This is one of the most common real estate questions I hear next to “how’s the market” and “is this a good time to buy.” I look at the real estate market much like the stock market from the standpoint that you should not try to “time” the market. Based on that idea, I believe the best time to sell is the time that is best for you. There are more active times of the year such as late spring, and there are slower times of year like late fall. That does not mean that selling your home in November or December is necessarily a bad idea.
I am always measuring and comparing statistics, looking for trends in our local market place. Over the last year, I have been tracking a significant rise in inventory and consequently a slowdown in price appreciation. That does not mean this is a bad time to sell, but you need to be more aware of competing listings and how your home stacks up. In a recent article in the Orlando Sentinel I commented on where I see the Orlando real estate market appreciation for the next 12 months. One agent said she is telling sellers to wait, because prices are still rising. One investor thinks there may be a “dark cloud in the distance.” If now is the best time for you personally, then let’s talk.
I have seen a lot written about this recently. I was updating this information on my website and thought I would share it here on my blog.
If you’re thinking about remodeling your kitchen, or finishing your basement, you probably want to get your investment back when you sell your home. But when it comes to payback value of home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually get a nice return on investment, typically 90% or more.Things like adding rooms or finishing basements tend to pay back the least.Finishing a basement usually returns less than 50%, so it’s not a project likely to show profit at selling time.
There are a number of factors that go into determining how well a project will pay back. Payback value depends a lot on the current market conditions in your area. If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market.
The type of project you do and how it fits in with other homes in the area can have a big influence on payback too. If you put your money into the wrong type of improvement, you won’t get your money back. But if you’re smart about what you do, you can make money. The payback will be better on improvements that are in demand and conform to neighborhood standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment. Building a large addition that makes your home twice as big as the other homes on the block probably won’t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won’t pay back as well as something more common to other homes in the neighborhood.
Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment.
The list below is compiled from several published surveys and shows typical payback for some popular remodeling projects:
- Kitchen remodeling – 90%
- Add a bathroom – 90%
- Bathroom remodeling – 80%
- Install central heating – 90%
- Install central air – 75%
- Add a deck – 70%
- Replace windows – 70%
- Add a room – 55%
- Build a pool – 45% (a lot of this in Orlando)
- Finish a basement – 40% (not a lot of this in Orlando)
When shopping for a mortgage, the lender may give you a quote for the mortgage interest rate and points (additional fees charged by the lender usually paid at closing by the borrower). These only represent terms available at the time of the quote. They may not be available by the closing date (which may be weeks or months in the future). To ensure the rate and points are the same at closing as they are when quoted, you’ll need to lock-in the interest rate (also known as a rate lock or rate commitment).
Obtain a Written Agreement
Most lenders will commit, in writing, to a mortgage interest rate for a specified time period while your loan application is processed – this is known as “locking-in” the rate.
If you elect to lock-in an interest rate, it is best to deal with a lender who provides a written lock-in agreement. Be sure to read this agreement carefully, some lock-in agreements become void due to actions beyond your control – such as a change in the maximum rate for VA-guaranteed loans.
The following lock-in options are common among lending institutions. Be sure to ask the mortgage lenders you are considering which lock-in options they offer.
- Lock-in interest rates and points.
This will give you a clear understanding of how much your mortgage will cost. Neither your interest rate nor points increase during the lock-in period. This protects you against rising market conditions.
- Lock-in interest rates and floating points.
Your interest rate is locked-in and will not change for the lock-in period, while your points may rise and fall with market conditions. With this option, your lender may allow you to lock-in the points at the current market condition some time between submitting the loan application and closing.
- Floating interest rates and floating points.
This gives you the option to lock-in the interest rate at some time between submitting the loan application and closing. This puts you at risk if interest rates and points rise and may not be best for a homebuyer with a tight budget.
The Cost of Locking-in the Rate
It is not unusual for a lender to charge a fee for locking-in an interest rate and points. This fee may vary depending on the amount of time you want to lock-in the rate (the lock-in period).
The fee may be charged when you lock-in the rate (and is rarely refundable if you withdraw your application, if your credit is denied or if you do not close on the loan) or it may be included in your closing costs. The amount of the fee and when it is charged will vary among lenders.
The Lock-in Period
Most lenders will offer lock-in periods of 30-60 days. Some lenders may only have short lock-in periods. And still others may offer a longer lock-in period (expect higher fees for longer lock-in periods).
The lock-in period should be long enough for the loan approval process and to allow for any other contingencies that may delay closing.
The Lock-in Expiration Date
If unexpected circumstances prevent the loan from settling prior to the last day of the lock-in period (whether caused by you or others in the process – including the lender), you lose the interest rate and points that were locked. Prevailing interest rates and points are usually charged under these circumstances. Be sure to ask your lender before you lock-in what interest rates and points will be charged if the loan is not closed before the lock-in period expires.
There are 11,315 homes for sale listed by Orlando Realtors® and 8,233 homes listed as contract pending. Of the homes still available for sale, 1,757 are foreclosures and 1,109 are short sales. Of the homes with contracts pending, 1,634 are foreclosures and 3,291 are short sales.
Early Orlando real estate sales statistics for May: 2,694 closed sales with a median sales price of $162,000. I hope there were a lot of closings Friday that have not been posted yet.
There are 11,207 homes for sale listed by Orlando Realtors® and 8,250 homes listed as contract pending. Of the homes still available for sale, 1,734 are foreclosures and 1,177 are short sales. Of the homes with contracts pending, 1,665 are foreclosures and 3,299 are short sales.
Way too early Orlando real estate sales statistics for May: 1,264 closed sales with a median sales price of $165,000. It is still looking like 3,000 sales this month.
There are 11,158 homes for sale listed by Orlando Realtors® and 8,304 homes listed as contract pending. Of the homes still available for sale, 1,725 are foreclosures and 1,191 are short sales. Of the homes with contracts pending, 1,679 are foreclosures and 3,315 are short sales.
Way too early Orlando real estate sales statistics for May: 905 closed sales with a median sales price of $165,000. Inventory, sales and prices are all climbing.
There are 11,085 homes for sale listed by Orlando Realtors® and 8,291 homes listed as contract pending. Of the homes still available for sale, 1,736 are foreclosures and 1,186 are short sales. Of the homes with contracts pending, 1,666 are foreclosures and 3,365 are short sales.
Way too early Orlando real estate sales statistics for May: 606 closed sales with a median sales price of $169,950. May looks good so far. We may hit 3,000 sales.
There are 11,036 homes for sale listed by Orlando Realtors® and 8,230 homes listed as contract pending. Of the homes still available for sale, 1,706 are foreclosures and 1,190 are short sales. Of the homes with contracts pending, 1,665 are foreclosures and 3,360 are short sales.
Way too early Orlando real estate sales statistics for May: 482 closed sales with a median sales price of $172,750. Wow! It looks like prices might be heating up.
Inventory and sales are climbing with the summer-like temperatures. There are currently 11,037 homes of all types listed as active with Orlando REALTORS®. Of those active properties, 1,732 or 15.7% are REO, 1,205 or 10.9% are short sales and 8,100 or 73.4% are equity sales. Pending sales are pretty much flat with 8,120 homes listed as either pending or active with contract. Of the properties with contracts, 1,601 or 19.7% are REO, 3,343 or 41.2% are short sales and 3,176 or 39.1% are equity sales.
The spring selling season has kicked into gear with 2,905 closed sales posted in April with a median sales price of $157,250. Of the homes that closed last month, 773 or 26.6% were REO properties with a median price of $92,259; 278 or 9.6% were short sales with a median price of $130,000; and 1,854 or 63.8% were traditional equity sales with a median sales price of $189,000. The 278 closed short sales represented only 8.3% or the pending short sale inventory. Cash sales continue to slip with 1,325 making up 45.6% of all sales with a median price of $100,000. Financed sales accounted for 1,580 closings or 54.4% of the total with a median price of $194,000. Based on last month’s sales we currently have just under a 3.8 month supply of homes available for sale.
Keep up with the latest statistics on my Orlando real estate blog.
There are 10,988 homes for sale listed by Orlando Realtors® and 8,165 homes listed as contract pending. Of the homes still available for sale, 1,715 are foreclosures and 1,203 are short sales. Of the homes with contracts pending, 1,587 are foreclosures and 3,387 are short sales.
Early Orlando real estate sales statistics for April: 2,590 closed sales with a median sales price of $158,000. April is looking pretty good, let’s hope it keeps rolling into the summer.