What You Should Know About Navigating the Housing Market in 2022

February 19, 2022

Throughout 2021, the housing market has been nothing but hot. Low mortgage rates and fewer homes in the market have meant a higher demand. This saw the prices shoot to all-time highs, even in markets and neighborhoods that are historically known to be less lucrative.

If you’re looking to buy or sell a home in 2022, you need to understand the market and the numbers before making up your mind. The fact that the housing market is hot doesn’t mean every property you list for sale will attract the best buyers. To help you navigate this terrain, we’ve listed some home buying and selling tips for your consideration.

Buying a Rental Property

The high market prices and low inventory doesn’t mean there aren’t good deals in the market. All you need is to do thorough research, compare prices, visit open houses, check taxes, and submit offers. If you do this right, there are chances you will find some deals that many buyers missed.

You can also leverage technology such as AI-powered online listings to scale your house-hunting mission. Here, you won’t have to rely on realtors and brokers who are often motivated by the fees. You may still need to physically visit the locations and be conversant with the different property types, on-demand amenities, and facilities, or future developments in the area. Here are the other home buying tips to keep in mind:

  • Always find an ideal location: If you pick a property without double-checking the location, you could risk losing your money. It’s advisable to choose a property in an area with an increasing population and where the infrastructure is well maintained and constantly improving.
  • Look for a property that can sell quickly: Whether buying your first home or acquiring some investment property, always go for the quality. You don’t want to buy a property that’s difficult to put on the market. You can avoid this problem by choosing a one that requires simple repairs, is in a friendly neighborhood, and is well connected to the transport system and other social amenities.
  • Financing or cash: Most investors choose to finance their properties through mortgage lenders and banks. The benefit to this is that you are using leverage for a higher ROI, plus you incur less risk since you are only making a 20% down payment towards the purchase of the property. Use the FHA loan calculator to estimate your mortgage payments. However, you can choose to pay cash for some deals, especially when the demand is high.
  • Consider your margins: Another important consideration to make is to calculate all the expenses you’ll incur until you or your first tenant moves into the property. You should then estimate the returns or potential savings for a given period and compare it with the cost.

Before buying your first rental property, ensure you understand the legal rights and obligations of owning a house. This is also true if you’re purchasing a commercial property, except that the rights, responsibilities, and governing laws may vary slightly.

Selling Your Home

Due to the high demand and favorable market prices, some investors use this opportunity to take profits from their initial investments. Similarly, some homeowners may choose to exit the market and wait until the prices drop to buy their dream homes.

Regardless of your reasons for selling your home, you can choose to sell it through a real estate agent or directly as a For Sale by Owner Property (FSBO). There are benefits and disadvantages of picking either method, so the right option will depend on your unique needs.

For instance, a real estate agent will take approximately 5% commission of the sale price, significantly reducing your profits. While the agent is more likely to find you a serious buyer, the process can continue for months before you get paid for the property.

With the FSBO option, you keep all the profits, and you always get instant cash if you find a serious buyer. However, it poses some legal risks due to complex laws and tedious paperwork. If you pick this option, it’s advisable to work with someone who understands the selling process and all the legal documentation required.

Some veteran real estate investors, such as Four 19 Properties, buy rental properties for cash, regardless of the reasons for selling. These investors will also allow you to sell your home fast with no fees and commissions, and they understand the selling process, so you won’t risk fines and penalties. Whether you are selling through an agent or directly to a buyer, here are some tips to consider:

  • Get ready in advance: You should move out and prepare the house for sale some days or weeks before listing your property for sale. Listing a home that’s still occupied can signal buyers that you aren’t serious or haven’t made up your mind.
  • Clean up the place: Always create that first impression by tidying everything up and, where possible, fix the simple deal-breakers, such as broken windows, or an overgrown lawn.
  • Trust your instincts: Timing the market is a very risky business. The only thing you can do is speculate and trust your gut feeling. This is true whether you choose to sell your house in the winter when there’s less competition or during a volatile market like now when there are fears of market correction due to the high inflation.

Endnote

If you are considering participating in the real estate market in 2022, you are probably going in as a buyer or seller. The odds may not be in favor of the buyers due to the limited inventories and higher prices. This limits the upside potential in the future, plus you can only buy what’s available in the market, meaning your options are constrained.

Less market competition and high prices mean sellers have a bargaining edge, but your reasons for selling make all the difference. If you are selling to downsize or move to a more affordable suburb or city, that will make a lot of sense. However, if your goal is to upgrade or buy a comparable home nearby, you may find it difficult to do so.


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