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4 Smart Home Devices: Which Are Right for Your Home?

When you’re not home, little doubts can plague you. Did I lock the door? Did I leave a key for the housekeeper? Is the AC still on full blast? Smart home devices can resolve those questions and ease your mind. They can also make your home more comfortable and convenient, and save you money. 

Once the exclusive domain of the super-rich and alpha geeks, smart home devices have become more common, user friendly, and affordable. You can equip your home with some basic smart devices like a smart thermostat, smart lighting, and smart door locks for $1,000 or less. You can run these devices with your smartphone or tablet. And in many cases, you can install them yourself; no electrical engineering degree required. 

Here’s what you need to know to get started in choosing the right smart home devices for your home and your budget.

What Are My Smart Home Goals?

Start by deciding what you want to accomplish, and that will lead you to a relevant device. If you want more security, consider a smart door lock. Are you looking for more comfort and convenience? Check out smart lights that come on right before you get home from work. Want to save money? A smart thermostat that uses artificial intelligence to control the temperature in your house may be the way to go. Do you crave a cool, high-tech gadget that’s downright Jetsons-esque? Go for a smart appliance like a fridge that can stream cooking videos.

Do I Need a Hub?

You don’t necessarily need a hub. In the early days of smart home tech you needed a dedicated device that tied all your smart home devices together. Back then, hubs were problematic, because not all devices were compatible with them, and their software needed to be updated regularly. Those old hubs are near relics now. These days, you can run your smart home devices through an app on your phone or tablet. Wi-Fi and the cloud have been game changers in smart home technology because they enable many devices to network together regardless of the make and the brand. 

Many homeowners use a voice assistant like Siri or Alexa as a de facto home hub by tying all their smart home devices to it. Once you do that, you can control your devices with a single unit. If you tie your smart home door lock and smart home appliances to your voice assistant, you can say, “Siri, preheat the oven to 350 degrees and unlock the door,” and consider it done. 

“Voice assistants have made so much more possible in the area of smart home devices,” says John Carey, vice president of Designer Appliances, a New Jersey retailer that specializes in smart appliances. “They can work with so many different products.”

Do I Need a Wi-Fi Connection?

You can run your devices by connecting them to a hot spot device, like a MIPS (Microprocessor without Interlocked Pipelined Stages), which lets you tap into a cell phone signal. A MIPS is basically a little computer that hooks your smart devices to the cloud via a cell phone network. You can also run smart devices through a hot spot on your phone or tablet. But you’ll get the best experience with Wi-Fi hooked up to the internet, Carey says. 

Can Smart Homes Get Hacked?

Although smart homes can be hacked, the damage a hacker can do is limited, says Christy Roth, director of offer management, home and distribution software for Schneider Electric in Nashville, Tenn. “Hackers can’t get to your bank account through your smart refrigerator,” she says. “But they could see what’s in your refrigerator or turn it off.” 

Although appliances can be at risk, homeowners are typically more concerned about risk tied to devices like smart locks and cameras. Carey says you’re better safe than sorry when it comes to security with smart home devices and appliances. “We recommend people set up a guest network that’s separate from their main network and connect all their smart devices to that. That way hackers can’t get on your network and onto your computer, where you store sensitive information.”

4 Smart Home Device Categories

Here’s a quick primer on four of the most popular smart home devices and some pros and cons for each.

1. Smart thermostats — They’re the top-selling smart home device. Around 33 million households in the United States had one as of 2020. “They’re the most natural place to start if you want to get into smart home tech,” Roth says. Smart thermostats let you create programmable temperature settings based on your schedule, the weather, and your own needs. Many smart thermostats incorporate artificial intelligence technology to learn your schedule and adjust heating and cooling according to when you’re home. They’ll turn off the AC while you’re at work and turn it on 30 minutes before you get home from work each day. “They definitely pay for themselves with energy savings,” Carey says.

Pros

  • Smart home thermostats reduce the use of heating and cooling systems when nobody is home. If your HVAC runs less, your utility bill will be lower.
  • They alert you when it’s time to change the filter and can tell you when your last maintenance check was, saving you costly repairs.

Cons

  • They can be complex to operate. “Setting up the profiles for vacation and sleep isn’t easy, so people can end up ignoring them or overriding them,” Roth says. “And the AI can annoy some people so that they override it. That defeats the purpose of having them.” 
  • Some require professional installation. 

2. Smart lighting This includes smart lightbulbs or smart switches. Both can be controlled remotely, via your smartphone when you’re miles away or with a voice assistant when you’re at home. You can program them to turn on or off at certain times and control their brightness.

Pros

  • Smart bulbs are simple to set up; you can screw them into a light fixture yourself.
  • They are easy to scale up; buy more to enlarge your smart lighting system.
  • They let you use whatever bulb you want because the switch is hooked to the cloud, not the bulb.

Cons

  • You can’t get smart bulbs to fit every fixture.
  • They don’t work well in fixtures tied to dimmer switches.
  • They require rewiring to install. You’ll need to call a pro.

3. Smart appliances — Anything that runs on electricity is game for joining the Internet of Things, the ever-growing network of connected devices that talk to one another via the cloud. So, you can get smart microwaves that let you download cooking instructions for frozen food, smart ovens you can preheat before you get home, and smart refrigerators that alert you when food hits its expiration date. “Our biggest seller is smart washing machines,” Carey says. “They’ll alert you when your laundry is done, so you can get it into the drier before it sours.” 

Pros

  • They look cool. What’s not to love about a refrigerator with a touchscreen that lets you see inside the fridge without opening it?
  • They can cut your electric bill. Some smart appliances can calculate energy rates and schedule themselves to run during off-peak hours when electricity rates are lower.  

Cons

  • They’re expensive to buy and repair. 
  • If your internet goes down, your smart appliances become dumb ones.

4. Smart door locks — They let you lock and unlock your house with the tap of a finger or a voice command. No keys required. Smart locks enable remote access, so you can unlock a door to let in a guest while you’re at work. Some locks allow you to monitor entry and exit logs in real time, so you can see if the kids got home from school or if the dog walker arrived on time. Some allow you to set up entry codes that work for only a certain period of time, so you can control who has access to your house.

Pros

  • You don’t have to dig in your purse or pockets for keys. 
  • You can see who comes and goes at your house.
  • Instead of giving out house keys to everyone who needs to get into your home, you can set a code for the cleaning person or the dog walker that only they use. 

Cons

  • They run on batteries. If the battery goes dead, you’re locked out.
  • If the power goes out or your Wi-Fi goes down, you won’t be able to operate the lock remotely.
  • Like all smart tech, smart locks can be hacked. But they have a system that will notify you or the police of an unauthorized entry.

Smart devices are a smart investment as long as they add comfort, convenience, or savings that you value. You’ll be more likely to get what works for you after exploring the most popular options and their pros and cons.

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What You Need to Know About Buyer Love Letters to Home Sellers

Did you hear the one about the dog who wrote a love letter? Not to his owner, but to a home seller. Well, actually the dog’s owner wrote the letter in Buddy’s voice. Buddy described how wag-worthy the house was and how much he craved a game of fetch in the backyard. 

Doggie ghostwriting, which happened IRL, is just one way home buyers are getting creative to motivate a seller to accept their offer. It sounds harmless enough, right? But buyer letters to home sellers can unintentionally create Fair Housing Act discrimination and risks for buyers, sellers, and their agents. And there are more-effective ways to offer what sellers value.

How Love Letters to Home Sellers Work

“A love letter is any communication from the buyer to the seller where the buyer is trying to set themselves apart,” says Deanne Rymarowicz, associate counsel at the National Association of REALTORS®. “It could be an email, a Facebook post, a photo. For example, some buyers send elaborate packages with videos and letters. The communication has the intent of ‘pick me, and here’s why.’” 

Buyers who write the letters typically send them to the listing agents, along with their offers, says Paul Knighton, CEO and cofounder of MORE Realty in Tigard, Ore. “They ask, ‘Would you please pass this along to the sellers?’ They’re doing what they can to get their offer accepted, especially in a competitive market.”

Letters Can Risk Violating Fair Housing Act

While these love letters may seem harmless, they can create a problem if buyers accidentally reveal information in one or more of the seven areas protected by the Fair Housing Act, Rymarowicz explains. Those areas are race, color, religion, sex, disability, familial status, or national origin. “Buyers could say something like, ‘this is down the street from our temple,’ or ‘the hallways are wide enough to accommodate my wheelchair.’ Anything that provides personal information related to one of the prohibited bases for discrimination could result in a violation if a seller makes a decision based on that information.” 

Do Love Letters to Home Sellers Work?

On top of creating potential risk, love letters to sellers aren’t all that effective, Knighton says. Here’s a case in point. Several years ago, one of his clients got 14 offers overnight, ranging from $219,000 to $250,000. “A person who offered $225,000 wanted to send a love letter. I told him, ‘You’re writing an offer that’s $25,000 under the highest offer. A letter’s not going to help.’ He wrote it anyway, but the seller didn’t even read it and took the higher offer. The offer needs to stand on its own.” 

And seller apathy isn’t the only issue. Some sellers may be completely turned off, Rymarowicz says. “They may think, ‘This is a financial transaction.’” 

Beyond communication, the circumstances can suggest Fair House Act discrimination, she explains. Say an offer with a love letter got the house but was less attractive than an offer without a letter. “If the losing buyer doesn’t share characteristics of the seller and the winning buyer does, you could have a situation. If sellers accept love letters, it’s more important that they document the basis of their decision when selecting a winning offer.”

Tips to Avoid Violating the Fair Housing Act

So, what exactly should you do to avoid risk of violating the Fair Housing Act? Here are five tips:

  1. Keep the contract in mind: Knighton says real estate pros at his firm talk to buyers and sellers about contract boundaries. “We say, ‘Please don’t communicate with the other party, because we are in contract negotiations and need to manage time frames.’”  
  2. Focus on objective information: Find ways to differentiate yourself on objective terms. And talk to the agent about how to improve the substance of your offer, Rymarowicz advises. “Can you make a larger earnest money deposit? Can you give them a longer closing date?” 
  3. Proceed with caution: The NAR discourages buyer letters to home sellers and advises caution, according to Rymarowicz. 
  4. Talk to your agent: Don’t be surprised if your real estate agent brings up the subject. “If you’re the seller, the listing agent may talk to you about the potential for Fair Housing violations. They may ask if you want to accept the risks,” Rymarowicz says. If the agent doesn’t raise the subject of buyer letters, the buyer or seller can do so. 
  5. Know your state law: Oregon passed a law governing how letters to home sellers are used. “Effective January 2022, a seller’s agent must reject any communication from a buyer other than customary documents,” Knighton says. A real estate firm filed a challenge to the law, though. And until the U.S. District Court for the District of Oregon issues a final decision, the state won’t enforce the law.

Even if a buyer letter to a seller focuses on the property and not the buyer, there’s little to be gained, Knighton says. “There’s risk, but the reward isn’t there. Instead, focus on writing a really strong offer. That’s what has to stand out.”   

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How to Prevent (Home) Buyer’s Remorse

When you’re house hunting, the pressure of competition can move you from “Hmm, I like that, but it’s too pricey,” to “I have to have that!” You think, so what if paying for this house will put me way over budget? I can cut back somewhere else, right? But that kind of thinking can get you into trouble. Trouble that’s totally avoidable.

Whether you’re in the middle of a home bidding war or facing down a list of must-haves, don’t lose sight of your budget and the risks. That way, you can own a house without home buyer’s remorse. And you’ll have money left to enjoy things like new furniture, entertainment, and just plain having fun. 

Who Has Home Buyer’s Remorse and Why?

A competitive real estate market can set buyers up to purchase a home that’s either beyond their budgets — sometimes hugely beyond — or doesn’t meet their needs, according to a 2021 survey by Bankrate and YouGov. The survey found that recent home buyers, including 64% of millennials, had regrets about their home purchase. The top reason? They were unprepared for maintenance and other home ownership-related costs. On top of that, 13% percent of millennials said they think they paid a higher sales price than they should have. 

“Things in homes always break down, so people should put aside a budget for anything that will need fixing,” says Lawrence Yun, chief economist at the National Association of REALTORS®. A rule of thumb is to anticipate 1% or 2% of the home price for potential maintenance,” he explains. “So, for a $300,000 home, that means setting aside $3,000.” 

One reason home buyers may be tempted to go over budget is they’ve been influenced by the beautiful homes on TV, according to an NAR report on home staging. “The shows can create unrealistic expectations for the home buying process and how homes should look,” says Brandi Snowden, NAR director of member and consumer survey research. Over time, buyers can view features that used to be luxuries as necessities. They believe everyone has them and they should too. One solution: Work with a REALTOR as early as possible in the process. “Make sure your agent knows your budget, so they can help you set expectations and stick to them,” she advises. 

How to Navigate House Hunting in a Competitive Market

In addition to pressure to exceed their budgets, buyers are facing hurdles like these five: 

1. Requests to Waive Contingencies

Tamara Suminski, a real estate agent at Beach Real Estate Group in Manhattan Beach, Calif., is seeing not only bidding wars but also sellers wanting buyers to waive contingencies. “With an appraisal contingency, if the appraisal comes in low, the buyer has choices. They can choose to try to renegotiate with the seller, bring in the difference, or cancel. When they remove that contingency and its protection, and if the home doesn’t appraise at the right level, the seller is not very likely to renegotiate with them. And the buyer has waived their right to cancel. If they cancel anyway, they’re risking their deposit.”

Some buyers are also waiving contingencies related to home inspections. These investigations are an opportunity to have a home inspector view the home based on disclosures and for the buyer to use findings as a bargaining tool, Suminski says.

Eliminating these protections can end up costing money for buyers. And the more offers the buyer writes and loses, the more risk they’ll tolerate. So, they may waive contingencies and regret it later, says Suminski. Talk to a buyer’s agent who will guide you through this and explain the risks of removing protections and unknown variables, she advises. 

2. Speed Showings and Decisions

Bryan Yap recently bought a home in an expensive and highly competitive market — Orange County, Calif. He found that with the pandemic, each showing lasted only 15 minutes. That was one of the biggest hurdles. “We’d see three, four, or five homes in one day. It’s hard to keep track of what you like and don’t like with each house. What I would do differently is take notes immediately after viewing a home. If you’re able to prepare beforehand, create a list of wants and requirements in priority order. Immediately after seeing each home, rank it based on the list.”

3. Focusing on the Top of Your Price Range

“If you’re looking in a micromarket where listings are achieving multiple offers and homes are going above asking price, don’t set your heart on houses at the top of your price range,” Suminski says. If $300,000 is your upper limit, look at houses priced at $250,000 or $275,000. Otherwise, you’re going to be outbid from the gate every time.”

That was the process Yap used when he was looking. “I would look for homes $25,000 under my max budget. I went on Zillow and looked at homes that were sold recently and tried to calculate the average over-listing price those homes were being sold for and factor that into my offer price.”

4. The Need to Compromise

Yap’s must-haves were three bedrooms, two baths, and being closer to the city center of Anaheim. “I was able to get three beds and two baths, but I did have to compromise on location. I also had to compromise on price, which was doable because I could still afford it. To compete with all the potential buyers, I knew that we had to either offer an over-list price or remove some contingencies.”

Suminski advises adjusting your search outward geographically, even if it means a longer commute. Buyers might also have to compromise on property types and features. In addition, they should consider doing some DIY projects instead of wanting everything to be move-in ready. “They may have to be willing to look at townhouses instead of single-family homes or install carpet and paint on weekends.” 

5. Information Overload

In the two years before he started searching for a home, Yap did a lot of reading. “It was a massive plan I had to come up with and stick to so that I’d be able to afford buying a home.”

Because of how hot the Orange County market is, agents scheduled showings as soon as a house was listed or showed “coming soon” status. Yap treated the home search as “almost a second job,” using lunch breaks and evenings to check emails, do online searches, and text his real estate agent about what he wanted to see. “I had to make a lot of sacrifices. People wanted to set plans with me for the weekend, but I said, ‘Sorry, I have to go view homes that day.’” 

He primarily credits his real estate agents, including Sumiski, for keeping him informed. “They made all this possible. I learned a lot from them.”

Some agents, like Suminski, hold an accredited buyer’s representative designation but usually work with sellers as well as buyers. “An agent with an accredited buyer’s representative designation has taken extensive buyer’s representation training,” Suminski says. “They’ll provide education to buyers so that they’re learning as much as they can about the market, including the risks involved with different negotiations. If buyers are going to shorten terms or remove protections, they need to be well informed about the pitfalls.”

Learn from Experiences

That access to information and guidance will help buyers making an offer on a home especially in a competitive market. “Today’s buyer has seen and written offers on many properties before they get their offer accepted,” Suminski says. “That’s common across the country. Each is a learning opportunity for buyers about what information they might need to be researching so they can move more quickly.” 

When you act on advice from recent buyers and agents, you can stay well informed and get good results even in a tough market. And that’s the best way to prevent home buyer’s remorse.

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How to Shop Around for a Mortgage Loan

Whether you’re shopping for new bed sheets or a new car, the drill is usually the same. Hit the reviews, check with friends, and scope out the best deal. After all, who wants to buy a car that racks up repair bills right away? Yet when picking a mortgage loan, borrowers don’t always think about comparison shopping.

In a Bankrate survey of recent home buyers, 12% of millennials said they believe their mortgage rates were too high. Some buyers may think that when mortgage rates are low, they don’t need to shop for the best offer. But even a few basis points can make a difference of thousands of dollars over the life of a loan, according to Bankrate, the Consumer Financial Protection Bureau, and the Federal Trade Commission.

You may think mortgage shopping is about as much fun as prepping for a tax audit. It’s true that comparing home mortgages can get complicated. But you don’t need a finance degree to make an informed decision. Here are some steps to get there.

Find a Few Lenders

When looking for lenders to consider, loan officers recommend going to a few sources:

  • Locals you know and trust: “Make sure the lenders you’re comparing come from referrals from local people you know who’ve worked with them — like your friends or relatives,” advises Jeff Koch, senior vice president of residential lending at Draper & Kramer Mortgage Corp in Schaumburg, Ill. “Wherever you have trust established would be a good source.”
  • Your real estate agent: “If you’re working with a real estate agent, find out if they have any feedback or advice on a lender or a loan officer,” recommends Jim DeMarco, branch manager and senior loan advisor at Flagstar Bank in Seattle.
  • Online reviews: These can be a good starting point, DeMarco says. “If you see a lot of really good reviews, that means people are taking the time to provide them.”

Have an Intro Mortgage Loan Meeting

During a meet and greet, you and the loan officer will usually ask each other questions, and the loan officer will use that information to assess your qualifications. That may sound cut and dried, but the meeting should be fluid based on what you’re ready to do.

Typically, the loan officer would schedule a meeting focused on comparison shopping separately. If that sounds painful to borrowers who want to (literally) get moving, no worries, Koch says. “The borrower may be well versed and want to get right to what’s most relevant for them, which are the financial and comparison details. But a lot of people need to go over their own questions or cover key topics first.”

Want to meet virtually? “Some folks are just more comfortable virtually, and that’s OK,” DeMarco says. “I’ve closed loans with people I’ve never talked to on the phone. It’s all via text.”

Interview the Mortgage Loan Officer

Whichever way you choose, this meeting is prime time to interview the loan officer. Borrowers need to find someone who will be in there with them and can problem solve. “We call unanticipated problems ‘icebergs,’” DeMarco says. “You think there’s smooth sailing. And then, suddenly, you smack into an iceberg.” 

Check out the lender’s communication strategy and their process for delivering on time. “The process is highly complex, and you’d think professional lenders all would have mastered it. That’s not the case,” says Koch. “When a loan isn’t delivered on time, people’s finances and lives are basically balanced on the head of a pin, which is the closing date.”

To avoid problems, ask questions like these: 

Fact finding about the process:

  • Would you take me through the process?
  • What should I expect? 
  • What will I need to supply?

Compatibility with the loan officer or mortgage banker or broker:

  • What’s your communication style? Are you willing to communicate virtually?
  • When would I work with you? Are you available in the evenings?
  • Will I work with you or a member of your team?
  • What do you think of my time frame to get to closing?
  • What if any problems do you foresee?

Track record of loan officer and lender:

  • How long do loans you process typically take to close?
  • How would you expedite the process if there’s a tight time frame?
  • About what percentage of loans you work on close on time?
  • How many loans have you worked on that haven’t closed or haven’t met deadlines? 
  • What’s the biggest problem you’ve had with a loan and how did you fix it?

Use the Meeting to Learn

You can also use the meeting to clarify general info you’ve picked up online and talk about your concerns. DeMarco gives a couple of examples. “You may have switched careers or industries in the last year or started having bonus or commission income. Your research may have shown you can just divide your salary by 12 to figure monthly income. But it may not be as simple as that.”

You’ll also want to bring up concerns like the impact on your credit score. Thirty-eight percent of buyers think comparing multiple mortgage offers in a short time will hurt their credit rating, according to a 2020 LendingTree survey. “As long as the lenders all pull the borrower’s credit within a couple of weeks, it’s counted as a single credit inquiry. So, it’s not a problem if they do it within a narrow band of time,” Koch explains.

Get and Compare Financial Information

Whether you’re looking at a federal form called a loan estimate or a precursor form called the fees worksheet, you’ll see a breakout of closing costs, explains Koch. “To compare the lender financials, you’ll want to drill down to origination charges in the lender section. Make sure you’re comparing apples to apples. If one lender is offering a 30-year fixed rate at 2.875% with no lender fees and another is offering 2. 75% with $1,500 in lender fees, those are unlike products. Get the fees at the same rate to find out which is less expensive.”

6 Tips to Get Mortgage Loan Information

Comparison shopping can get complicated. Here are six ways to keep it simple:

1. Keep Your Pool Manageable

Mortgage shopping “depends on the borrower and the personality type and how they’re wired,” Koch says. “The process can seem overwhelming. That’s why it makes sense to have a select few options to compare so borrowers can process and assimilate them.”

2. Get a Fees Worksheet

The best way to compare effectively is to zero in on the fees worksheet, which the loan officer should provide. “You’ll be able to figure out just what the lender’s direct fees are, and you can make a nice, simple comparison,” Koch explains.

3. Understand a Fees Worksheet Versus a Loan Estimate

The numbers on the worksheet are estimates and not locked in. Interest rates are fluid and change daily or even more often, DeMarco says. On the other hand, after you have a contract with a seller, “the loan estimate and loan application are where the information is binding, barring structural changes to the loan,” Koch says. Make sure the information reflects previous discussions with and disclosures by the loan officer.

4. Be Careful Interpreting Third-Party Fees

Third-party fee estimates are included on the worksheet. Two lenders could each come up with different estimates for title, escrow, or appraisal fees, Koch explains. But not all are negotiable. For instance, the seller chooses the title company, so the lender doesn’t control the choice or the fees. The lender could be choosing the high or low end of a range, but it’s only an estimate.

5. Think About Timing

Make sure lenders are using the same time frame for locking in pricing and that it will extend through the closing, Koch notes. “A lender might offer a rate that’s a lock for three weeks, but if you anticipate or know your closing date will be five or six weeks out, that’s a problem.”

6. Consider Applying for Loan Approval Before Finding a Property

“Many lenders will not do this,” Koch says. “But some will allow borrowers to go through the formal underwriting process — not just pre-approval — without having a property. The borrowers can get a bona fide mortgage commitment with all of the major buyer financials truly underwritten at that point. Then when borrowers make an offer, they can close more quickly.”

You’ll have to invest some time and effort into comparison shopping for a mortgage loan and selecting a lender and a loan officer. But your return on investment can pay off over the long haul.

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Understand What Goes into House Prices in a Competitive Market

You may be selling a home in a competitive market — for example, with low inventory and high demand. And you may be thinking “Yay!” or at least “Whew.” You know you’re likely to have more interested buyers, better offers, and a quicker trip to contract than you’d have otherwise. But along with that good news comes the need to manage your expectations by understanding what determines house prices and home sales. Factors include the right real estate agent, local market conditions, buyer preferences, seasonality, and mortgage rates versus inventory.

Work with the Right Real Estate Agent to Sell Your Home

House prices come down to the micro real estate market, says Jasen Edwards, a real estate coach and former member of REALTOR® magazine’s 30 Under 30. “What’s going on in the U.S. as a whole is different than what’s going on in Austin, Texas. [And both are] different than what’s going on in your neighborhood,” he says. “You might hear that it’s a strong seller’s market, but you might be in a micro buyer’s market.”

Edwards advises researching your market on your own, then interviewing real estate professionals to find the best person to work with. Sellers should approach working with an agent as though they’re forming a team. You’ll be creating a plan together on how to maximize home pricing, Edwards says. 

Bernadette Inez and her broker created such a team. Inez, who had lived in the same southwest Chicago home for 26 years, needed to sell last fall when she was going through a divorce. She wanted a real estate professional who could give her strong guidance in determining an asking price. 

Inez learned about Erika Villegas, managing broker and co-owner of RE/MAX In The Village in Oak Park, Ill., through Villegas’ community sponsorships and networking events. After an initial consultation, Inez hired Villegas to list her home.

Consider Local Market Conditions that Affect House Prices

Villegas did a hyper local market analysis and found the price of houses similar to Inez’s to be about $229,000. She recommended listing at $239,900, mainly because of the area’s lack of inventory and extremely low days on market. It was the right call. The house had 35 showings in the first 48 hours and generated five offers at $10,000 above the asking price.

Sometimes home improvements are needed to maximize the price. When Inez decided to put her home on the market, she opted to do some updates to appeal to more buyers. The 1950s tile in one of her bathrooms was showing its age, so she hired a contractor to install a vinyl covering. She hired someone to reglaze the tub in her other bathroom and replace all faucets, including in the kitchen. She also repainted her living room. 

Think about Buyer Preferences that May Affect Your Home Pricing

In addition to home condition, other factors, including buyer preferences, affect price. Being located on a busy street or alley, for instance, may deter some buyers. 

“I put myself in the buyers’ shoes [about] what they’re seeing in the home,” Villegas says. “For instance, many are home schooling right now. That is influencing which features buyers want in a home.” 

Know that Seasonality May Be a Factor

Seasonality has historically been a factor, but 2020 was an exception, when strong home sales extended into late fall and early winter. Existing-home sales in November were up almost 26%, and sales prices nearly 15% from the previous year, according to the National Association of REALTORS®. Transactions and house prices nationwide traditionally trend up in the summer, when home shopping activity is high. They slow in the winter, when demand wanes. Demand also correlates with Americans’ higher mobility rates in the summer, when school is out. However, seasonality is also regional, with markets in the Northeast and Midwest peaking more significantly in the summer than the South and West, NAR reports. 

“Listed homes have been going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates,” says Lawrence Yun, NAR’s chief economist. 

Weigh Mortgage Rates Against Inventory

Low interest rates can of course make purchasing a home more affordable for buyers. However, the lack of homes on the market has created stiff competition among buyers. In fact, it often puts them in bidding wars, nullifying the benefit of the low rates. According to Redfin, record low interest rates have increased home buyers’ purchasing power by 6.9%. But higher home prices have cancelled out the effect.

In multiple offer situations, Villegas creates a spreadsheet outlining the terms and pricing of each offer for her clients. She then calls the loan officers of the potential buyers to make sure their information has been verified. After that, Villegas goes through each offer one by one with her sellers. Together, they evaluate which one is not only the best, but also the most secure. She also helps her sellers prepare for the appraisal by creating a list of the home’s updates from the past few years. 

Why You May Need to Be Flexible

Flexibility is a plus, even when circumstances seem to favor sellers. Low inventory and aggressive house prices are compromising many buyers’ ability to afford a home. Sellers should be prepared to make adjustments if necessary. 

“No one has a crystal ball,” says Edwards. Ideally, the seller should list at a price that gets attention and triggers a lot of interest, he adds.

When buyers are continuing to take advantage of ultra-low interest rates, a seller’s market will remain in areas with sought-after price points and a low inventory of homes for sale.