Just over 5 million existing homes are projected to sell in the United States over the course of 2019. That number may seem large, but it’s actually down from last year.
Typically, housing sales have taken a hit because of reports that are warning buyers of an imminent “cooling” in prices. In anticipation of price reductions, buyers are now starting to wait instead of jumping at every “For Sale” sign they see as they had been over the last 5-years.
Warnings of a market downturn have actually done more than slow sales. Warnings have also started a lot of conversations around factors that can make selling and buying a home difficult.
In an effort to break down some of the issues both buyers and sellers can run into while conducting their respective business, we decided to whip up this article!
Home Selling Barriers
Since a cooling market serves to hurt sellers more than buyers, we’ll open things up by discussing some of the pains sellers may face when trying to cash in on their investment.
1. An Unfavorable Market Has Reared Its Head
One of the most divisive issues when selling and buying a home is how hot the housing market is. We use the word “divisive” because this issue represents a negative to sellers while simultaneously presenting a positive to buyers.
We’ve heard a lot of adages in real estate that say things like, “There’s no such thing as a down market!”. These adages contend that a “down” market simply requires more effort and with that effort, sellers can do just as well as they would have done in an up market.
Frankly, that interpretation of housing markets is nonsensical.
First, extra effort doesn’t usually entail shining your floorboards a little more before an open house. Extra effort to drum up interest in a down market means cycling through tons of agents, investing a considerable sum in marketing and negotiating extraordinarily hard with buyers.
All of that effort is costly from both a time and capital perspective.
Our advice is to sit in your house if you can when markets are down. It could take a while for things to heat back up, but if you’re patient, you can make tens of thousands of dollars more on your investment.
You’ll also save yourself a massive headache.
2. Your House Needs Work
People save for years to purchase a home. The last thing most of them want is to invest their life savings in something that at best needs more work and worst could turn into a money swallowing pit.
As a seller, if you’re interested in commanding top dollar for your home and want to part ways with it quickly, you’ll want to give any glaring issues it has a look.
Let us be clear about that suggestion… Giving glaring issues a look does not mean remodeling your kitchen because its decor is out of fashion. That’s an investment that likely won’t pay off in the long run.
We mean that if you have issues like holes in your roof, you should get those fixed.
A final note on this point: some sellers choose to forgo essential repairs and instead sell their homes to “we buy as-is” fix and flippers. Going that route is certainly easy but will mean getting much less than your home is worth.
3. Your Neighborhood Has Gone Bad
When you buy a house in a bad neighborhood, you at least have expectations as to how the area will affect your investment. What’s much worst than that scenario is when you buy your house in a decent neighborhood that goes bad.
In that instance, you’ll have paid a premium for a decent area and will lose that additional investment since you can’t ask a premium from future buyers seeing as how your neighborhood didn’t hold up.
There’s very little that you can do to prevent an area from souring. Our recommendation is to stay active at community meetings to ensure that poor leadership is not contributing to the problem.
4. A Bad Agent is Managing Your Listing
A bad agent can affect both selling and buying a home. In our opinion though, agents can have a much larger adverse impact on sellers.
If you’ve signed a listing agreement with an agent and your house has been sitting on the market for months, you need to have a discussion.
Agents should be proactive when it comes to selling your home. If they’re hitting a roadblock, they need to bring that information to your attention so that you both can strategize on how to proceed.
Unfortunately, some agents do not communicate well. Instead, they find more lucrative, easier listings and leave your home to rot on the market.
If you suspect that your agent is being negligent with your listing, figure out how to dump them.
5. It Feels Like Somebody is Still Attached to the Property
No… This point isn’t about your house being haunted (although that would make your house hard to sell as well). What this point means is that your house has too much of your family in it for another buyer to get excited.
To dodge this bullet, remove family photos from your home office, take down paintings, etc. before an open house.
Home Buying Barriers
It’s not all candy canes and rainbows for buyers either. They certainly bare their fair share of issues. Below are 5 of the most common snags that buyers face:
1. Prudish Lending
Very few people have 200K+ sitting in their bank account ready to be invested in a home. That’s why lenders are essential when it comes to buying a house.
If lenders aren’t willing to lend though, what can you do? Unfortunately, not too much.
If the current housing market has made lenders tighten their purse strings, your best bet is to engage other lenders and if that doesn’t work out, wait for conditions to improve.
2. Prices are Inflated
Just because you have the money to buy a house doesn’t mean that you should spend it. Over the last few years, a lot of money has been handed out by lenders thanks to an up economy. As a result, lots of people are buying homes that have been horrendously overvalued.
No matter how much you want to get into a house, we can’t stress enough that you should never overspend.
If you’re sitting in a housing bubble, wait for it to pop and then pounce.
3. Income Inequality
Your parents may have had a pretty easy home buying experience. They might have graduated from high school, got blue-collar jobs and then immediately bought a house after working for a couple of years.
Why then can’t you do the same thing? After all, you’re more educated and have a better job than they had.
A big reason why is income inequality.
A very small portion of the population has a very disproportionate amount of wealth. Home sellers are targeting that segment with their high home prices and are leaving middle-class people like you out to dry.
If you look at insane home prices and wonder why you don’t make enough money to get into a basic house, chances are, it’s because a seller would rather wait for a rich person to impulsively buy their home at an inflated price than sell to you.
4. Bad Credit
Good credit borrowers have a much easier time scoring mortgages than bad credit borrowers. If your credit is bad and you can’t get your hands on a mortgage or your mortgage’s terms are poor, take a step back.
Building credit doesn’t take much more than managing your existing debt responsibly and waiting.
If you rehabilitate your credit rather than rushing into a bad mortgage, you’ll save tens of thousands of dollars over your mortgage’s lifespan.
Nobody likes to talk about this stuff but we’d be amiss to not mention it. Discrimination is alive and well in real estate.
We see discrimination most often when buying a house. It starts with loan officers that hesitate to give out loans based on factors that are non-income related. Then, sellers select offers that come from people that belong to their racial groups.
Get Help Selling and Buying a Home
When you’re selling and buying a home, you should be well prepared for issues that you may run into.
The more familiar you are with problems that can arise during transactions, the better prepared you’ll be to make the most out of your circumstances.
For more information on all things finance-related, check out additional content on “Thousandaire” today!