You've probably heard that the Bay Area is experiencing a housing market shift. If you're thinking about selling your home, here's what you need to know:
The market has slowed down. 6 months ago, homes were selling for more than 1 million above the listing price. But rising inflation and higher interest rates have put a damper on the housing market in general. Now, 30-year interest rates are above 6%, but adjustable-rate mortgages (ARMs) are still at around 4.375% APR.
Monthly affordability has increased. 8 months ago, if you bought a home for 1.3 million with 2% interest and 20% down payment, your monthly payment for principal and interest was $4,109. With current ARM rates, however, your monthly principal and interest payments are $5,270—an increase of almost $1,270 per month!
If you're planning to sell your house, it's important to do the simple math of how much profit you're willing to make. If you bought 10 or 5 years ago, surely you'll be able to make some profit off the sale. But if you've only had the house for two months and are selling now? You can't expect to make a profit.
Recently, I listed one home where the clients had bought it for 2.06 million in March, which was peak season. But due to changed circumstances, they were planning on selling the house at 1.8 million to 1.9 million—a loss of 160k from their original purchase price. If they sold now, they would lose close to $240k including commissions—so for them, it was better to wait a few years before reselling their home at a higher price point!
Last month, I had one listing in San Jose. We priced it out at $1.26 million and had no offers. We lowered the price to $1.20 million and sold it for $1.20 million!
If you're looking to sell your home in this market, follow these tips to make sure you get the best possible price.
- Pricing it right: If you're listing your home, don't price it based on recent comparables. Instead, make sure you're pricing it 10-15% less than what they were going for. This will help you avoid getting stuck with an overpriced house that's harder to sell.
- Patience: Be patient! In this market, houses are expected to sell faster, so don't be afraid of waiting a little longer if need be. Allocating extra time for showings and negotiating can help ensure a better deal for everyone involved!
- Counter offers: If you receive a low offer number, consider submitting a counter offer before accepting or rejecting the original offer. The seller may be willing to negotiate on closing costs and contingencies as well—but only if we know what kind of deal we're working toward! When it comes to buying a house, I think a contingency is a waste of time and money. I'd rather pay the 10k less and not have to deal with an inspection or loan contingency.