The Impact of Coronavirus on the Real Estate Market and Home Prices

The Impact of Coronavirus on the Real Estate Market and Home Prices

The Impact of Coronavirus on the Real Estate Market and Home Prices

the impact of coronavirus on the real estate market and home prices, home value estimate app

The coronavirus has ground the American economy and way of everyday life to a halt. States such as California and New York have instituted shelter in place policies and once-bustling city centers have become barren wastelands. We all know that the economy is feeling the negative effects but what about the relationship between coronavirus and home prices?

the impact of coronavirus on the real estate market and home prices, important stats

The Effects of Coronavirus in the Real Estate Industry.

The real estate industry was partially to blame for the last economic recession. Will the effects felt by the coronavirus have a lasting impact on home prices this time around? According to data collected by ShowingTime, the real estate industry’s leading showing management provider, showing activity has suffered a sharp decline in recent weeks. In fact, the number of home showings booked in a given week has fallen close to 70% and is expected to continue to decline.

Will My Home Lose Value due to the Coronavirus?

Home showings are suffering a decline but does that have an impact on the value of my home? Not exactly, at least in the short term. The slowdown in home showings will cause a slowdown in sales during March and April. The best-case scenario is that a home buyer who was previously anticipating purchasing a home in March or April has simply delayed their timeline by a month or two.

Keep in mind that there is a lot of uncertainty in the world right now and deciding to purchase a home is a major life decision. There are still many questions that must be answered about the coronavirus let alone the impact it will have on the job market and the economy. The declines in the stock market will also have a negative effect on a buyer’s appetite for purchasing a home as they see their savings diminish.

Some of the hardest-hit industries such as the hospitality industry are already feeling the economic impact and laying off employees. A rise in the unemployment rate and home prices have an inverse relationship meaning if unemployment continues to rise, the value of homes will decrease.

What are the Long Term Effects of Coronavirus on Home Prices?

While it does not look like the coronavirus will have an impact on home prices over the short term, it is important to be aware of long term market forces. If we cannot contain the virus and the economic impact that results from it, there will likely be a lasting effect on home prices. To make sure this does not happen, government officials are attempting to stimulate the economy with monetary and fiscal stimulus programs. Interest rates are already at historic lows and Americans need to be reassured that if they do get laid off for a period of time, they will not have to suffer the same fate as so many did in 2008 with unforeseen foreclosures.

Is it a Smart Idea to Buy a Home when there is so much Uncertainty Surrounding Coronavirus and Home Prices?

At Felix Homes Realty, we look at the buying process like you would any investment decision. After all, for most families, their home is their largest investment. Ask Warren Buffett or any successful investor and they will tell you to buy when others are scared. If you are financially secure and do not believe you are at risk of being laid off, then it is a great time to buy a home. Interest rates are at historic lows and as a buyer in this market, you will have the benefit of commanding the upper hand in negotiating a great deal.

the impact of coronavirus on the real estate market and home prices, man under quarantine

Is there a way to view homes without having to see them in person?

Felix Homes is a technology company first and a real estate brokerage second. We incorporate technology into everything we do from our complimentary drone photography to our digital marketing expertise. Last week, we announced that we will be offering virtual open houses and virtual showings for any listing in Middle Tennessee.

How can I Follow the Effects of Coronavirus in the Real Estate Industry?

Whether you are a home buyer, potential seller or just someone who is generally interested in following the correlation between the coronavirus and the real estate market in Nashville, send an email to contact@felixhomes.com and let us know your opinion of the effects of coronavirus in the real estate industry.

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What To Do With Your Home When Getting A Divorce?

What To Do With Your Home When Getting A Divorce?

Thinking about divorce?
Here’s what to do about your house

What To Do With Your Home After Divorce, beautiful house in a beautiful neighborhood

If you’re thinking about getting a divorce, deciding what to do with your house is a major challenge and can add to an already stressful situation. After all, for most families, their house is their largest asset and most young families do not have enough equity to pay the expensive fees that are associated with selling. You may be asking “how much will it cost to sell my house”, “how will the proceeds get divided up” and “do I have enough equity to pay for the closing costs and Realtor commissions”?

If neither spouse wants to continue to live in the home or if neither spouse can afford to buy the other out, then the best option is to put the home up for sale. If this is the case, there are a few things you should consider before contacting a local Realtor. If this sounds like you, don’t worry as this article will explain all of your options and will provide tips on what you should do.

PRO TIP: Compare the top ways to sell your home.

Determine how much equity you own

The majority of home buyers choose to use a mortgage to finance the purchase of their home. If you took out a mortgage, keep in mind that the majority of your initial monthly payments went towards paying off the interest on the loan while only a small percentage of the early payments went towards accruing equity in the home. This is an important concept to understand when calculating how much equity you actually own and can influence what you decide to do.

Calculating how much equity you own is important because selling your home comes at a cost. There are fees associated with selling such as Realtor fees, closing costs and applicable taxes. If you don’t own enough equity in your home, these fees may come directly out of your pocket as opposed to being paid out of the equity you own in the home.

PRO TIP: Get an instant online home value estimate for free

Choosing the best way to sell your house

There are three primary ways to sell your home — using a Realtor, selling directly to an iBuyer or real estate investor, or selling your home for sale by owner (FSBO).

Option 1: Using a traditional 6% Realtor

Most folks decide to sell their home using a local Realtor. That being said, not all Realtors are created equal. For example, depending on your location, the typical Realtor commission is 6% of the sales price of your home. This fee is paid at closing and typically comes out of the equity you have accrued in the home. Of this 6% commission, 3% is paid to the listing agent and 3% is offered to a buyer’s agent to incentivize them to bring their clients to your house. Realtor fees can amount to $18,000-$30,000 or more depending on the value of your house.

In return for their commission, your listing agent should help you determine a fair listing price by researching comparable homes that have recently sold in the neighborhood. They should pay for professional listing photos and put your home on the local Multiple Listing Service or MLS which is a platform that Realtors use to see available inventory. Your Realtor may also choose to market your home directly on social media or create marketing material such as flyers and postcards. Once you receive an offer it’s your Realtor’s job to help you negotiate the best terms and guide you through the closing process.

PRO TIP: Compare the services and fees of selling with Felix Homes vs. a Traditional Realtor.

Option 2: Using a 1% Realtor

The 1% Realtor model is quickly gaining popularity as homeowners continue to find it hard to justify the high commissions most traditional Realtors charge. This also happens to be the model we offer at Felix Homes Realty. Under our model, you only pay a 1% commission! As for the buyer’s agent’s commission, we still recommend you offer them the market-standard commission to incentivize them to bring their clients to your home although we leave this completely up to you. Like the traditional Realtor model, the full commission is paid at closing only if your home sells. The simple comparison is (1% Felix Commission + 3% Buyer’s Agent Commission) VS (3% Traditional Realtor Commission + 3% Buyer’s Agent Commission). On average, our clients end up saving roughly $15,000.

PRO TIP: Our 1% commission is waived for Veterans or families with a member in the military

Even though you are paying less in Realtor commissions, you shouldn’t expect lower quality service from a flat-fee Realtor. In fact, many of our Realtors used to work at traditional firms such as Keller Williams, Remax, and Century 21. With Felix Homes, your dedicated agent will be by your side throughout the entire process. Like the traditional model, your Felix agent will determine a list price for your home by analyzing recent sales in the neighborhood, schedule professional listing photos, upload your listing to the MLS, negotiate the terms of the sale, and walk you through the closing process. In fact, at Felix, our goal is to go above and beyond what a traditional Realtor would provide which is why we include a complimentary home staging consultation with an interior design consultant and promote your home on social media platforms such as Facebook, LinkedIn, and Instagram to get your listing in front of the estimated 52% of first-time homebuyers.

PRO TIP: Calculate how much you can save in Realtor commissions

Option 3: Selling to an iBuyer or real estate investor

This is a great option if you need to sell in a hurry. An iBuyer is a company that will purchase your home directly from you and then flips it for a profit. The biggest drawback of this model is while it is convenient, it comes at a hefty price. Most iBuyers purchase homes at a 15%-17% discount to fair market value. This large fee can make selling to an iBuyer nearly impossible for homeowners who do not have a substantial amount of home-equity.

Option 4: Selling ‘For Sale By Owner’

Selling your home FSBO may sound like a great way to avoid paying Realtor commissions altogether. In reality, most folks who decide to sell their home themselves typically still offer a buyer’s agent a 3% commission. Furthermore, most homeowners do not have the tools necessary to accurately price their home. Going by online valuation estimates such as Zillow’s Zestimate may cause you to leave tens of thousands of dollars on the table and many appraisals may determine that your home is worth more than a buyer is willing to pay which would result in your listing sitting on the market for a long period of time. It can also be a hassle to schedule showings, negotiating the terms of the sale and navigating the closing process without the help of an experienced Realtor.

PRO TIP: Follow Felix Homes Realty on Instagram to stay up-to-date on the latest real estate trends.

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A Definitive Guide To Closing Costs

A Definitive Guide To Closing Costs

A Definitive Guide To Closing Costs

Closing Costs, real estate agent offering a deal to potential customers

If you’re thinking about selling your home, you’ve come to the right place. At Felix Homes, we’ve created a ‘Home Selling Tips’ series which will cover everything you need to know before you put it on the market. The goal of this series is to let you in on trade secrets with the goal of empowering you, the home seller so that you can get the highest price in the shortest amount of time.

One of the most common questions we get at Felix Homes is how much are closing costs and who pays for them? Before we dive into who pays what, it’s important to go over what closing costs are. Closing costs are simply the upfront fees that are associated with closing a real estate transaction.

What Closing Costs Do Sellers Typically Pay

Let’s say you just sold your house for $500,000. We all know that you won’t necessarily walk away with that amount and in most cases, nothing even close to it. Here is a list of closing fees that a seller typically pays:

  • 1. State Property Taxes (Prorated): The seller is responsible for any state property taxes that were accumulated between their last payment and the closing day.

  • 2. HOA Fees and Transfer Fees (Prorated): The seller is responsible for any HOA Fees that were accumulated up to the closing day. Additionally, depending on the details of the purchase contract and the HOA, the seller may also need to pay a fee to their HOA to transfer the property to the buyer.

  • 3. Title Fees: The seller typically pays a title company to do a comprehensive title search and transfer the title over to the buyer. Additionally, Sellers will also handle the new owner’s title insurance, which protects them in case there are any issues with leans against the property. Many title companies also handle the escrow account for the transaction, which they’ll include in their fee to the seller.

  • 4. Realtors’ commission: This is where you’ll be able to save mega-$$$ with Felix Homes. The home seller is responsible for any fees charged by the real estate agents involved in the home sale. This includes both the listing agent and the buyer’s agent. In most cases, this is usually around 6% of the sales price (3% to the listing agent and 3% to the buyer’s agent) which for a $500,000 home is $30,000! At Felix Homes, we’ve done away with the 6% commission. Instead, we charge a 1% commission on the listing side and we still encourage our clients to offer a buyer’s agent a 3% commission so they are incentivized to bring their clients to your listing. Our 1% model saves the average homeowner over $15,000 in Realtor commissions!

  • 5. Real Estate Transfer Tax: This varies from state to state but in Tennessee, the current deed transfer tax is $0.37 per every $100 of the sales price. So for a $500,000 home, the transfer tax would cost the seller $1,850.

As real estate experts, we know the process of selling your home can be stressful, especially if you don’t know exactly how much it can cost. In addition, at Felix Homes, we are doing our part to decrease the cost of selling a home by lowering the fees we charge compared to other agents all while providing a better home-selling experience. If you’re interested in other home selling tips, head over to our blog and if you’re interested in selling your home, feel free to get a free home value report on our website.

Let’s chat today.

 

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Save money when you buy or sell.

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