Friends and clients—Even after more than a year in our frenzied market, home prices continue to soar, which is excellent news for those who own new and existing homes in our marketplace.
The Case-Shiller National Home Price Index measures the average home prices in major markets across the nation—they’ve tracked that home prices rose by 13.2% year over year as of March, which had the highest annual price growth rate in almost 16 years. According to the National Association of Realtors, the median sales price for existing homes increased by 19.1% in April to $341,000.This extreme price growth is driven by a few different factors. Record-low mortgage interest rates have made purchasing homes more affordable, even considering rising home prices. Many people have taken advantage of this and flocked away from urban centers, seeking out homes that offer more space to accommodate working remotely and spending more time at home in general.
However, supply is still very limited, and inventory may only continue to shrink. High prices and high demand have contributed to the shortage; April was the third month in a row of declining home sales. By the beginning of May 2021, the number of available homes for sale had shrunk by 20.5%. This has led to some intense multiple-offer situations, where buyers are throwing out all the stops to compete for homes, including by waiving inspections, appraisals, and other contingencies to draw the seller’s eye to their offers.
Even though homebuilders are trying their best to keep up with demand, the new home construction industry can’t fill the gap in inventory. Increased land, labor, and material costs have made building new homes difficult and expensive, even as demand continues to surge. Still, many are turning to new construction homes because the competition for existing homes is still fierce in our current market.
As hectic as it sounds, this market presents some prime opportunities for homeowners to get top dollar for their properties. However, just because options are slim and demand is high doesn’t mean you can simply throw your home on the market and expect it to fetch a maximal price. Before you can figure out how much you can expect to walk away with, you’ll first need to assess how much it will cost you to prepare your home for the market.
Here’s a quick breakdown of some of the costs of selling a home:
- Real Estate Commissions. Sellers are responsible for paying real estate commissions, which can range between 2.5% and 3% for your own agent, and a similar spread for the buyer’s representative.
- Preparing Your Property. Though you may not need to go all out in getting your home ready for the market, sprucing things up here and there will help maximize your property’s value. For the interior, you’ll want to declutter, clean, paint, and stage; according to the NAR, buyers spend an average of 40 minutes in a staged home compared to five minutes in a non-staged home. You’ll also want to freshen up your home’s curb appeal. The cost depends on what you need to have done. You should at least make sure that your landscaping is trimmed and neat. Spending as little as $300 on lawn care can get you an extra $1,200 when you sell.
- Repairs. Though some buyers are waiving inspections to be more competitive, that isn’t typically recommended, so expect a home inspection. A good rule of thumb is to set aside 2% of your sales price to cover the cost of necessary repairs that may come up on your inspection report.
- Closing Costs. As a seller, you’ll be expected to pay a few different fees at the closing table, including title fees, transfer taxes, escrow fees, and miscellaneous taxes and dues. Plan to spend around 8% and 10% of your sales price on these seller expenses, though you may spend less than that.
The bottom line is that now is an excellent time to be a seller. The market leans heavily in your favor, and with just a little time, investment, and guidance from an experienced real estate professional, you can get the absolute best price for your home.
If you’re curious about what you could get for your home, check out this link to instantly calculate your home’s value based on recent Northern Virginia / D.C. Metro area sales:
If you need assistance getting the home-selling process started or have questions about any other real estate matter, please call me at (703) 328-3434 or email me at firstname.lastname@example.org. I would love to help you reach your real estate goals.