PCS Q & A: Selling Your Home in a Seller's Market
by PCSgrades Staff - June 8th, 2021
Guest: Joel Lifschutz. I moved to Las Vegas from the Midwest about 10 years ago, after my wife had followed my military career for about 20 years. Together, we got into real estate and have been honored to work with many military families.
DoD Updates: As soon as you get your hard orders, get on DPS and set up your move, because we are seeing some long lead times, so the sooner the better.
There is a rumor about OCONUS shipments not getting crated due to lumber shortages. TRANSCOM reports that OCONUS shipments WILL continue to be crated, and they have priority for crating those shipments.
How soon in the PCS process should a military family be prepared to sell their home?
I would recommend they reach out to a real estate professional 6 months before their move date. You can discuss necessary repairs, and be prepared for the process. You should also reach out to a professional at the same time on the other end so you can prepare to buy a home there.
What about families with short-term orders?
It depends on your needs and when you need to sell the home. I have sold to families in other time zones or stationed overseas. My focus is to reduce the stress on the family, so it’s preferable to start early, but buying and selling can still be done remotely with last-minute orders.
What do families need to know about selling a home for the first time?
Military families sell homes more frequently than the normal American. You still need a professional to help you through the process, advertise your home, understand the process, and set expectations for the timeline. You will also want to know what costs are customary in your part of the country, since costs can vary everywhere. Understanding the process is the best way to make it easier.
You also need to understand market conditions. If I list a home here today, it will probably sell by Friday. But there are parts of the country where home sales will pause until snowfall or certain weather seasons. So you need to understand your current market.
Why should a family use an agent instead of selling on their own?
If you list with an agent, then a home will typically sell for higher, on average. And that’s even after you make commissions to an agent. If you list your home yourself, you won’t get the same marketing or exposure. When you are selling, the buyer will probably be using an agent. You will be at a disadvantage for negotiating the closing terms. You wouldn’t go into a court case against a professional lawyer by representing yourself. A licensed real estate agent knows the local laws, and can help guide you and protect you to choose the BEST offer–which isn’t always the highest offer. You need to understand all the details of loans and all the associated costs.
What are the unexpected costs of selling a home?
A good agent should lead with this info, by setting realistic expectations. The seller in Nevada will pay for the association documents, the commissions for the seller’s agent. There are transfer tags and title insurance. This can be between 7-10% of the overall sales price in closing costs. In the current market, agents are trimming those costs, but it is still a significant impact on the cost of selling a home.
Do you recommend renting or buying for short (2 year) tours?
I almost always recommend buying, because it is the fastest way for Americans to build generational wealth. Some service members buy a home at every duty station. But of course it depends on the market value and the location. If you do buy now, you need to consider your overall goals. Are you trying to avoid renting, trying to build wealth, or to become a landlord and have renters at multiple buildings on various duty stations? If your area has a dense military market, it has a high turnover rate and keeps the market volatile. In more remote areas, you will see less turnover, lower demand, and not as much appreciation in the market. Follow the investors and look where they are buying. They are doing the research and driving up the competition.
What is the difference between an HOA and a non-HOA?
In this area, almost everything built in the past 10 years is part of an HOA. It can be frustrating, but it does help you maintain steady property values. People have to maintain their home, and it keeps the neighborhood consistent and gives you an outlet to report a neighbor who may be bringing down the local property values.
If a home sells quickly, how long does closing take, and when do families need to prepare to move?
Some sellers are taking advantage of the market and are willing to rent once they move out. Other offers are allowing the seller to remain in the house for 60 days after closing. This is attractive to both the buyer and the seller. It’s customary for sellers to pay for the home warranty and the appraisal value of the home, and buyers are offering these nuggets of value to make their offers more attractive. The contract typically allows the buyer to occupy within 60 days, but there are ways to adapt the contract and make your proposal more attractive.
Currently, many homes are selling above asking price. What are the perks of a seller's market?
Price is a huge thing, and we are able to put more money into the seller’s pockets. Our market shows 2,000 people per week moving to our market from California. It’s hyper-competitive! It will eventually change back, but new home builders are not releasing lots, so that lack of inventory makes it difficult to buy in that market. If you are considering moving in the next year, look into selling now. Competition drives property appreciation, so it has driven everything up right now.
It’s hard to predict when the market will change. For me, it’s about locking in gains. I’m a fiscally conservative person, so to me it makes sense to lock in gains now and rent for the interim until you can afford to buy again. There are properties that come back into the market after going on escrow, so if you have flexibility and money in the bank, then you can offer the most competitive offer and meet someone where it is most advantageous. This gives you the ability to make a decision on your own timeline.
Should people plan to stage a home to sell?
If a home is empty, the buyer thinks the seller really needs to sell and to sell now. A home with furniture doesn’t appear as desperate. A beautifully staged home certainly helps, and allows someone to instantly see themselves in that space.
How do you make VA loans competitive to conventional loans?
Your agent should be showing you homes that meet the VA requirements. The agent considers the property, the conditions, and potential issues. I will write conditions of acceptance into my offer if it is missing an appliance or paint, etc. A lot of it comes down to education. It is easier to present a VA offer to a veteran who is selling a home. We can write a letter that begins a dialogue centered around military experience. The VA Loan still allows you to pay above appraisal or pay their own closing costs. They can’t pay commissions, but it is rare for that to come up. The appraiser needs information, so if you give them the full level of information, it is more likely to get an appraisal to come in near your offer. You’re going to have to come to the table with money, even if your VA Loan is at zero money down. Working with a professional is the first step, so they can educate the other side about what zero down means, and that you can pay 6% towards closing costs.
How do you find the right agent?
Personal referrals are the best source. You ask family, friends, or other military families in the area. I know PCSgrades offers reviews from other military families, and they have relationships with real estate agents who need to understand the challenges of buying and selling with PCS orders. Military families trust each other. Even an agent who works to help a family find a rental may eventually get word-of-mouth reviews for military family buyers. Local spouse and community groups will have positive and negative recommendations.
To determine if someone is a good fit, use some military acronyms and see if they understand them and your lifestyle. The more familiar they are with military life, the better they will be able to help you during a move.
Final tips?
All real estate is local, with lots of variables. You need someone on the ground in that market to help you navigate it. Hire a professional and give yourself plenty of time so you don’t have to make fear-based decisions. Knowledge is power!
Watch the full video on our YouTube Channel here.
