent’s remarks so they aren’t in the public sections of the listing. They can also ask the agent to verify financing before they agree to showings.

You might miss out on the best possible offer with a pocket listing if you’re a seller. You cannot know whether the buyer you’ve chosen actually has the strongest offer.

There’s also the potential for a listing agent to violate Fair Housing laws if they choose who can see a home. There may be a greater risk of discrimination in these situations, so an agent has to be very careful.

Finally, pocket listings can affect home values negatively. If the sale isn’t in the MLS, it will not show up as a comparable listing if an appraiser or agent tries to determine its worth.

Again, while a pocket listing might have its advantages, they’re something to be cautious of for sellers and their agents because they also have risks.

Position Realty
Office: 480-213-5251

What Happens When Companies Buy Houses?


If you’ve ever seen signs for companies that say they buy houses, or maybe you’ve been approached by one, you might find yourself wondering exactly what it is that they do.

There are a couple of different types of companies that buy houses cash. There are those ones that you see advertising in your community, but there are also tech-driven companies that do it.

How Do Home Buying Companies Work?

If you want to sell your house, you typically will hire a real estate agent, and then they’ll place it on the MLS. If you want to sell it fast without doing work or paying a commission, then you might instead try to sell it as-is.

There are companies that buy houses as they currently are for cash. This can mean local cash buyers, investor networks, or iBuyers.

• A local cash buyer is typically just someone who will buy your house and either flip it or turn it into a rental.
• An investor network is one of those companies that you see advertising most often, and they’re local franchises. They don’t pay much for houses because they usually focus on ones that are in pretty bad shape, and then then they flip them.
• Then, there’s the term iBuyer. The term stands for instant buyer. These are companies that use algorithms and data in the form of what are called automated valuation models to determine what your home’s worth. Then, based on their data, they’ll make an offer.

What Are the Benefits for You?

If you want to sell your home quickly, one of the three above cash buyer options can be good.

The vast majority will buy your house just like it currently is, so you don’t have to make repairs or updates, nor do you have to worry about staging it.

They’ll usually be flexible in helping you find financing solutions, and you’re probably going to get a relatively fast closing. These companies don’t have to go through the traditional financing process from a bank, so they might be able to close in seven to 14 days.

You’re also avoiding real estate commissions and closing costs.

Are There Downsides?

While selling your home quickly and easily to a company can seem great, there are certainly some downsides you have to be aware of.

First, there’s a pretty high likelihood you’re not going to get full market value. You’re trading that for simplicity and lower costs.

There’s also always a risk of predatory tactics or even scams.

If a company is trying to pressure you into selling your home for far less than it’s worth, that’s a problem.

There are a lot of legitimate companies that do buy houses for cash, but not all of them are completely legit. You have to do some research if you’re thinking about having a company buy your house to make sure it’s not a scam.

How Does the Process Work?

If you’re interested in the direct-buying model, which is ultimately what all the examples above are considered, then you might wonder what the process looks like.

Companies might vary slightly in how they do things, but typically, the home buying company might come to you, or you could approach them. The buyer or company will get some general information, and then they’ll schedule a walk-through.

The buyer will determine the market value of the home once any updates or repairs are made. At that point, they’ll present the seller with an offer, which will include the price they’re willing to pay, a closing date, and terms of the sale.

There are negotiations, and then once everyone accepts the offer, a closing date is set.

When it comes to direct buyers you just have to think about what your priorities are and how those weigh against the potential downsides. If your biggest goal is to move quickly and avoid having two mortgages, a home buying company can be a good option if they’re reputable.

If you’re in no rush and you want the highest price for your home, then you might go the traditional route in selling it.

Position Realty
Office: 480-213-5251

Capital Gains Tax When You Sell Property


If you’re selling a home, what you make could be taxable. Depending on your property’s value and other factors, you might be hit with a big tax bill that you weren’t expecting.

Capital gains on real estate can be taxed, but there are things you can do to reduce or avoid what you owe to the IRS when you sell your house.

A capital gains tax is the fee you’re responsible for paying on profits you make when you sell an asset. Your capital gains taxes can apply to stocks, bonds, and tangible assets such as cars, boats, and real estate. The IRS and many states also assess the capital gains taxes on the difference between what you’re paying for your asset, known as your cost basis, and what you sell it for.

Capital Gains and Real Estate

The capital gains you might owe if you sell your home vary depending on your tax filing status and the sales price of your home. You may also be eligible for an exclusion. The IRS might allow you to exclude up to $250,000 of capital gains on the sale of real estate if you’re single and up to $500,000 on real estate if you’re married and file jointly.

If any of a certain number of factors are true, you then pay tax on the entire gain of the sale of your home.

These factors include:

  • The home wasn’t your main residence
  • You owned the property for fewer than two years in the five years before selling it
  • Not living in the house for at least two years in the five years before you sold it
  • You claimed the available exclusion on another home in the two years before selling this current home
  • Buying the house through a like-kind exchange, which is a 1031 exchange in the past five years
  • You have to pay expatriate tax

If you do owe taxes on what you made from selling your home, different capital gains tax rates can apply.

Capital Gains Tax Rates

If you owned the asset for a period of less than a year, then typically, short-term capital gains tax rates apply. The rate is the same as your tax bracket. Long-term capital gains tax rates will usually apply if you have owned the asset for more than a year. A lot of people qualify for a 0% rate, but depending on your income and filing status, you might pay 15% or 20%.

Avoiding Capital Gains Taxes When Selling a Home

Some of the things you can avoid having a tax bill from selling your home include:

  • The best way to avoid taxes is to live there for at least two years, which don’t have to be consecutive. If you’re a house flipper, you have to be careful here. If you sell a house you didn’t lie in for at least two years, your gains can be taxed. If you sell in less than a year, it’s particularly expensive because you may have to pay the higher short-term tax rate.
  • Determine if you qualify for an exception. You might still be able to exclude some of the taxable gains on the sale of your home because of work, health, or an unforeseeable event.

Finally, if you make any improvements, keep your receipts. The cost basis of your home will include what you paid to buy it and the improvements you made over the years. If your cost basis is higher, you may have a lower amount of capital gains taxes to pay. Remodels, expansions, and other updates can reduce your taxes.

Position Realty
Office: 480-213-5251

Can You Use Home Equity to Buy Another Property?


When you have equity in your home, you can tap into that and, if you’re strategic, use it as a way to build long-term wealth.

There are a lot of ways you can capture equity to build wealth. For example, you can pay off higher-interest debt or make home improvements that ultimately increase the value of your house. You can start a business or you can even invest in the stock market where returns might be significantly more than the interest you pay on your loan.

Another question people commonly have is whether or not they can use their home’s equity to purchase another property, which we discuss below.

Can You Use a Home Equity Loan to Buy a House?

In short, yes. You can use a home equity loan to buy a house, but that doesn’t mean it’s always the right decision in every situation. Using home equity can be a way to buy a second home or an investment property with caveats.

A home equity loan is a second mortgage, giving you a way to access the equity you’ve built in your home. Home equity refers to the difference between what you owe and what your home is worth.

The Upsides

If you’re thinking about using your home’s equity to buy another house, there’s a distinction you need to first make. Are you buying a second home or an investment?

If you’re planning to buy an investment property, using a home equity loan can give you more liquidity and make it less expensive. Benefits of using equity to buy an investment property include:

• You can put more toward your down payment. A home equity loan is something you receive as a lump sum payment so that cash can go directly toward a down payment. You’ll be a more competitive buyer, which is essential in the current market, and you’ll get lower interest rates and monthly payments.

• It can be harder to finance a second property because there are more stringent down payment requirements, so a home equity loan can be a more affordable solution and also one that’s more convenient.

• A home equity loan is secured with collateral, which is your current home. As a result, you get the benefit of lower interest rates.

If you’re buying an investment property, using your home equity can be a good wealth-building strategy. If you’re buying a second home, you have to consider that it’s not going to bring in income like an investment. That means that you’re going to be tying your home up in a loan and then taking on another loan, so you need to be in a solid financial position to make this work.

The Downsides

The downsides of using equity to buy an investment property do exist. These include:

• You’re swapping an asset for a debt. You’re taking the part of your home that you own, and then you’re putting it into a loan. Ultimately, no matter the specifics, you will have higher debt, so is that what you want?

• You’re vulnerable to housing market shifts, even more so when you own two properties instead of one. You’re doubling your risk if something happens in the housing market. For example, if the value of either of your properties goes down, you might owe more on your home equity loan and your mortgage, overextending you.

• If you were to default on your loan, you could lose both properties.

• You might end up having three mortgages but only two homes. Most home equity loans are second mortgages, so you have to combine this with the loan you’ll need for your second home, meaning three mortgages.

• Another downside you’ll have to weigh is the fact that interest payments on your home equity loan will probably not be tax-deductible because of 2018 changes in tax codes.

The big takeaway here is that, yes, using home equity to buy a second home is an option and sometimes a very good one. At the same time, there are risks and it’s not always the right decision, so you need to go over the details in your specific situation carefully.

Position Realty
Office: 480-213-5251

What’s the Difference Between a Vacation and Investment Home?


If you’ve ever considered buying a second home, the mortgage rules are a bit different from your primary residence.

There are also key differences between buying a second home and an investment property, and you should be aware of these distinctions because often the two terms are used interchangeably.

The Meaning of “Second Home”

The term second home refers to a property that you will live in for part of the year, in addition to your primary residence. It’s usually a vacation home, but a second home might also be somewhere you go for work. For example, maybe you have a condo in a city where you often work, but it’s not your main home.

If you’re going to get a mortgage for a second home, it will usually need to either be in an area known as a vacation or resort location, or it might need to be a specific distance from your primary residence.

A second home loan will often have a lower interest rate than an investment property loan.

Your loan will probably also have what’s called a Second Home Rider.

The rider says that as the borrower, you’ll occupy the property and use it as your second home. The property can’t be part of a rental pool or timeshare agreement, and there can’t be agreements requiring you to rent the property or give a management company or third-party control over the property’s use.

While the above is the general definition a lender might use, every lender is going to have their own specific requirements that might be different from these.

Some lenders, for example, won’t give you a second home loan if you’re going to rent out your home at all. Others will give you a loan as long as you plan to stay in the home for a certain number of days annually, even if you’re also going to rent it out.

What About Financing An Investment Property?

One of the reasons it’s important to understand the differences between a second home and an investment property is because the financing process is different. It tends to be significantly easier to finance a second home compared to an investment property.

Usually, a second home mortgage is going to have an interest rate that’s fairly comparable to those for buying a primary home, and credit requirements tend to be in line with one another too.

It’s harder to qualify for an investment property mortgage, and the interest rate is probably going to be higher, as are the origination fees.

That doesn’t mean an investment property mortgage isn’t without its own benefits.

With an investment property, some lenders are willing to give you a loan more easily because the idea is that the property will generate the cash flow needed to pay your loan and other expenses.

What About the IRS?

The IRS has its own guidance as far as the comparison between a second home and an investment property.

A property can be a second home if you use it for at least 14 days each year, or 10% of the days you rent it. If you don’t meet that standard, it’s an investment property.

Why does it matter?

If you have a second home, you may qualify for a mortgage interest tax deduction. That can be used on interest paid on up to $750,000 in qualifying residential debt.

If you have an investment property, you can use the deduction the same way, but you can deduct interest on your mortgage as a rental income expense.

As an owner of an investment property, you can claim an annual depreciation expense, which would lower the amount of your rental income that was taxable.

No matter how the home is specifically classified by the IRS, if you use it and rent it, you have to divide expenses by the time it’s rented and the time you use it personally.

Finally, if you’re thinking about fudging the truth a bit, that’s not a good idea. You will have to sign off on what your intended use of the property is going to be, and if you aren’t honest, it can be considered mortgage fraud, which is illegal.

Position Realty
Office: (480) 213-5251

Why FHA Loans Are So Popular


FHA loans are a popular choice for a lot of people, especially first time homebuyers. Why especially so for first time homebuyers? FHA loans require a low down payment, just 3.5% of the sales price. It’s easier for first timers to come up with enough money for a down payment and for closing costs. Plus, sellers can help out with the closing costs as well, further adding to potential cash savings. Down payments can also come in the form of a gift from a family member or qualified non-profit. While conventional loans also allow for down payment assistance, they require a minimum amount from the buyers.

FHA loans in general are easier to qualify for as well. Debt to income ratios are relaxed, especially when compared to low down payment conventional programs. That means having the ability to comfortably afford a slightly higher loan amount. FHA loans are available from most every single mortgage company and mortgage broker, too.

FHA loans also more easily allow for a coborrower to help out. If someone is buying a home but the payments are a bit out of reach, FHA programs allow for a co-signer to help relax debt ratios to a qualifying level. It should be noted here that a co-signer will have to qualify for the new mortgage as well as any current debt. This could very likely mean the co-signer would be responsible for two mortgages. The one they have now plus the new FHA loan.They must also qualify based upon credit scores. If there are multiple people agreeing to take on a new home loan, lenders will request credit scores and use the lower one of the group.

Lenders like FHA loans as well. As long as the lender uses appropriate FHA guidelines when evaluating and approving a mortgage, the loan carries a guarantee to the lender. Should the loan ever go into default, the lender is then compensated for the loss. This guarantee is financed with two different forms of a mortgage insurance policy. There is an upfront insurance premium that is rolled into the loan amount and there is an annual premium that is paid in monthly installments, included with the monthly mortgage payment, insurance and property taxes.

FHA loans are not for investment properties, but available for owner occupied units. This means financing for a rental property or second home is not available. Conventional loans can be used for non owner occupied units, but not FHA loans. There are also loan limits for FHA loans and these limits can vary based upon location. FHA loan limits are based as a percentage of the median home price for the area in which the property is located.

However, for most first time homebuyers, FHA mortgages are the loan of choice. Low down payment, easier qualifying, relaxed debt ratios and credit make these programs ideal for many first time homebuyers.

Position Realty
480-213-5251

When Should You Lower Your Home’s Listing Price?


As the U.S. housing market appears to finally be cooling somewhat, some buyers are breathing a sigh of relief. Home sellers are frantically entering the market, hoping to take advantage of the remnants of the pricing boom.

For the four weeks ending on May 22, almost 1 in 5 sellers dropped the price of their home. It’s the highest rate since 2019. During the same four-week period, there were 13% fewer “homes for sale” searches on Google, and there was a 12% year-over-year decline in tours and related services from agents on Redfin.

Sellers are still asking a premium for homes, with the median asking price up 17.8% year-over-year. However, sellers are also starting to see the writing on the wall as buyers are more cost-conscious with rising interest rates. Thus the price drops.

If you’re a seller with a home on the market, how do you know it’s time to lower the price?

Price Is Usually the Reason Your Home Is Still On the Market

If your home has been on the market for a while and it’s not getting the attention you think it should, or you’re not getting offers, it’s frustrating. More often than not, according to real estate professionals, the issue is the price.

Buyers can overlook many other factors if they feel like the price is right.

Some of the signs your price might be too high include getting little traffic and no offers. You might also get good traffic, but the offers you’re getting are a lowball. A third sign of thinking about having good traffic but negative reactions from potential buyers. If buyers consistently make comments about the price, it might be time to pay attention to what they’re saying.

When To Lower the Price

If you think you should reduce the price of your home, you should do it quickly. Usually, within two weeks of initially putting it on the market is ideal, especially with inventory remaining low. As a rule, you’ll see the most activity within the first 21 days of your home going on the market, so make sure you’re taking advantage.

You’ll also want to look at some of the indicators in the housing market where you are, like the average days on the market.

One guideline that some real estate pros recommend is a price adjustment after a house is on the market for ten days.

There are marketing steps your realtor should take before a price reduction. For example, maybe they need to revisit your photos and ensure they’re good enough. The home also needs to be listed in multiple places, and you should address buyer feedback.

What to Know About Price Cuts

No one wants to make a price reduction, but the reality is that you may even have to do it more than once. The more your days on the market go up your potential need for price adjustments increases.

It’s advisable to make no more than three price reductions. If you go beyond that, it will start to become a red flag to buyers.

You also want to be careful and strategic in how much you reduce the price. For example, if you priced high to start with, maybe you reduce it by around 4% to no more than 9%. If your initial price was comparable to market value, you might need an incremental cut.

Some real estate agents think it’s better to go ahead and reduce your home by a significant enough amount initially, so you don’t have to do it more than once. That’s something to talk to your agent about. There is the potential that multiple smaller cuts are just dragging out the process of selling your home, which isn’t what you want.

Position Realty
480-213-5251

Contact Form Powered By : XYZScripts.com
Info