How's the Housing Market? What Does "Contingent" Mean? And Answers to Other Common Real Estate Questions

Hi Everyone!

Before I became a licensed Realtor, as a first-time (and even second and third-time homebuyer) I didn't really understand what all the different real estate terms and processes were. I basically just trusted my agent to tell me what I needed to know and what I needed to do. I know that there are many other people who do that as well. I was fortunate that it was never a problem for me. However, it easily could have gone sideways and resulted in a very different experience, since I really didn't know what was going on and what I was getting myself into.

Real estate jargon can be very confusing and even a bit intimidating to both buyers and sellers. This week I have created a list of common real estate questions and their answers. Many of these answers have a degree of variance to them because in real estate it all depends on what the contract for each unique property says. There are general guidelines, but there can be some big differences which is why it is so important to not only read all of your contracts before signing but to also talk with your Realtor and make sure you really understand what you are agreeing to. If you have a question that isn't on this list, please don't hesitate to contact me! I would be delighted to help you get the answers you're looking for!

How is the housing market?

That is a great question, but the answer isn't so simple. The answer to that question depends on if you are referring to the market in terms of buying or selling. In general, the market right now is starting to slow down a bit due to the seasonality of the real estate market in Michigan. That being said, sales and home values are up right now compared to this same time last year. For Saline, the average sales price of a home in September was $325,000 which is up 1.57% from August and up 7.43% from a year ago. Keep reading the next section to see how quick home turnover is. If you would like to see my full Saline Housing Market Report click here.

How long is it taking for houses to sell in Saline right now?

The average number of days on the market for houses in Saline for the month of September was 22 days. Keep in mind that quality move-in ready houses sell much faster than outdated ones do. Also, houses in the entry-level and mid-level price ranges tend to sell quicker than those in the upper price range. This is primarily because there is a smaller pool of buyers and many of those buyers would prefer to do a new construction rather than pre-existing. If you would like to find out other stats for Saline (or another city) you can click this link to select your city and watch this 1-minute video

How would a recession impact the housing market?

This is probably the most asked real estate question right now and rightfully so! People are still suffering from PTSD from the last recession. The great news is that the terms "recession" and "housing crises" are not synonymous. When we do have our next economic slowdown (or even recession) the housing market shouldn't be affected. In fact, based on the history from the last 6 recession, all of the expert analysts are estimating that home values will actually rise between 2-5% a year over the next 5 years. Michigan could be affected by a recession slightly because of the massive presence of the auto industry though. When the economy goes down, the auto industry tends to see layoffs which could affect housing slightly in Michigan as a whole. Overall though, Washtenaw County has the most stable housing market in Michigan due to U of M, which is great news for us! If you would like to look into the topic of a recession and housing in more detail, you can check out my blog from a few weeks ago that addresses this very thing.

What is the first step to buying a house?

The first step of the home buying process is getting pre-approved for a mortgage (if you are getting a mortgage). Pre-approval is a necessary first step because it gives you a definitive answer as to how much house you can afford, you need to supply a copy of your pre-approval with any offer you submit, and it shows that you are a serious buyer. Often times Realtors will not show you houses without a pre-approval letter because of the above reasons. If you are paying cash, your first step would be to hire a quality Realtor. For more information on the home buying process check out my free Buyer's Guide Ebook!

What does "Contingent" mean on a listing?

"Contingent" or "active-contingent" means that there is already an accepted offer on the house, but the contract has some contingencies (stipulations such as home inspection results or the buyers selling their current home first) that must be met before closing. The sellers may still be willing to accept back-up offers, but unless the first offer falls through, you will not be able to purchase the home. Often times you will run into the problem where home search sites like Realtor.com and Zillow will list a home as active (active means that the home does not have an accepted offer yet) when it is actually contingent. Your Realtor will be able to help you determine which homes are actually active listings.

How long does it take to buy a house?

That depends on a lot on how quickly you find a house that you like, what your payment method is, your lender, and your title company. Typically, once you find a house and are under contract, it will take 45-60 days. If everything is in line and there are no complications with title and financials, you might be able to squeak by in 30 days, but it's best to plan for 60 to be safe.

What is earnest money?

Earnest Money is the Money that you put down into an escrow account that will be counted toward your closing costs. Essentially the Earnest Money (or Earnest Money Deposit aka EMD) is a way for you to let the seller know that you are serious about your offer and won't back out without valid reason. Keep in mind that if you do back out of the contract for any reason that isn't allowable by the contract, the seller has the right to keep your Earnest Money Deposit (around $1500 typically).

How does a Realtor's commission work?

The amount of commission that a Realtor receives depends on what is in the contract with their client. There is not a standardized rate, but most often you will find that the Realtor fees equal 6% of the selling price of the home. That 6% is then divided up between the listing agent, selling agent, listing brokerage (i.e. Real Estate One, Reinhardt, Howard Hanna), and the selling brokerage according to the terms of the contract. The commission is typically paid by the seller, but if the sales contract doesn't say as much as your Agency Agreement says you will pay to your realtor, you will have to make up the difference. So again, make sure you read all the contracts!

Are there tax implications for any profit you make on selling your home?

If you have lived in (not just owned) your home for more than 2 years, you typically won't have to pay for any profit that you made on the sale of the property. There are other exclusion determination factors as well so be sure to talk to your tax professional or financial planner if you are unsure. The IRS created the 2-year rule so that people couldn't make money tax-free when they flipped houses.

I hope that this helped to answer some of your questions, but if you have any other questions please don't hesitate to contact me! I would be more than happy to help answer them. You can also schedule an appointment to have your questions answered in person!

Have a fantastic day!

Chrissy Myers
Realtor
Real Estate One
1365 E Michigan Ave
Saline, MI 48176
937-241-7123
ChrissyMyers@RealEstateOne.com
ChrissyMyers.com
Facebook.com/ChrissyMyersRealtor/