Yes, you can invest in a REIT by completing a 1031 Exchange 

Investors looking for a tax deferred exchange investment are often attracted to Real Estate Investment Trusts or REITs as they are commonly known. They generate a lot of interest but also a lot of questions. 

One of the most frequently asked questions is “Can I do a 1031 exchange of the relinquished property proceeds into a REIT as replacement property?” 

A REIT is a company (sometimes publicly traded) that owns, and usually manages, income producing real estate. REIT portfolios are typically diversified by industry, geography and tenant and can include shopping malls, apartments, office buildings, hotels, medical facilities and warehouses. Popular features of a REIT that attract investors include; professional management, diversification and the potential for equity appreciation. 

But before you get carried away… there are strict rules and regulations that govern a REIT. An investor cannot do a 1031 exchange into shares of a REIT because the shares of a REIT are considered personal property even though the REIT, at the entity level, owns real property assets. Investors pursuing a 1031 exchange tax must exchange property that is considered ‘like-kind’ – defining ‘like-kind’ can be confusing and understanding what property is eligible for a 1031 exchange is vital to the success of the exchange; the investor must exchange real property held for investment or business purposes for other real property held in the same way. REIT shares are not considered ‘like-kind.’ 

But, although investors cannot utilize a 1031 exchange into a REIT, there is a two-step strategy that can allow investors to own the equivalent of shares in a REIT. Section 721 of the Internal Revenue Code provides an alternative strategy to a Section 1031 exchange allowing the property owner to convert their property into shares of a REIT - here’s how: 

Step #1 - 1031 Exchange into a DST: 

By exchanging into a Delaware Statutory Trust (DST) investors may participate in an UPREIT (Umbrella Partnership Real Estate Trust) pursuant to IRC §721. UPREITs provide an exit strategy for owners of property who rather than exchanging for another real property in a 1031 exchange, prefer the benefits of owning an interest in an UPREIT’s operating partnership. These operating units (OP units) benefit from the REITs diversification, capital potential and distributions of operating income. Within an 18-24 month time span the taxpayer has the option to UPREIT or stay in the DST investment as a factional owner. A properly structured DST offers fractional ownership of real property and qualifies for tax deferral. One of the many benefits of a DST is the ability for investors to exchange out of actively managed real property, into a passive investment in a fractional ownership of institutional grade replacement property with high quality commercial tenants. Note: Not all REIT’s are structured for this type of investment exchange so it’s wise to review the guidelines and timelines carefully. 

Step #2 – UPREIT from the DST into OP Units of a REIT: 

By utilizing IRC §721 the investor performs an UPREIT from their DST shares into operating partnership units (OP Units) in a REIT. The OP Units usually have all of the benefits as direct ownership in a REIT and are convertible into REIT shares. The UPREIT is a tax deferred transaction under IRC §721. As long as the OP Units are held, the investor can maintain the tax deferral. If the REIT shares are publicly traded, they can be sold on the open market for cash. It should be noted however, that conversion of OP Units to REIT shares by the owner does create a taxable event, but investors can decide to stagger those conversions for liquidity and tax management reasons. Upon an OP Unit holder’s death, the beneficiaries of the OP Units will receive a stepped-up basis in the OP Units, like real estate, conveniently providing greater tax planning flexibility. 

In conclusion, the benefit of owning shares in a REIT can be a diversified real estate holding portfolio, professional management, liquidity events and potentially greater cash flow. A diversified portfolio may be achieved by investing in various states 

(geographic), tenant mix, REIT’s and asset classes. Many investors find a REIT to be a valuable estate planning vehicle - as it is possible to sell a portion of the shares in the REIT to offset capital gains taxes, and by staggering investment time frames, to defer the tax hit so that it doesn’t occur all at once. 

There are many options for investors to consider and a REIT is just one part of the investment puzzle. If you’d like to see the big picture – what the puzzle looks like with all the pieces in place, the experienced advisory team at Diversified Investment Strategies (DIS) will meet with you for a no-obligation consultation to analyze your investment needs, and devise the best strategy to meet those goals. 

For further information regarding DST’s, 721 UP-REIT’s and alternative 1031 exchange options please contact Bryan Hakola of Diversified Investment Strategies 866-261-0104 or email Bhakola@diversified1031.com or visit our website www.diversified1031.com 

Securities products involving REIT’s and/or DST’s are for accredited investors only (a net worth of greater than 1 million dollars – exclusive of primary residence). Securities products are offered through Concorde Investment Services, LLC, member FINRA/SIPC. Office of supervisory jurisdiction: 1120 East Long Lake Drive Suite 200, Troy, MI 48085. Diversified Investment Strategies and Diversified Real Estate Advisors are independent of Concorde Investment Services, LLC. All information provided is for educational purposes only. The material contained herein does not constitute an offer to sell and is not an offer to buy real estate or securities. Such offers are made only by a sponsor’s memorandum, which is always controlling and available to accredited investors only. There are material risks associated with the ownership of real estate, including but not limited to, tenant vacancies, loss of entire principal amount invested, and that potential cash flows, returns, and appreciation are not guaranteed. Past pricing structures may not be indicative of future pricing and may not result in positive returns. Diversified Investment Strategies and Diversified Real Estate Advisors are unaffiliated entities with Concorde Investment Services, LLC.

Active Inventory: The inventory increased on the backs of overpriced, overzealous sellers. 

2014 started with an active inventory of 4,733 homes, the lowest point of the year. That was a much higher start compared to 2013’s extremely anemic, 3,161 homes. That was the year of multiple offers, purchase prices above their asking prices, and rapid appreciation, at least for the first half of the year. Low values and low interest rates fueled the robust housing market and buyers were willing to pay just about any price for a home. However, values increased to a point where buyers were no longer willing to pay thousands of dollars above the last sale. They were only willing to pay close to the Fair Market Value for a home. As a result, houses began to sit on the market as sellers were no longer getting away with pricing their homes thousands of dollars above the most recent comparable sale. The inventory reached a high of 6,350 homes in October of 2013. 

Many unsuccessful sellers from 2013, along with a surge of new sellers, came onto the market anticipating that the first half of 2014 would be a lot like the first half of 2013. Consequently, they overpriced their homes expecting multiple offers and more robust price appreciation. They failed to realize that buyers were no longer tripping over themselves to purchase because values had already reached a point where affordability was starting to become an issue. Buyers continued to desire paying the Fair Market Value for a home. They would pour over the most recent comparable sales and did not want to pay much more. 

From the start of the year through mid-August, the active inventory increased unabated, reaching a height of 8,084 homes, a 71% increase. The inventory increased in every price range and every city in Orange County. If a home was not priced right, it did not sell. It was as simple as that. 2014 became the year of the overpriced home. As a result, 10% of the active listing inventory reduced their asking price every week. The Multiple Listing Service (MLS) has a helpful red arrow pointing downward adjacent to the asking price if the price was reduced. In bringing up a list of homes in every corner of Orange County, nearly half of them had red arrows pointing down. Sellers did not get it. They did not listen to their real estate professional in terms of pricing, so, in order to be successful, they had to reduce the asking price, and often more than once.

Demand, the number of new pending sales over the prior 30 days, peaked in April at 2,818 pending sales, 9% below the peak in 2013. Overall, demand in 2014 was off by 10% year over year. The market followed a normal housing cycle with the strongest demand during the Spring Market, followed by slightly less demand during the Summer Market, and finally much less demand during the Autumn and Holiday Markets. Demand would have been much higher during each of the seasons if sellers were much more realistic in their pricing, but that just was not the case in 2014. 

Within the past two weeks, demand dropped by 266 pending sales, or 15%, and now sits at 1,478. In comparing year over year demand, it is only 1% lower than last year with 17 fewer pending sales. 

Distressed Properties: Foreclosures and short sales played a very tiny role in the Orange County housing market. 

As a result of so much appreciation in both 2012 and 2013, the number of homes that were underwater in Orange County dropped to a little more than 3% by the end of 2014. That paled in comparison to prior years, peaking several years ago at more than 25% of all mortgaged homes owing more than their homes were worth. As a result, fewer homeowners were forced to go the short sale route. In the last year alone, the number of short sales dropped by 66%. The number of foreclosures dropped by 55% as well. 

Out of the 28,063 residential resales in 2014, only 1,544 were either a short sale or foreclosure, accounting for only 5.5% of the Orange County real estate market. That meant that 94.5% were good ol’ fashioned sellers with equity in their homes, non-distressed. With so few distressed homes, the market was at its healthiest point in eight years. 

The distressed inventory started the year at 271 total foreclosures and short sales, and ended the year at 295, a difference of only 24. 

Distressed homes remain one of the hottest segments of the Orange County housing market with an expected market time of 54 days. Within the past two weeks, the distressed inventory decreased by 33 homes and now sits at 262, an 11% drop.

Expected Market Time: for most of 2014, the expected market time hovered around 90 days. 

After starting the year with an expected market time of 95 days (the length of time it would take to sell a home based upon current supply and demand), it dropped to 65 days by mid-April. By July, the expected market time had increased back to 95 days and did not change much for the remainder of the year. As demand dropped, so did the inventory; thus, there was almost no change in the expected market time. 

The expected market time for all of Orange County grew to 101 days in the past two weeks, the highest level since January 2012, three years ago. For homes priced below $1 million, the expected market time is 83 days. For homes over $1 million, the expected market time is 8.1 months. These levels are nearly the same as one year ago today. 

The 2015 Forecast: the tug of war between overzealous sellers and buyers only willing to pay the perceived fair market value for a home will continue throughout 2015. 

The Federal Reserve has hinted at increasing the Federal Fund Rate sometime in 2015. Know that when this happens, mortgage rates will rise, which will cut into home affordability in Orange County. Here’s the forecast: 

• As more overzealous, overly optimistic homeowners enter the fray and overprice their homes, many of them returning, unsuccessful sellers from 2014, expect the inventory to rise to about 9,000, peaking by the end of August. 
   
• Demand will remain subdued, similar to 2014, since buyers will continue to patiently wait to pay only the Fair Market Value for a home. Many buyers will sit on the fence and wait until the market turns more to the buyer’s favor, which, at best, will only tip slightly during the second half of the year.
   
• For the first half of the year, expect mild appreciation from 1 to 3%. By year’s end, that appreciation will be all but wiped away and year over year appreciation by the end of December will be close to zero. 
   
• The housing market will follow a normal housing cycle. The strongest demand coupled with a lot of fresh inventory will occur during the Spring Market, followed by slightly less demand and a continued fresh supply of homes in the Summer Market, then another drop in supply and fewer new listings in the Autumn Market, and, finally, all the distractions of the Holiday market will be punctuated with the lowest demand of the year and few homeowners opting to sell. 
   
• The number of successful, closed sales will be similar to 2014 levels. There will be an increase in the number of “move-up” sellers, which will prove to be a very smart decision as mortgage rates rise. 
   
• The distressed inventory will remain low with a very similar level of successful short sales and foreclosures, representing just a few percent of all sales by year’s end. 
   
• Even though rates have remained low for several years now, they have remained at these levels due to the Federal Reserve’s manipulation of the monetary system. Now that the secondary market is now functioning, the next healthy step is to start increasing the Federal Fund Rate, which will result in increasing mortgage rates. If they take that step and increase the rate at a few of their meetings (they meet eight times per year), expect interest rates to increase to about 4.875%, knocking on the door of 5%, levels not seen since 2009.

Whether you are considering putting your home on the market in the near future, or wish to stay put with your family for a long time to come, taking care of the investment you have put into your home is very important. Wouldn’t it be nice if there were some easy things you could do to make your investment worth even more? We are happy to say that there are things you can do, and today we want to share four great tips to consider.

Open Things Up By Creating Space

These days buyers are looking for homes that flow well, giving the feeling of a wide open floor plan. How can you do this in your home? It’s actually much easier than you think. Doing things like taking down non-structural walls, removing kitchen cabinets or even a kitchen island can give potential buyers the feeling of openness, making your home seem larger and much more comfortable to live in.

Trim your Yard Back

Are your trees overgrown, touching your home, or covering your windows? If the answer is “yes”, don’t feel too bad. People forget about taking care of the trees outside their homes more than just about any maintenance item. If your trees are an overgrown mess, you are obscuring the view of people inside your home, while at the same time making the inside of the home darker than it needs to be. From the outside of the home, you may be obstructing the view of your home, not allowing potential buyers to easily see the great features your home has to offer.

Remember Your First Impressions (Remember Your Front Door)

When a potential buyer walks up to your home, they are going to make up their minds in the first minute as to whether or not they want to give your home serious consideration. Knowing that, why would you possibly have a messy front door area?

Remember, the little things count. Make sure your doorbell works. Make sure the planters around the front door have colorful, healthy flowers or plants, and throw out your old doormat and purchase a clean, new one.

Bathroom Upgrades Pay Off

Updating your bathrooms is a sure fire way to add value to your home. While a full renovation may not be in your budget, there are upgrades that are inexpensive and quick to do. 

Replace frosted glass for clear glass, clean the grout, remove rust stains, apply fresh caulk, update doorknobs and cabinet pulls, replace faucets, and install a low-flush toilet. For less than $500-1,000, you would be amazed at what can be done to make your bathrooms fresh looking and attractive to potential buyers.

Obviously market conditions play a major role in what the perceived value of your home is. Upgrading and touching up your home in this strategic fashion will give potential buyers a positive view of your home, thus increasing it’s value in their eyes.

Once you decide you want to put your home on the market, it is very normal for you to feel excited, a bit nervous and an overwhelming sense of just wanting to “get it done” and to get onto the next chapter in your life. The pitfall here to look out for is wanting so much to get your home sold, as quickly as possible that you make mistakes.

Today we wanted to share a few pitfalls to avoid, to ensure that you sell your home as quickly as possible, for the highest possible price, making you happy and getting you to the next stage in life you have planned.

1) DO NOT HIRE THE WRONG REALTOR®

Law of averages says most homeowners interview at least 3 Realtors® before they decide the one they want to hire to represent them in the sale of their home. Remember, this is one of THE MOST IMPORTANT transactions you will ever undertake in your life. You can’t leave this to chance. Do your due diligence:

1) Interview enough Realtors® that you feel comfortable with your choice.

2) Make sure you have the right questions: Ask for referrals, make sure they are experienced in selling homes in your marketplace, and above all, don’t fall for tricks. Some agents will suggest a very high list price, simply for the sake of getting your listing. Don’t fall for that. Make them show you comparable sales data to back up their thoughts on the price your home should list for.

3) At the end of the day, you have to go with your gut. Choose the agent that you feel good being around and that you truly believe in (even if they aren’t the agent that claims to be “Area Expert”).

2) Remember- “The Market” is a living thing that changes constantly

Every market changes as the year progresses, the economy changes and buyer demand changes. You CANNOT ignore what the market is doing. If you decide that your home is worth a particular price and are not willing to listen to your Realtor® and their pricing suggestions, this means your home is likely to sit on the market for an extended period of time, or even worse, not sell at all.

Remember this: The market is a two way street. If the market is down and you don’t get the exact price you wanted for your home, the plus side to this is that there is always the opportunity for your to buy your next home at a lower price a well, thus somewhat equalizing the issue.

3) Don’t “cover up” problems with your home

Above all else, be forthright and honest when selling your home. If you have had your cracked foundation fixed, or have had a fire or flood, you need to disclose this to potential buyers so they can check it out and make sure you took care of everything and that they are comfortable with proceeding with an offer.

If you decide not to disclose this information and opt instead to try to hide it, in the event you get caught, it will most likely guarantee the possibility of litigation. Facing legal problems is not only stressful, BUT it will also delay you selling your home and getting on to the next stage of your life.

The Moral Of The Story: Just Do Things The Right Way

Do things right from the beginning and you'll have a smoother, easier, and more profitable transaction.

Investors looking for ways to expand their portfolios often are very attracted to the idea of owning Real Estate. The question becomes, where do you possibly begin? Investing in Real Estate is a complex process and is very different than managing something like a mutual fund. For brand new investors, this could be tricky and even scary.

It doesn’t have to be scary though. In fact, with the right training, Real Estate Investing can be much easier than you imagined, giving your good return on your investment and minimizing the risks you take. Today, we want to share some tips with you to ensure you get started on the right foot, from the very beginning.

Real Estate Investing Is A Serious Business

Just as you don’t take your stock or mutual fund success lightly, you have to remember that investing in Real Estate is a very serious business. It’s not just, “Sitting back, collecting rent and instantly becoming wealthy. You need a plan. Writing a business plan and planning realistic goals with specific timeframes will help you to treat your investment like a business.

Build Your Team

Investing in Real Estate successfully requires a team approach. First, you need a Realtor® that is capable of helping you. You see, many Realtors® are not experienced with or have the tools to help investors. A Realtor® that is experienced helping investors though will be an invaluable source in ensuring your success. Your Realtor® will be able to give you “inside advice” on potential investments to check out, before anyone else knows about them. They can also help get your teamed up with a Mortage broker that can help you with any complex financing needs you may have.

In addition to a good Realtor® and Mortgage Broker, look to possibly join a Real Estate Investment club, or to speak with other investors that are investing in your marketplace. If you build good relationships with these people, you will undoubtedly be able to get valuable local market information and advice.

Do Your Research And Keep Learning

You can find a ton of information about Real Estate Investing online. There are also tons of books with tips and game plans on getting into investing. Additionally, you’ll want to keep informed of market trends, mortgage rate outlooks, etc., to ensure that you are always as well informed as possible.

Be sure you know what your return is going to be

There is an old maxim of real estate says that a rental property yielding 1 percent of the sales price per month is a good deal. In other words, if the home cost $100,000, you should get $1,000 per month in rent, or about 12 percent annual yield.

Regardless of whether you end up getting more, or slightly less than 1 percent, the most important take home message here is that you HAVE TO know exactly what your return is going to be. If you don’t have a clear grasp of this number, you risk operating in the red and risking your investment.

“There Are No Free Lunches” Applies Here As Well

Like anything else in the world, nothing great ever comes to anyone that doesn’t work hard to earn it. There are definitely no free lunches when it comes to Real Estate Investing. The harder you work and the more effort you put into your Real Estate investment business, the greater your ultimate reward will become over time.

As hard as it is to believe, it’s almost 2015. While many are looking forward to time off from work, getting to spend time with friends and loved ones, others are already thinking about the New Year. Thinking of goals to meet, events that will happen, and possibly even putting their home on the market.

If you are thinking of selling your home in 2015, now is the perfect time to start preparing for a successful sale. As with everything in life, it’s the little details that count. Taking care of these things now, while you still have ample time to do so, will ensure you get the maximum price for your home, once you do decide to put it on the market. Here are some things to consider when getting your home ready for the market:

Start Packing Now!

Even if you pride yourself on not being a packrat, chances are that there are many things that you can pack away and thin down, to make your home look it’s best. Remember, when people come to see your home, what you like is insignificant. You want to make a potential buyer comfortable and able to visualize them living in your home. Too much clutter will not only make it hard for them to do this, but it will also make them feel as if your home is smaller than it really is.

Pack away things that are not necessary to your day to day life. Reducing the clutter throughout your home, including thinning out all the closets and cupboards in your home will make it look it’s best, giving potential buyers a great impression of your home.

Is It Broken? Fix It Now

When you list your home, the very worst thing you can do is try to hide things about your home that need improvement or plain old aren’t working correctly. Make a list of all the things in your home that fit in these categories and make plans to fix them.

Making these repairs and improving things that are worn and need touched up will give homeowners a feeling that your home is well taken care of. Many times these little improvements leave the impression that features in your home are actually newer than they really are, helping you with the chances of selling your home for a higher price.

What happens WHEN your sell your home?

If you live in an area where inventory is low, this question is a very important one. Do you sell your home first and then look for a new home to buy? Or do you put your home on the market and accept offers, contingent on you finding a new home? There are plenty of options when it comes to what to do when you sell your home. The trick is to prepare ahead of time for this, considering all scenarios and putting together a plan that is going to ensure you experience a stress free sale of your home.

No matter what you do, Hire a Professional

Every single thing we’ve discussed in this article today are things that a qualified Real Estate professional should not only advise you of, but also give you assistance with. Selling your home, while tricky, doesn’t have to be stressful. A qualified Real Estate Professional, familiar with YOUR specific marketplace will help you in ways you never imagined possible.

If you are new to investing in property, one of the most important lessons you can ever learn is when to spend money to fix up a property and when to simply “let it go”. When you are selling a property, it’s really not that difficult to figure out. If you put $10,000 into upgrades and in turn you can count on bringing in an additional $30,000 to the sale price, this is a no-brainer. With investors that are renting out their property though, it can be a bit trickier than meets the eye.

If you are an investor, what “you like” does not matter. Picking the things that will be most widely viewed by the largest number of people as valuable is what you want to focus on.

 It’s simple economics. As an owner of an investment property, your sole job is to keep your return on investment as high as possible. Don’t over do it on things that won’t be deemed as valuable by prospective renters. Focus on the core things a renter will most likely be focused on. If you do this, you will be able to justify setting a higher rental amount for your investment property.

Work With A Local Real Estate Professional

Interestingly enough, upgrades to properties are not a universal thing. What is popular in one marketplace may not be in another. To those ends, a good local Real Estate professional will be able to help you pinpoint the items that will not only give you the highest return on investment, but also be the most attractive to potential renters in your marketplace.

The “Go To” Upgrades

Even though upgrades can be somewhat regional, there are a few basic factors that apply to every marketplace and will command you the highest return on investment and perceived value:

1. Curb Appeal – A clean yard, weed free, with a nice green lawn will definitely give a renter a good impression of the property, making your higher rental price more acceptable in their minds.
2. Open Bright And Airy- Opening up the feel of your home by focusing on making sure your windows are clean and all the lighting fixtures work throughout your property will put potential renters at ease in your property, giving them a better impression of it.
3. Remember the infrastructure- One of the most annoying things about any home can be if the basics don’t work. Additionally, one of the highest return on investment activities you can undertake is simply upgrading the electrical and plumbing in your investment property. Updating these things will also make your life easier down the road as you won’t have calls from your tenants, upset because the plumbing is broken, or the power keeps going out.

Being a landlord and setting up your investment property so you get the highest return on your investment, while at the same time giving it the highest perceived value to potential renters can be a little tricky. But if you take it slow, in a realistic manner, and work with a local Real Estate professional to guide you through the process, you cannot go wrong.

Many out in the real estate field will think I have lost my marbles, moving sellers from the “Naughty List” to the “Nice List.” For the first 7. months, as a group, they were very naughty; but, for the past three months, they are really showing much improvement and are beginning to behave. Santa is a pretty forgiving man with a very big heart, so there is hope for 2015. 

Orange County started the year with 4,733 homes on the active listing inventory. They ignored their REALTORS® and arbitrarily overpriced their homes. One home after another was coming on the market way over the most recent comparable sale. Buyers didn’t even blink, wanting to only pay as close to the Fair Market Value for a home as possible. They ignored these overpriced homes, which languished on the market. The active inventory grew without pause from the beginning of 2014 through mid-August, and it inflated by 71% to 8,084 homes. Economists were forecasting an inventory at anemic levels, but so many homeowners were encouraged and thrilled with the amount of appreciation in just two short years that a flood of new overpriced, overzealous sellers entered the fray. They too wanted to take advantage of much higher values after watching their equity evaporate just a few years ago. 

These sellers were very naughty. They were unsuccessful in achieving their goal in selling. Even with price reductions, most values were still too high to attract a willing and able buyer. They heard stories over the past two years where sellers were attracting multiple offers and were able to achieve selling prices way above their asking prices. That came to an abrupt end by July of 2013. In 2013 

the active inventory grew through mid-October, two months after the cyclical peak. The inventory should peak and begin to drop at the end of August as the housing market decelerates with kids going back to school. At that point, the Spring and Summer Markets are in the rearview mirror. Sellers typically do not come on the market at the pace that they did during the summer, but that is exactly what happened last year. The inventory ballooned and, as a group, they collectively received coal in their stockings. 

This year, sellers thought they knew it all and arbitrarily priced their homes, a recipe for disaster in 2014, ignoring the facts. As a result, 10% of the active listing inventory reduced their asking price each week throughout the year. Appreciation slowed from double digits to about 5% year over year in September. That means that it took an entire year for values to increase by 5%. Many sellers priced their homes 5 or more percent above the last comparable sale. What took a year, sellers were foolishly trying to achieve in just a few short weeks. 

But, hope began to blossom after the market peaked mid-August. Finally sellers were coming to the harsh reality that the best of the 2014 market was in the past. They came to a crossroads, reduce their asking prices closer to the Fair Market Value or pull their homes off the market and wait for another day. The inventory dropped from 8,084 homes to 6,010 homes today, on the verge of dropping to below 6,000 home for the first time since March. 37% more homes were pulled off the market this year compared to last year. That’s a definite step in the right direction. These facts got Santa’s initial attention. 

The year over year difference in the active inventory peaked in April when there were 82% more homes on the market compared to 2013. That has improved in dramatic fashion and is currently only 8% more than just one year ago, the lowest disparity so far this year. Because homeowners are starting to get it, the expected market time has remained at about 3 months since July. The market appeared to be heading towards a buyer’s market, an expected market time above 4 months, but that just did not materialize. The expected market time takes into consideration supply and demand. Demand may have dropped since the Summer Market, but so has the supply of homes. Santa was very pleased and placed sellers on the “Nice List.” 

It is important to note, that at 3 months, the housing market does not favor sellers or buyers, but is balanced. Below 3 months it becomes a seller’s market, the shorter the market time, the hotter the market. It appears as if the inventory is going to continue to drop through the New Year, where it will start 2015 at its lowest point, about 5,200 homes. That will be higher than the start to this year, which could lead to an inventory with a height that exceeds this year’s nearly 8,100 home mark. This will occur if sellers overzealously approach the Spring and Summer Markets. That is a very likely scenario and sellers will again be placed on Santa’s “Naughty List.”

Getting ready to put your home on the market is one of those exercises in optimism. You are excited to move to the next chapter in your life. You are also hopeful that all the planning and execution will go exactly as you and your Realtor® plan, ensuring your home sells over list price, as quickly as possible.

The reality though is that there is more to this than meets the eye. There can always be a correction in the market. Your home may not garner as many interested offers as you anticipated, or your home may simply just not sell at all.

So how do you avoid these problems? Today we want to share with you a few tips that will ensure you are able to sell your home, for the price you want, according to plan, with no drama.

1) The market is a thing. You need to respect it.

Depending upon what time of year you choose to sell your home, there are going to be differences in the market and as a result, differences in the listing prices of homes on the market. It is very important to be realistic about the true state of the market and what you want to list your home for, if you want to be sure to sell it quickly. Remember: It’s all relative. Even if the market drops a little, that just means the next home you purchase will cost that much less.

2) Interview more than one prospective Realtor®

Selling your home is one of the largest transactions you'll ever have, so why wouldn't you interview several applicants to help you? You can ask friends and family for referrals, but there are several questions you should ask. Make sure the agents you interview are experienced selling homes in your neighborhood and the type of home you want to sell. To get the listing, potential agents may employ a number of strategies, including suggesting or agreeing with you to list a high price for your home. Don't fall for it. Choose the agent who is straight with you, about the market and about your home.

Asking friends who they have worked with to sell or buy property, looking at signs in the neighborhood to figure out who sells the most property in your area, or even looking at print marketing you get in your mailbox can all give you a good idea of who you may wish to hire to sell your home. The VERY IMPORTANT thing to remember though is that you are embarking on selling what is likely your most valuable, and definitely your most personal asset. Don’t just pick a Realtor® out of the thin error.

Schedule listing appointments with at least 2-3 Realtors®, meet with them in person, and pick the agent you feel most comfortable with, align with best and trust the most. It may seem taxing to go through this process, but in the end it will pay off.

3) Your picked an agent, now listen to that agent

So you just went through this whole process to find the “perfect” Realtor® to help you sell your home. If you are wondering what the most valuable next step is, it’s easy: LISTEN TO THEM. You already know you are comfortable with them, trust them and know they can help you sell your home.

When they tell you that you can get a better offer if you de-clutter, stage your home, make certain updates or repairs, it's a proven truth. Buyers are more negative when they see homes that need work, and tend to make offers or withhold offers based on their feelings.

Do these things, right away, without objection and it will surely make for an easier and more profitable sale of your home.

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