Low Commission Real Estate Agents

For more than 60 years, most real estate agents have charged a total commission fee between 5.5% to 6% of a home’s sales price. For a $500,000 home, that means you’ll be paying about $30,000 in Realtor fees, representing the majority of your closing costs as a home seller.

Today, several options exist for consumers who want to work with lower commission real estate agents including flat-fee listings, discount brokers, MLS-only listings, and online real estate brokerages.

In this article, we explore the service provided by low commission real estate agents and why you might consider hiring one.

First of All, Who Pays for Realtor Commission?

When a home sale occurs, there are typically two sets of commissions that get paid: the Buyer’s Agent commission and the Listing Agent commission.

Historically, most sellers pay about 6% in real estate commissions (3% to the listing agent and 3% to the buyer’s agent). But, a common misconception is that these fees are locked in or set in stone. Many agents will tell consumers that their commission rate is not negotiable, but this is usually not the case. Both the listing fee (typically 3%) and the buyer’s agent fee (also, typically 3%) is negotiable.

If you don’t feel comfortable negotiating a reduced commission with your agent, yet don’t want to pay 6% or more to sell your home, a low commission agent or online broker might be a good option for you.

What is a Low Commission Real Estate Agent?

A low commission real estate agent is a licensed real estate agent that charges a lower commission than a traditional agent or brokerage. For example, these lower fee agents may charge a fixed fee or a reduced commission rate instead of the prevailing 3% listing fee and sell your home (not including the buyer’s agent commission).

These agents may offer full service or limited services for a discounted commission. The core services offered by most “full service” agents include:

Home valuation
Lockbox and yard sign
Photography
MLS listing
Contract negotiation
Showing/tour management
Seller disclosure docs

Flat Fee & Discount Brokerages

“Flat fee” or “discount” brokerages may provide a very similar (if not exact) level of service compared to a larger, national brokerage such as ReMax, Keller Williams, Coldwell Banker, etc.

It is important to note that these agents will typically not alter the buyer’s agent commission, only the listing agent commission. In other words, if the typical fees in your area are 3% for the buyer’s agent and 3% for the seller’s agent, the discount broker usually will only lower their listing fee, but not the commission of the buyer’s agent. This way, the buyer’s agent is equally incentivized to show your home versus another home.

Why Would an Agent Offer Discounted Rates?

Many brokers and agents have various reasons for charging less in commission. Most commonly, it comes down to business expenses that come with finding new customers such as marketing and advertising costs. If an agent lowers their commission, then they generally can acquire more customers at a lower cost than their competitors. With the increased number of customers, the agents can then offset the loss from the discounted commission.

Another factor relates to the “fixed costs” of selling a home. What most consumers don’t realize is that agents do not shoulder fixed, hard costs when with selling a home. In terms of operating costs, agents generally pay a “desk fee” or a commission “split” to their brokerage plus annual dues to the local Realtor’s association. But, when it comes specifically to selling your home, the only real cost is their time and energy. Gone are the days of high “marketing costs” where an agent might print and distribute thousands of flyers or postcards. Those tactics are unnecessary with the advent of the internet.

In short, it costs agents very little to “sell your home”. So, technically an agent could charge you only $1,000 and still make a small profit – depending on how much the agent valued their time. Said another way, an agent that only charges you $1,000 is not necessarily “losing” money on you as a customer.

Commission Savings Comparison

SimpleShowing, the author of this post, has a 1% listing fee model for home sellers. Below is an illustration of how this breaks down from a cost saving standpoint, with total commission paid resulting in 4% versus the typical 6%.

For Sellers:

SimpleShowing charges $0 up front and a 1% listing fee at closing. In 2022, our sellers saved $9,300 on average by listing with us instead of a large, national brokerage.

Our 1% Listing Fee includes:

Listing on the MLS and 50+ real estate sites
Professional photos
Digital marketing of your listing
Dedicated real estate agent
Contract and negotiation management
Home valuation
Property disclosures

Please note: This fee does not include Buyer’s Agent commission which is typically 2.5 – 3% of the purchase price.

Conclusion

Selling through a low commission brokerage may be a good decision if you already know the value of your home, you’re an experienced seller, or if you live in a hot area where homes are selling quickly.

If you’d like to learn more about selling through SimpleShowing, get started with a free online home valuation that takes less than 1 minute.

When is the Best Time to Buy a House?

Considering moving into a new home? For most of us, a home purchase is the largest financial undertaking of our lives.

Understanding when to buy a house can greatly influence your buying experience. The number of houses you can choose from and the final selling prices of those houses fluctuate with the seasons. Some seasons offer better selection while others offer better bargains.

Knowing the best time to buy can get you into the house of your dreams at a great price.

The Best Time to Buy a House

The best time of year for buying a house depends on your priorities. To choose from the best selection of homes you will probably sacrifice a bit on selling price and vice versa. Knowing the best time of year for you to buy can help you get the house of your dreams at a price you can afford.

Fall

If you are most interested in saving money, there are bargains to be found in late summer and early fall. Lots of sellers drop prices right before school starts (particularly in late August and September) to avoid the winter lull in the market. There is also less competition from other buyers in these months. Homebuyers with school-age children will have already bought and moved into their homes before the school year starts.

Winter

You can get a particularly good deal in the winter months if you are willing to sacrifice selection. People avoid putting their home on the market (or even take it off the market) in the winter to avoid dealing with colder weather and trying to keep a home “show ready” during the holidays. A homeowner willing to list and keep a home tidy during holiday chaos is probably highly motivated to sell. Buying at this time gives you lots of room to negotiate on the selling price not only due to the limited listings, but also due to their being less foot traffic from buyers. The colder weather discourages buyers from wanting to house hunt during this period, so there is less competition from this end as well.

Price reductions are also common during the holidays, so you may be able to get a better deal on a property. Closing on a house in fall and winter tends to move more quickly than at other times in the year. Agents are usually very motivated to finish closings and clear their books before the new year begins, resulting in a faster move-in time for you.

Spring

If you want to prioritize selection over selling price, spring and early summer are the best times to go house shopping. This is the time when many homeowners put their houses on the market, so the selection is high. May and June are usually the best months to shop if you want to see a wide variety of homes or if you must have a home in a particular area. If you need a particular school district for your children, this is the best time to shop. Keep in mind that along with better selection comes more competition. There will be lots of other potential buyers looking at houses, leaving you with less wiggle room on selling price. Houses tend to sell fast during this period, so if you find the home you want, be ready to act quickly to avoid losing it.

The Best Day of the Month to Buy a House

If you are looking to stretch your dollar a bit, choosing a closing date can be particularly important. If you are going from renting to owning your first home, it makes sense to close on the last day of the month to avoid paying for a partial month in your rental. If you have a lot of closing costs to pay, you can schedule your closing date closer to the beginning of the month to give you a breather between the closing and your first mortgage payment. Lastly, closing on a Friday is a great option because it gives you the weekend to start moving your things into your new place!

Conclusion

The overall climate of an area can affect selling prices. In warmer climates, most sellers won’t be worried about a winter slowdown that we mentioned above. As a result, sellers won’t be motivated to make a deal in August or September, unlike the seller up North who wants to get out of the house before winter hibernation sets in.

If you have kids and need a specific location because of the school district, you will want to shop when the selection is at its highest (late spring/early summer). Many parents want to settle into their new home before the school year starts. The competition and prices for a home are higher at this time, but if you absolutely have to have a particular school district, that is the best time to buy.

There are a lot of factors to consider when choosing a home. If you are looking for a great bargain, the winter months are a great time to search for that dream home at a great price. If you require a certain location or just want a better selection to choose from, the late spring and summer may be the best time for you to go house hunting. Armed with this knowledge, you can make the move into homeownership when it is best for you.

Hottest Areas of Tampa

Tampa is one of the largest cities in Florida with many diverse neighborhoods to choose from including South Tampa, Downtown, New Tampa and The Heights. Below, you can read all about these neighborhoods, their housing options, and what makes them some of the most desired places to live in Tampa.

1. South Tampa

Located on the bay, the peninsula of South Tampa is a historic district filled with lots of local restaurants and boutique shops. Along Bayshore Boulevard, a 4.5 mile sidewalk offers amazing views across the bay on one side and uber luxury homes on the other. It’s easily accessible from most of South Tampa and is always packed with scores of people out walking, running or cycling to enjoy the great Florida weather.

In South Tampa, housing prices currently range from the low $400,000’s all the way to pricey multi-million dollar homes. Homes tend to be the more expensive option in this area while condos and townhomes are the more affordable choices. South Tampa always has a packed event calendar, so you are sure to find something to do.

2. Downtown Tampa

???? : Tampa Bay Times

Downtown Tampa is also an area close to the water. While it has been known as a business district, there are many projects underway to transform this area with new housing, retail shopping and restaurants. According to ABC News, a recent $3 billion dollar investment has plans to improve the waterfront area, double the housing available, and add 30 new buildings to the skyline. With such a large investment, this area is sure to grow in the coming years.

Like most downtown neighborhoods, the housing options are mainly limited to condominiums ranging from the $300,000’s up into the millions. Although condos may not give you the most space, they offer stellar amenities such as fitness centers, pools, and great skyline views that you can’t get anywhere else. If you’re looking for city living in Florida, then Downtown Tampa should be on your list.

3. The Heights

???? : Daven Henry

Seminole Heights, Riverside Heights and Tampa Heights make up this area just north of downtown. These neighborhoods are older parts of Tampa that have recently resurfaced as some of the hottest areas with new restaurants, shopping, and businesses popping up. How old are The Heights exactly? According to the Tampa Heights Civic Association, Tampa Heights is considered to be Tampa’s first suburb with homes still dating back to the 1880’s!

Bordering Tampa Heights to the north, Seminole Heights is known for its many bungalow homes and historic buildings dating back to the 20th century. Lastly, Riverside Heights is located along the bank of the Hillsborough River to the west of Tampa Heights and Seminole Heights. According to Neighborhood.com, this area is very family-friendly with affordable homes and lots of diversity.

If you’re looking for a fixer-upper or a nicely done re-model, then this area might be for you! You surely won’t run out of dinner options either with The Heights Market at the old Armature Works building and the Hall on Franklin. Both of these are two of the newest, hippest options for dining and drinks in Tampa and join a list of other restaurants along Florida and Nebraska Avenue up in Seminole Heights.

4. New Tampa

New Tampa is one of the newest communities in Tampa, hence the name. Homes here range from condos, townhomes, and ranch-style houses. Housing prices are currently ranging between $350,000 – $600,000 for single-family homes. Condos or townhomes can be less expensive options. Unlike South and Downtown Tampa, New Tampa doesn’t offer the same convenience of walkability as most places are spread out here. However, there are plenty of restaurants, tons of shopping in the area, space for parks and recreation, and the amusement park, Busch Gardens is nearby.

According to Newtampa.com, luxury communities are on the rise in this area with New Tampa becoming the home of some of the most sought-after neighborhoods in Tampa Bay. New Tampa has seen a boom in growth over the last few decades and this trend is expected to continue. If you like newer construction, you’ll get more house and yard for your money in New Tampa than in many other parts of the city.

Looking to tour a home in Tampa? Start searching now!

What Does “As-Is” Mean in Real Estate?

If you’re in the market for a house, you’ll probably come across at least one or two listings that include the words “as-is.”

For some, this is a giant red flag. Others would think they’ve found a diamond in the rough.

The truth is that neither is 100% accurate, so it’s important to understand what an “as-is” property really is before you decide whether or not it’s worth considering.

What Is an “As-Is” Property?

In real estate, an as-is property is one that’s listed for sale in its current state, meaning that any issues or problems with the home will not be addressed by the seller.

With a traditional home purchase, if the buyer discovers something wrong with a house (e.g. a roof leak, broken HVAC, etc.), they can request that the seller pay to have it fixed before closing. In this common scenario, the buyer’s purchase of the home is contingent on the repairs being made prior to the close of escrow.

When a property is listed “as-is”, it generally suggests that the seller won’t entertain any such requests. Buyers can either take the home in its current state or look elsewhere.

Common Issues with As-Is Properties

To give you a better sense of what an as-is property might entail, here are some common examples of defects that the seller wouldn’t be repairing, despite putting their house on the market:

Asbestos
Polybutylene plumbing
Broken or malfunctioning systems (e.g. HVAC)
Faulty or leaking roof
Mold problems
Structural issues
Termite damage or infestation
Siding rot

Of course, depending on the home, there could be any number of different issues the owner won’t be addressing before the sale. At the same time, the issues could be minimal, but the owner simply wants to sell the home ASAP.

For example, many as-is properties are foreclosed homes or short sales. After repossessing a property, banks often decide it’s not worth making minor repairs because they simply want to recoup as much of their loss as possible and not incur any further expenses.

What “As-Is” Is Not

With that being said, selling a property as-is doesn’t mean the homeowner can just list it, walk away, and simply accept whatever price they can get. Many sellers are under the misconception that the “as-is” label relieves them of any responsibility to ever disclose what’s wrong with the home.

Laws about disclosure do differ by state, though. In some, homeowners aren’t obligated to tell a potential buyer about any issues with the house if they have never occupied the residence themselves – for example, an investor. In real estate, this is known as “Caveat Emptor”, more commonly referred to as, “let the buyer beware.”

However, every state requires that sellers answer questions about the house honestly. So, you can list your property as-is, and you can choose to withhold whatever information you like, but you’ll still have to truthfully answer any questions a potential buyer poses.

Furthermore, a real estate agent is legally required to disclose anything the seller tells them that represents a significant or material defect of the property. This is because their services fall under the Consumer Protection Act.

Therefore, “as-is” should never be taken to mean that the buyer has no options for learning about potential issues.

Should You Buy an As-Is Home?

The short answer is…maybe.

As-is homes often carry a bad connotation for reasons we just touched on. Many buyers suspect that the only reason a home is listed that way is because it suffers from major problems that would be extremely expensive to fix.

In other words, they see “as-is” and think “not worth it.”

However, this isn’t always the case.

Again, quite often, properties are listed this way because they’ve been foreclosed on and banks don’t want to spend even a minimal sum to switch out a sink or replace some broken windows. If everything else is right with the house, this wouldn’t be an issue for many buyers, especially if the “as-is” house is listed below market price.

The seller could have also run into financial troubles. If they had the money, they’d make the necessary repairs. Unfortunately, in their current situation, they just need to sell their home right away.

At the same time, it’s worth pointing out that not all “as-is” homes are going to be bargains, either. While it’s true that they often sell for less than comparable homes because of major defects, lower asking prices tend to attract investors. Someone looking to flip a house might not bat an eye at having to spend thousands on updating a kitchen and will even bid aggressively to win the as-is property.

In short, it’s absolutely worth considering any “as-is” homes you’d otherwise be interested in.

Property inspection is critical

Perhaps the most important rule when considering an “as-is” property is that you must have a property inspection done during due diligence. This is always good advice, of course, but it’s essential for these types of homes. Keep in mind that you can also get specialized home inspections as well – such as an air quality test, radon inspection, termite inspection or structural inspection.

While you should still ask the real estate agent any questions you have, don’t proceed with the sale until you hear from your inspector. When someone is selling “as-is”, they might not even be aware of all the issues with their house. After all, what does it matter if they’re not going to fix them?

Tell the inspector what you already know about the house and then let them evaluate it. They’ll let you know whether or not the home is worth purchasing.

You Don’t Need to Buy an “As-Is” Home to Save Money

If you come across an attractive “as-is” home during your search and it gets a clean home inspection, there’s no reason you shouldn’t buy it if you’re willing to address any minor pre-existing issues.

However, you shouldn’t feel as though an as-is property is your only chance to save money on a house you’ll be glad to call home.

At SimpleShowing, here’s how we help during the home buying process: we educate you about the market, help you book showings and connect with an experienced real estate agent. Best of all, with our Buyer Refund Program, you’ll actually receive a piece of your agent’s commission. On average, we’re able to give buyers more than $5,000 back at closing. This refund can also be reflected as a credit on the purchase agreement.

Want to learn more? Contact us today and let’s talk about finding you the perfect house.

Why Mid-Century Modern Homes Are Still So Popular

Almost 100 years ago, the world of residential architecture changed forever with the introduction of mid-century modern homes.

They didn’t look anything like their predecessors, which is exactly why the style became so popular practically overnight. For many people, it’s still the ideal option.

So, if you’re in the market for a new home, it’s worth learning why so many people love mid-century modern homes.

What Is a Mid-Century Modern Home?

Mid-century modern homes grew in popularity during the 1940’s and maintained it all the way through the 1960’s. This style of architecture broke away from more traditional designs, borrowing heavily from the inspired work of Frank Lloyd Wright.

Though its popularity dropped after the 60’s, it’s still an extremely prevalent form of architecture throughout the country. Here are the four aspects that define this type of home.

1. Flat Panes

Mid-century modern design prioritizes flat planes. This emphasis on geometry can be seen throughout these homes, from the layout of each room to their roofs. Although ranch-style mid-century modern houses typically keep their gable roofs, the insides feature more straight lines than traditional ranch homes would.

Mid-century modern interior design doesn’t always follow suit, though. Designers often use plenty of curves in their furniture choices inside of geometric rooms, creating “modern” looks reminiscent of the 50’s and 60’s.

2. Large Windows

One of the most distinguishing characteristics of mid-century modern homes are large glass windows. In fact, it’s not uncommon for the back of these homes to be almost completely without walls – just large floor-to-ceiling windows instead. Some seem to be almost completely made of glass with even the front of the house letting in plenty of light.

This is probably the best example of the functional aspects of mid-century modern homes. Not only do these large windows look great, but they also let in lots of natural light. From a design perspective, they blur the line between the house and its natural surroundings, which is great for homes that are tucked away off the beaten path.

3. Changes in Elevation

Similar to a split-level house, mid-century modern homes usually feature multiple floors, but each is separated into different elevations, often by just a step or two.

The effect may also be heightened by the inclusion of partial walls that create spaces of varying depths or even cabinets of different heights.

4. Integration with Nature

As we touched on a moment ago, mid-century modern homes tend to offer multiple views of the outdoors. This usually means large windows, but multiple access points can play a role, as well, making it easy for the inhabitants to step outside. Courtyards are fairly common, too.

4 Reasons People Love Mid-Century Modern Homes

Though they are reminiscent of a style that had its heyday during the first half of the last century, mid-century modern homes remain popular. People aren’t just buying the original versions, either. Plenty of residential architects stay busy by designing brand-new mid-century modern houses for people who absolutely love this look.

Here are the four most common reasons these homes will be around for another century.

1. Vintage Style

One reason for the popularity of these homes is that Millennials love vintage design and style. This category has proven to be a great combination of chic and functional.

So, it’s not surprising that when Millennials decide to buy houses, many of them love the idea of owning a home that has an authentically vintage feel to it.

At the same time, mid-century modern houses still give them plenty of room for creative design choices. They aren’t as boxed in by the architecture of their home. Whereas other forms of architecture demand a fairly specific type of interior design, mid-century modern can accommodate numerous options. Owners can strictly adhere to the vintage look, choose something more modern, or include aspects from a range of other styles.

2. Small Spaces Get Lots of Character

Another great thing about mid-century modern homes is that their changing elevations create lots of fun little spaces throughout the home. One room may actually feel like it includes two or more because of a step up or down or a partial wall that creates a new space.

The wide range of furniture that works for mid-century modern designs also gives you a lot of options for creating the feel of multiple rooms in one.

In any case, these homes are big on character, even when it comes to the smallest spaces. So, you don’t need to come up with a massive budget to buy an equally massive home in order to enjoy the feel of a large house. Walking through a mid-century modern house can take you from one style to a completely different one, even where the smallest spaces are concerned.

3. Practical Décor

Again, mid-century modern decor leaves a lot of room for interpretation. No, you don’t have to buy authentic furniture from the era. You don’t even need to buy furniture that takes its style from that era. Contemporary touches are a great way to provide a bit of contrast and ensure your living room doesn’t look too much like the set of Mad Men.

However, one thing that this type of décor does tend to have in common is practicality. It should be durable, affordable, and comfortable. Of course, it also looks great, too, which is one more reason homeowners continue to love mid-century modern designs.

4. Lots of Freedom

Finally, despite the fact that this style originated from a defined period in architectural history, you have plenty of freedom when it comes to the look of your house and what you decide to do with your interior. As we just covered, you don’t need to spend a fortune on collecting authentic items to fill your home.

You also have plenty of room to create your own style, one that fits your unique tastes. This is usually much more of a risk if you decide to buy, say, a minimalist house or one built in the Spanish missionary style. Taking too many liberties with your décor in those kinds of houses could create a jarring contrast.

Take the First Step Toward Finding Your Mid-Century Modern Home

Are you looking for a mid-century modern home?

Use SimpleShowing to connect with a real-estate agent who can help. Plus, when you buy a mid-century modern home with a SimpleShowing Agent, you’ll qualify for our Buyer Refund Program, which pays out an average of $5,000 towards your closing costs.

How Much Commission Are Buyers Agents Paid?

A common question asked by those selling their home for sale by owner (FSBO) is “how much commission are buyers agents get paid and do I have to pay them?”. A big reason sellers choose to list their homes FSBO is to avoid paying commissions to a listing agent. However, just because they avoid paying commission to a listing agent does not necessarily mean they’ll avoid paying commission to a buyer’s agent.

Whether you are listing FSBO or through a listing agent, you are likely to have to pay commission to a buyer’s agent. Therefore, it’s important to understand just how much commission you will have to pay so that you can budget it into your total selling costs.

How Does Buyer’s Agent Commission Work?

Nearly all traditional real estate transactions involve the buying and listing agent receiving a percentage of the home’s commission. If you are selling, you are likely already aware that in traditional real estate transactions that involve a full commission listing broker, there’s a total amount of real estate agent commission that is decided upon when a listing agreement is signed.

While this commission percentage varies by region, the exact number usually falls between 5-6%. The full 5-6% commission of the home is combined for simplicity and paid to the listing agent by the seller. This money is generated from the sale of the home. The listing agent will keep a portion of the profits (2-3%) while the other portion is given to the buyer’s agent through the purchase of the home.

Who Pays the Buyer’s Agent Commission?

It’s a common misconception as to who pays the buyer’s agent commission. While many buyers assume these agent services are free and the seller pays both, that idea isn’t entirely true. Buyers do in fact pay, just not as directly as it may seem.

While the buyer’s agent fee is technically paid by the seller, sellers factor in the cost of buyer commissions when they price their homes. Typically, the listing agent and the buyer’s agent split the commission from the transaction after closing. While the funds come off the seller’s side, creating the illusion that the seller pays, buyers are the only one bringing money to the closing table.

How Does FSBO Affect Buyers Agent Commission?

If you are selling FSBO, you are likely already aware that in traditional real estate transactions that involve a full commission listing agent, there’s an amount of agent commission that is decided upon when a listing agreement is signed.

When selling FSBO, sellers can eliminate this agent commission they would typically pay a traditional listing agent. Sellers can list their home on the MLS for a flat fee, eliminating all listing agent commission costs. However, the seller will have to put in the extra effort (and potentially extra money) to stage their home, market it to buyers, and negotiate offers.

As previously mentioned, the seller will still have to pay the buyer’s agent fee. But, since the money is technically baked into the listing price and paid for by the buyer, seller’s don’t have all too much to worry about as long as they are aware of how the money is split.

So How Much Do Buyer’s Agents Get Paid?

Whether you are selling with a traditional agent or FSBO, there is no exact amount that a buyer’s agent gets paid. This number is determined by the listing price of the home. In a traditional selling situation, the sellers will work with a local realtor to determine the listing price based on market conditions and similar homes in the area. Those selling FSBO will have to research that information themselves.

When listing your home, the MLS will ask how much the seller is willing to pay the buyer’s agent. The listing agent will help sellers come up with a percentage amount that will generate enough traffic to appeal to buyers agents and their clients. When selling FSBO, sellers will have to decide the percentage amount they are willing to pay themselves. This will require a bit of research to figure out.

Pay Less and Get More with Low-Commission Alternatives

The most common reason sellers decide to sell FSBO is to eliminate costly listing agent fees. However, these sellers often don’t consider all of the work agents put into selling a home. This includes tasks such as marketing the home, filtering buyers, drawing up contracts, negotiating offers, and much more. While it may be worth saving the money, the stress from navigating the process on your own may be overwhelming.

With SimpleShowing, sellers can save thousands with our 1% listing fee that automatically lowers total commission to just 4%! Not only that, but you will get the same exceptional services and features of a big firm brokerage. That means you can lower your selling costs without having to do all the work on your own.

Contact SimpleShowing today to get in touch with one of our local agents in your area. We will help you get the best home at the best price with our low-commission model.

5 Ways to Find Off-Market Properties

If you’ve been on the hunt for a new home, you’ve probably come across several home’s listed as “off market”. This is especially common for popular home selling sites like Zillow or Realtor.com. It’s easy to assume that “off-market” means that the home isn’t currently for sale. However, in the world of real estate, the term actually has another distinct meaning depending on the context.

What is an Off Market Property?

An off-market listing is any property that is in fact for sale, just not publicly listed on the MLS. Often referred to by real estate agents as pocket listings, these off-market properties are homes that are not listed on a standard multiple listing service (MLS). Instead, these listings are marketed to buyers via word-of-mouth or through private listing services that limit who views the property info. In other words, the listing is kept in the “pocket” of the seller and the agent.

Off-market are more common than you may think. In fact, many for-sale by owner homes fall into the pocket listing category. Because this type of selling plan doesn’t require the seller to work with a real estate agent, the seller can market their home however they please.

As you can imagine, off-market properties are rare and can be hard to come by. But, in this competitive market, putting in the effort to find these properties might give you a leg up. To help you out, here are 5 ways to find off-market properties. To maximize success, be sure to use several methods in combination with each other.

1.) For Sale By Owner or “Coming Soon”

While off-market listings might not be listed through an MLS yet (if at all), they may still be able to be found online. Some real estate websites like Zillow allow sellers to list as “Coming Soon” properties well before the property is listed on the MLS.

FSBO (for sale by owner) homes are not listing on places like Realtor.com or the MLS. However, you can find these deals on Zillow by using the “other listings” tab, which is the category of listings that are not associated with an agent.

2.) Wholesalers and Investors

Networking with wholesalers is one of the most effective strategies to find off-market properties. A wholesaler finds a motivated seller and assigns or sells the contract to another investor for a higher price. Many off-market properties are bought and sold privately through investors and wholesalers. If you want to be in the know of all local off-market properties, you’ll want to have these people on your side.

Be on the lookout for real estate events in your area by checking your local REIA, bulletin boards, Facebook groups, or online networking groups to see when and where groups are meeting. Through these networking events, you’ll will be able to easily connect with local wholesalers and investors.

3.) Builders or Contractors

Builders and contractors are well-connected to real estate professionals and are another good friend to have when searching for off-market properties. Oftentimes, homeowners or investors abandon a job mid-project because they didn’t have the financing to finish the construction. While unfortunate for the homeowner or seller, buyers and investors can benefit tremendously by connecting with local builders or contractors who are “in the know” of these kinds of situations.

Property investors looking to flip and rent/sell will especially want to look out for these opportunities as some of the flipping work might already be completed. Not only could you find a property, but already have a builder or contractor at hand to finish any renovations.

4.) Word-of-Mouth

Don’t shy away from a potential off-market connection just because they aren’t a real estate professional. Anybody you meet has the potential to be a lead. Along with more professional networking, be sure to ask around via work of mouth. Friends and family are easy to do word-of-mouth marketing with because they already know who you are and how to contact you. If they know of or find out about an opportunity, it will be easy for you to find out about it.

Of course, reach out to those outside of your usual circle such as neighbors or even people you might come across throughout the dat. Don’t be afraid to strike up a conversation and bring up your home search. The more you practice word-of-mouth marketing, the more likely people will remember you when they come across an off-market property.

5.) Real Estate Agents

By far the best way to find off-market listings is through a real estate agent. While real estate agents are most familiar with properties listed on the MLS, they can be just as savvy when it comes to finding off-market properties. When it comes to buying a property, you want to choose the right agent to work with. To have the best luck in finding an off-market property (or any property) with an agent, you will want to specifically work with an agent local to the area you’re buying in.

In addition to helping home buyers, agents also help sellers to list their home. If you are working with an agent, ask if they know of properties that are off-market or simply have hit the market yet. If they don’t have any properties in mind, they might know someone in their network that does. Having this inside connection through a realtor can help you find out about off-market listings that the average buyer or investor may not be able to know about otherwise.

Getting Started

At SimpleShowing, our local agents provide a wealth of knowledge and stellar service to each buyer we work with. Not only that, but buyers can also get an average of $5,000 towards closing costs. Contact us to learn more about our buyer refund program.

Should I Sell My Home Before I Buy?

It’s safe to say that 2022 looks a lot different than it did last year, and if you have wanted to get into a new home, your plans may have been placed on the back burner due to COVID-19.

If you’re wondering if now is the time to purchase a home, the answer is yes! With interest rates at an all-time low, you have a great chance of potentially saving money on your mortgage.

But what if you aren’t a first-time homebuyer? You possibly need more square footage in a home, need a closer commute to work, or have other requirements that aren’t being met at your present location.

If you need to move, is it wise to shop for a new home while selling your current home?

The process may seem a little overwhelming and hectic, but here are a few things to consider before making an educated decision.

Is it Better to Sell the House Before Buying?

It may seem that the most logical way to go about this would be to sell your current home and use that money to purchase a new property. While this may be a viable option, there are advantages and disadvantages to both selling your home first and making an offer on a house before selling.

Before making the best decision for you and your family, consider consulting with a real estate agent and becoming knowledgeable in these areas for smooth transactions.

In recent years, cash purchases have become more common. This might make your decision easier if you can sell quickly before you purchase your next home. It’s not unusual for many homeowners to say “I want to sell my house fast” – and avoid listing all together by accepting a cash offer. The typical cash home buyers tend to be investors that can close quickly (2 weeks) and often convert the property into a rental.

Assess the Market

Like other markets, the real estate market wavers depending on several differentiating factors.

Doing research and having a thorough understanding of the current housing market in the area is a great first step when deciding to place your home on the market or beginning the house-hunting process.

2021 is indeed a seller’s market meaning that homes are in demand, causing listing prices to skyrocket. A well-listed property won’t last long in this market, therefore making right now an ideal time to list your house!

Doing research on the real estate market will also give you a good idea of the potential listing price of your current home, based on location, similar features, neighborhood, and more. Knowing your home value can also aid in creating a budget for the new house!

Consider Your Options

If your primary concern is, “Can I buy a house without selling mine first” the answer is “Yes, you can”, though this is your personal preference and whether you choose to or not has its pros and cons.

Sell Before You Buy

Selling your home first is a rational option; however, you may have to take on an additional expense of a rental.

In a perfect situation, you would place your home on the market while searching for a new property hoping that the house sells quickly, so you can then use that money to jump straight into your purchase. Unfortunately, in most cases, the closing dates don’t align, and you might be forced to find a temporary place to call home.

Keep in mind that if you are waiting for your home’s sale to use that money for a new home, loans like a Bridge Loan do exist. This is a type of short-term loan that can be used when the buyer lacks the funds to purchase a home until the buyer secures a permanent financing option. Most sellers may try to avoid committing to a rental, and they might settle for a new home that ultimately isn’t ideal for them. Don’t settle for a house you won’t be happy in. It’s best to swallow the expense of a rental to be completely happy with your new purchase.

While your house is on the market, it’s also a good idea to plan ahead for additional expenses and delays such as the buyer’s financial situation, potential issues with inspection, etc.

Selling your current home first may sound like lost money, however, a great advantage to this option is the ability to avoid paying two mortgages at the same time!

Buy Before You Sell

Buying a house before selling does have its fair share of downfalls, like a second mortgage. In addition, a down payment may be required, but there are many loans available that can assist or cover the down payment completely if you qualify. While buying a house before selling does have a higher debt-to-income ratio because of the second mortgage and down payment, it does have an advantage.

Purchasing a home prior to selling makes moving easier!

Knowing you have somewhere to go without having to rent is very beneficial, especially if you have kids, pets, or heavy furniture.

Understand Your Financials

Know your numbers!

Being in the know as far as budget, savings, and the amount of equity in your home can help determine your options for loans and the best path to take in the home buying and selling process.

As mentioned before, knowing your home’s potential resale value helps you to understand what your home can be priced at if it were to be listed on the market today. Consider getting a pre-inspection to determine if any repairs will be needed before selling. The extra measures will help you to achieve the highest market price and help you budget correctly.

If you pay a mortgage on your current home, do some research to find out your home’s equity. Equity is the amount left over when you take your home’s current value and deduct the remaining balance on your mortgage. Would you be able to purchase without breaking into that equity?

With possible extra expenses in mind, as far as repairs, a second mortgage payment, a down payment, and more, having some sort of savings wouldn’t be a bad idea.

How to Sell Your House

If selling your house before buying a new home is the best option for you, we’ve got you covered!

Selling your home can be a hectic process, and the help of a knowledgeable and experienced realtor is essential. Once you’ve decided on when to sell your house, Simple Showing can help.

Buying and selling a home is one of the most significant financial commitments you will make in your life. While buying and selling a home can be a hefty price tag, working with a realtor you trust doesn’t have to be.

With Simple Showing, you will get all the benefits of a full-service agent and keep a little more money in your pocket.

A traditional real estate agent typically charges a 3% listing fee. With Simple Showing, you pay no upfront costs and a 1% listing fee at closing! We even give you $5,000 towards closing costs when you buy!

With streamlined technology and a team of experienced local agents, saving money has never been easier. If you’re ready to sell your home, give Simple Showing a try!

Opendoor vs Zillow: Cash Buyer Comparison

Instant buyers, or iBuyers, are one of the most revolutionary changes currently being made to the residential real estate industry. The iBuying business, which emerged in 2014, uses algorithms to price homes and make instant offers in the attempt to resell for profit. These online sites have an automated, tech-first approach to real estate that make the process of selling homes simpler and therefore more appealing to sellers.

Two of the biggest names in the iBuyer scene are Opendoor and Zillow. In fact, these two popular platforms alone account for roughly 86% of iBuyer transaction volumes. Both platforms have similar buying models. They say that they can buy your home as-is within a matter of days, close on your schedule, and charge a fraction of standard commission.

While similar, both iBuyers have quite a few differences from one another. Some may even make you decide to choose over another. Let’s go over Opendoor and Zillow and discuss the difference between these two competing iBuyers.

Opendoor

Advantages: Market pioneer and fast turnaround of real estate services

Founded by Eric Wu, Opendoor was the first iBuyer on the scene acquiring $1.5 billion from investors. As the pioneers of the iBuyer industry, Opendoor is widely known for its speed. The company’s business model revolves around buying and selling as many homes as possible. This model makes for a powerful business and a smart choice for those looking for a quick home turnaround.

With Opendoor, sellers sell their home directly to them and receive an offer back in a matter of days. That way you’ll have the cash needed to buy your next home. This direct selling method also allows sellers to skip the showings and repairs. Instead, a video walkthrough is submitted and any repairs are handled by the company. This simplified selling process allows sellers to sell and move on their schedule by selecting a close date that works for them.

In addition to buying and selling services, Opendoor recently formed a brokerage and debuted cash-backed offers. The implementation of these two new services offers a huge new market opportunity that interested buyers and sellers are already advantage of. The company also has the largest home trade-in program in the nation and partnerships with many large homebuilders.

Zillow

Advantages: Strong history of pricing properties and attracting users with services

Newer to the iBuyer scene is Zillow. Up until a few years ago, Zillow was a partner in the homebuying industry. The company was originally founded back in 2006 as a real estate listing platform that generates revenue by selling real estate advertising. However, when co-founder Rich Barton returned as CEO in 2019, the company pivoted to iBuying due to competition. Since then, Zillow has invested in home tour, mortgage, and title services to make its platform even more of a one-stop shopping experience.

Like other Opendoors, Zillow makes a quick offer on homes (typically within 48 hours). Instead of having a real estate agent sell your property, you can have Zillow do it for you. This means you can skip the more expensive and time-consuming steps that go into selling.

With approximately 2.2 billion website visitors during the last quarter of 2020, Zillow knows how to draw in website traffic, as well as attact interested buyers and sellers. While Opendoor has already mastered the art of buying and selling homes, Zillow is quickly catching up. But, considering Zillow practically owns the top of the real estate funnel, it makes sense why more homebuyers are likely to use Zillow Offers for their iBuying needs. Many even suggest that Zillow will outperform Opendoor in the next 5 years.

Disadvantages of Using Opendoor and Zillow

Opendoor and Zillow share a lot of similarities and advantages to one another. Both platforms allow for quick sales that require no need for home repairs, deep cleaning, inspections, or back and forth negotiations. Sellers submit their homes information, receive an offer, and sell. While in some situations selling your home through Opendoor or Zillow might be a good choice, there are some disadvantages you will want to weigh out before you commit.

Studies have even shown that iBuyers do not present excellent value for clients and often result in offers much lower than what they’d get on the market. You’re paying for convenience and speed, effectively. This is far the biggest downside of Opendoor or Zillow is the likelihood of your offer having a below-market sales price. This number is typically 15-20% below market value.

For a home valued at $350,000, you can expect to lose $70,000 in lost equity. If you’re in a time crunch, money might not be your number one concern. However, if you are like most sellers and looking to get a fair value for your home, you might want to look elsewhere.

Long story short, iBuyers aren’t always what they seem. Do your research and be aware of loopholes on their website and within their business model.

Consider Smarter Alternatives

iBuyers are in the business to make a profit. This means they’ll seek to provide you with the lowest offer possible to maximize their profits. Although technology has advanced significantly, the home buying process has remained untouched.

The thought of selling quickly and efficiently through a website or app, rather than going through the conventional real estate process is appealing to many. If you are looking for an easier way to sell your home online where your best interest is always in mind, you’ll want to look at some alternatives.

The good news is that you can streamline that process – all while paying less in commissions and fees than those choosing traditional agents or iBuyers.

With SimpleShowing, sellers not only receive the benefits of a traditional agent, but you’ll also keep more money in your pockets. Instead of paying the traditional 3% listing fee, you’ll pay a reduced 1% listing fee. This percentage may sound small, but when selling a home that might be $500,000, that amount is quite significant! Plus, with self-tour lock boxes, interested buyers can tour on their own time without any involvement from you or an agent.

If you’re interested in selling your home with SimpleShowing, feel free to fill out our home evaluation form. After just a few simple questions, you’ll be well on your way to selling your home and selling it smart!

Home Selling Paperwork: What’s Included and What to Sign?

Selling a home is a long process that needs a lot of preparation and various documentations. It’s not something you can do with a handshake, and the deal is sealed. You need to prepare rounds of documents from yourself, your buyer, the lenders, the lawyers, and many other people involved in the sale.

Paperwork for selling a house by an owner can be overwhelming. But if you don’t put everything in order, you’ll end with various legal and financial consequences. There is paperwork that protects you as the seller and those that protect the buyer. Take a look at this list of paperwork that you need before, during, and after selling your house.

Documents to Prepare before Listing Property for Sale

Before you announce your intention to sell the house, you must first organize and have the following documents ready.

Residential Sales Contract

This is the most crucial paperwork that you will need for your home selling process. It includes the terms of sale. These include the purchase price, down payment, dates of purchase and possession, and the conditions required upon the sale. This will be a legally binding contract after you finish the sale.

In recent years, cash purchases have become more common. It’s not unusual for many homeowners to say “I want to sell my house fast” – and avoid listing all together by accepting a cash offer. However, even if you sell to a cash investor without putting your home on the market, you’ll still need a sales contract!

Seller’s Disclosures

Seller’s disclosure is a mandatory document when selling a house. The federal and state government requires that sellers disclose any issues with their homes. Failure to do this can lead to lawsuits or fines. The mandatory disclosures take into account everything from asbestos, environmental hazards, and other structural issues.

Boundary Survey

Your pre-sale documents should include a recent survey on your property. It will show the exact legal borders of your property. The survey will help the lender prove that what they’re buying is what it’s supposed to be. However, you’re not obligated to carry out a property survey before selling your house.

Homeowners Insurance Records

The insurance record is another essential piece of paperwork for selling a house that you must present to the buyer. Your buyer should prove that the information in the report of the claim is correct. It will also help the buyer have an idea of the amount of the homeowner’s insurance costs.

Tax Records

Consulting the property tax records office can help you understand the value of your home or give you a comparative market analysis. Understand that the market value will be higher than the tax basis of your home. But it will help you understand the pricing range for your home.

HOA Documents

If your home is under Homeowners Association, you should get ready the HOA documents as well. The document will inform the buyer about HOA regulations, dues, and any penalties under your property.

Preliminary Title Report

You need to get a preliminary title report for your property to help you understand if it has an outstanding issue. The information will include back taxes, liens, and other restrictions. You can decide to add these issues to the disclosures or solve them yourself.

Property Appraisal

If you had a home appraisal in the recent past, you should have the paperwork to show for it. This will outline the condition of your house and the value of the property as it compares to nearby comparable homes. An appraisal is not required from the seller, per se, but it could be used to validate the property value if you’re in an area that lacks relevant comps.

Comparative Market Analysis

Comparative market analysis (CMA) estimates the value of your property concerning recent sales of similar properties. The CMA gets you closer to getting the actual value of your property by taking into account the market dynamics. This is not required to list or sell the house, but is typically provided by a Realtor to help assign a value for the property.

Documents after Accepting the Offer

Once you put your house out in the market, you should expect buyers to start making their offers. If you get an offer that is likely to make you a good profit on your house sale, you should accept it. You’ll then start preparing another stack of paperwork. Here is the list of papers that you’ll need to prepare.

Purchase Offer & Counteroffer

A counteroffer is a purchase offer that explains the terms of the deal to the buyer. If you negotiate and end up with a different price, the counteroffer will be amended and named purchase offer. This also includes more specifications on the property as well as boundaries. Both parties are required to sign this document, and it will be named a purchase contract.

Appraisal Report

If the homebuyer purchases the property with a mortgage, the lender will need to carry out an appraisal. The appraiser will come up with an objective value of the property and ensure that it matches the buyer’s mortgage. The report will outline the value of the property as it compares to nearby comparable homes.

Home Inspection Report

Another essential document is the inspection report which gives information about the structural issues, cosmetic problems, and other issues in the house. The report is well-detailed and includes photos of your property. Some problems reported in this document might bring the seller and the buyer back to negotiation.

Contingency Exhibits

This involves the pre-conditions for sale. You’re required to meet the contingencies before closing the deal. The contingency removal form needs to be completed before you can close the sale. You should also note that contingencies expire after some time.

Binded Purchase Agreement

As from the name, this document means that the negotiation has reached its end and the purchase agreement is irrevocable. Both parties, including their respective attorneys, will draw the document. The document includes the final sale price, contingencies, terms of the deal, and the closing date. Both the seller and the buyer will sign the document, which will be a legally binding contract.

The Title Deed

This is a physical document that confirms the owner of the property. It contains details about the property and identifies the buyer and the seller. The seller will hand over the deed to the buyer in a process known as the transfer of property ownership.

Bottom Line

There are lots of documents to fill and sign when selling your house. We might not cover all of them in this article because others are specific to your state. You need to carry out thorough research and find out all the paperwork of selling a house by the owner before taking the bold step. You might consider consulting your attorney or find low commission real estate agents to help you with the process.

SimpleShowing can help you organize yourself and arrange all the paperwork you need for the home sale. Get in touch and start your home selling journey today.

6 Landscaping Tips to Improve Curb Appeal

When prospective buyers are on the hunt for a home, the majority are mainly concerned with how the inside of the house looks.

While you should keep this in mind when putting your home up for sale, it’s also important not to forget about how the outside of your home looks as well.

Overgrown or even dead patches of grass, shrubs, and trees can make your home look unattractive. And a yard full of dirt and rocks can make your new property look like it came straight from the deserts of the wild west (and not in a cool way).

A few simple landscaping projects will ensure that your home is dressed to impress. What’s more, enhancing your home’s curb appeal could help increase your property value and see big returns on your home sale from little investment on your part.

You don’t have to break the bank or spend countless hours on the weekend to transform your home. Below, we’ve put together a list of 6 simple landscaping tips you can follow to improve the curb appeal of your home.

Here are 6 Landscaping Tips to Improve Your Home’s Curb Appeal

1. Add Vertical Elements to Your Lawn

When designing smart landscaping, you should keep in mind that the end result should add interest to your lawn. Adding vertical elements not only looks great but is also a good way to save space. This can be an important benefit when you are working with a small area of land.

Flower beds and shrubs can be combined to add depth. Start by clearing away all of the dead, dying, and overgrown original landscaping. From there, you can create a wavy-edged border around your front yard to add an artistic touch and then mounds of dirt within the border to add height. You can also incorporate landscaping fabric to help keep weeds at bay. Lush foliage and flowering plants can then be added to create a beautiful exterior design.

2. Incorporate Plenty of Color

Using lots of colors is one of the best landscaping tips to improve curb appeal. Colorful leaves and vibrant blooms can help create an eye-catching display. You can accomplish this in several different ways, including:

Adding container gardens
Installing planters
Planting annuals flowers
Incorporating gardens for fresh cut flowers

Be sure to cluster your annuals in large groups so that you create a design that looks professional and visually impactful. The location of your plants is also important. If you’re aiming for landscaping tips to improve curb appeal, it’s best to position your plants near a front door or gate.

Lastly, be sure to consider bloom time in regards to your plant installations. Not paying special attention to this particular detail can cause you to end up with gaps in your landscaping where either nothing is in bloom or the area appears to be completely barren.

Different plants bloom at different times of the year, so be sure to plan strategically when designing your landscaping.

3. Add New Mulch & Trim Back Trees

Fresh mulch in your garden beds can make your plants and lawn look more attractive. However, over time, the mulch can thin out and start to look dull. When this happens, it’s best to add two to three inches of new mulch. Just be sure to use a mulch color that complements your planter beds. Simply adding fresh mulch can make all of your landscaping seem brand new.

Just like humans need a haircut every once in a while, the trees and shrubs in your yard also need to be trimmed back. Overgrown trees and shrubs should be trimmed to remove branches that may block your windows, walkways, or hang over your home.

4. Install Quality Landscape Lighting

One of the best means of improving your home’s curb appeal is ensuring it is sufficiently illuminated. You can exemplify the best features of your home, as well as your landscaping features, is implementing a residential landscape lighting design plan.

This landscape lighting will not only increase the curb appeal of your property but will also provide several safety benefits. This lighting will illuminate a path or walkway at night, preventing any slips or falls, as well as preventing thieves, as they cannot hide in the shadows. If you are looking for the best ways to revamp your home’s curb appeal, you should most definitely consider making sure it is properly illuminated.

5. Consider Proportions When Installing Plants

While there are many things you can add to your yard to improve its curb appeal, you should pay attention to proportions when deciding which plants to install.

For example, small flowers don’t necessarily complement larger homes that feature a flat front. These homes would instead benefit from a row of mid-size shrubs that better fit the architecture. You will immediately notice the difference when you group your plants so that they match the shape and lines of your specific house.

While you don’t want to hide your home with greenery, you want to choose flowers and plants that accentuate your home in a positive way and make it look more inviting.

6. Keep Your Landscaping Low Maintenance

While landscaping can improve the curb appeal of your home, you don’t want to sign yourself up for another full time job maintaining it. Therefore, it’s important to look for simple things you can do to enhance your home’s exterior in a way that won’t consume all of your free time.

If you live in an area that gets cold in the winter months, you want to have landscaping in place that can survive the freezing temperatures. For example, trees and shrubs look great regardless of the season. You don’t want to have to constantly rebuild your landscaping from scratch to maintain good curb appeal.

By following these tips, you should be able to achieve great landscaping that equally fits your personal style, your home’s architecture and improves your overall curb appeal. By adding in the right mix of elements, you will ensure your lawn and garden greatly improve the overall appearance and help your home sell fast when the time comes.

Make More Profit When You Sell Your Home With A SimpleShowing Agent

One of the main reasons you’re probably looking to improve your home’s curb appeal is so that you can make the most profit when you sell your home.

A SimpleShowing Agent will not only be able to give you suggestions on how to improve your home’s curb appeal, but will also list your home for only a 1% listing fee.

SimpleShowing sellers profit $7,500 more on average on the sale of their homes.

To learn more about our listing services, request a free, online home valuation to find out your property’s value.

Underwater Mortgage: A Quick Guide For Homeowners

Your home is most likely your biggest valuable asset and an essential tool for building your wealth over the long term. That said, like any other assets you invest in, home value fluctuations and such fluctuations can cause issues like being underwater with your mortgage.

Is that even a thing? Yes, it is!

This article shares the basics of underwater mortgages for homeowners and possible solutions like the FMERR Program to get out of an underwater mortgage.

Understanding Underwater Mortgage

Also known as an upside-down mortgage or negative home equity, an underwater mortgage refers to a situation when the principal balance from your mortgage exceeds your home value.

In short, it’s when you owe your lender more than your home’s worth.

For instance, you owe $250,000 on your mortgage, but the market value of your home is only $200,000, making your mortgage $50,000 more than the value of your home; this is considered an underwater mortgage.

Today, underwater mortgages are less common due to the stricter underwriting standards. Also, the record price for homes had already increased since the pandemic. So, even if your mortgage did fall underwater during the start of the pandemic, there’s a strong possibility your home is worth more now than it was when you first bought it.

How To Determine If You Have Underwater Mortgage

The equation for determining if your mortgage is underwater is straightforward. You subtract your loan balance from the value of your home. If you get a negative answer, then it means you are underwater.

That said, the more difficult part is determining your mortgage balance and the value of your home.

To figure out how much you owe, check your mortgage statement for the “outstanding principal” or “principal balance.” Or you can also call your lender and ask them directly.

Determining your home’s value is a lot tricker. Having your home assessed by a reputable home appraiser is the best method to acquire an accurate calculation, best if you’re thinking of selling your home. If not, you can get a ballpark figure from real estate portal websites.

What To Do When You Have An Underwater Mortgage

If you get a negative answer by your calculations, which means your mortgage is underwater, here are some options to help you change your situation.

1.) Refinancing

Refinancing an underwater mortgage is tricky since you need equity to do it. However, it is possible if you’re backed with programs like FMERR.

Short for Freddie Mac Enhanced Relief Refinance, the FMERR program is specifically designed for homeowners with an underwater mortgage. It helps make your mortgage more affordable by lowering your loan rate and monthly payment or helping you increase your equity faster with a shorter repayment period.

This program is available if you take out a mortgage on or after October 1, 2017, and don’t have late payments. Requirements may also include having no 30-day delinquency within the last six months and not having had more than one 30-day delinquency in the previous year.

2.) Stay On Your Payments

Perhaps the simplest option you can do if your mortgage is underwater is to stay in your home and continue paying your mortgage payments.

Paying down the principal balance allows you to build equity. Also, if possible, make extra principal payments to reduce your loan balance faster.

3.) Make Home Improvements

Other than staying current on your mortgage payments, you can also try increasing the value of your home.

In general, you can do simple jobs such as improving curb appeal, repairing damaged areas, and other DIY tasks that can help improve home value.

4.) Sell Your Home

You need to meet two conditions to sell a home with an underwater mortgage.

First, you need to make up the difference between your sale price and loan balance with a cash payment at closing.

Second, you need permission from the lender to sell short. Unless you’re financially broken and struggling to make payments, in which case you lack the funds to bring cash to closing, selling your underwater mortgaged home is not a good idea. Otherwise, a short sale can be a better alternative to a foreclosure.

That said, your lender will not allow for a short sale unless you show proof of hardship that keeps you from making payments such as disability or job loss.

Also, please take note it can take months before a lender approves a short sale, causing you to get more late payments which can harm your credit as much as a foreclosure. Plus, even if your lender approves the short sale, you’ll have to pay tax on the amount of mortgage balance that the lender forgives.

Take Away

And there you have it!

An underwater mortgage is not a situation that any homeowner wants to be; however, it does happen more than you may think.

So, if you’re currently underwater in your home and feel like you’re drowning in your mortgage payments, look for experts that can help you get through this.