If you’re buying or selling a home this year, you’re likely saving up for a variety of expenses. For buyers, that might include things like your down payment and closing costs. And for sellers, you’re probably working on a bit of spring cleaning and maintenance to spruce up your house before you list it.
Either way, any money you get back from your taxes can help you achieve your goals. Using a tax refund is a common tactic for buyers and sellers. SmartAssetestimates the average American will receive a $2,897 tax refund this year. The map below provides a more detailed estimate by state:
If you’re getting a refund this year, here are a few tips to help with your home purchase or sale this season.
How Buyers Can Use Their Tax Refund
According to American Financing, there are multiple ways your refund check can help you as a homebuyer. A few include:
Growing your down payment fund – If you haven’t started saving for your down payment, let your tax refund kick off the process. And if you have a fund already, the money you get back could put you closer to your goal.
Paying for your home inspection – Your home inspection can save you a lot of headaches down the road by helping you determine the condition of the house. As a buyer, you’ll typically be responsible for paying for your inspection, and it’s definitely worth the investment.
Saving for closing costs – Closing costs are additional expenses you’ll need to pay once it’s time to close. They average anywhere between 2-5% of the purchase price of your home.
This list is a great start, but it isn’t exhaustive of all the costs you may encounter as you set out on your homebuying journey. The best way to prepare is to work with a trusted real estate professional to make sure you understand what’s to come in the process.
How Sellers Can Use Their Tax Refund
If you own a home and are planning to sell this spring, your tax refund can help you make sure your home is ready to list. Here are a few ways current homeowners can put their tax refund to good use:
Making small upgrades – NerdWallet provides a list of great ways to use your tax refund, including tackling small projects or boosting your curb appeal to help your home stand out.
Making repairs – If there’s anything in your house that needs to be fixed, American Financing notes that completing repairs is another great use of that money.
Buying your next home – Whether you’re selling to move up or downsize, you can use your tax refund to help pay for any costs on the purchase of your next home.
Of course, it’s important to talk with your trusted real estate advisor before taking on any projects. They’ll make sure you can focus on areas that’ll help you receive the best possible price when you sell.
Bottom Line
Funding your home purchase or sale can feel like a daunting task, but it doesn’t have to be. Your tax refund can help you reach your goals. Let’s connect to discuss how you can start on your journey.
Lease Back : A Great Strategy for Albuquerque Home Sellers
Tego: If you just said something there really quick, and you said lease back for the seller. Can you explain what that means? Tracy: Well, you know, the market right now, sellers have some leverage, right? So I, Tego: To say the least Tracy: In two instances that I can think of in the last couple weeks where we helped to sell or sell, but we negotiated as a part of that sale contract that they could stay in the home for 59 days or 60 days. There’s some, some implications there with a new borrower’s lending. So 60 days is sort of the most, if they’re getting a loan that says a primary residence, but we can negotiate a lot of buyers right now are willing to allow you to stay in that house while you get your new house under a contract and get moved. So Tego: Hope there’s no real estate agent. We don’t want to give away all our secrets. Tracy: Oh, that’s, Tego: That’s true. We do. I know we have a lot of real estate agents that listen, cuz I always hear from. Right. So yeah, so I mean that’s the, the whole lease back idea. So basically the home closes you’ve been funded, but basically you’re rent back the house h until you’re ready to move. And that’s, that’s a great strategy for home sellers and again, you know, home sellers, you know, that’s, that’s something that could be a condition of your sale, that you would like to have. Tracy: Right. So that’s just one of the strategies and one of the programs. So we can definitely talk if you’re interested. Just give us a call at that four, four eight, eight, eight, eight, eight. And we’ll get you set up with the best home seller expert on our team. We have several, you know, Melissa who grew up out in the Mai edge area, east mountains, east mountain, east mountains. Yeah. Yeah. East mountains, you know, she loves to represent those properties. We’ve got Shayna in Rio, Rancho. Not that they don’t cover all areas, but you know, we have different people with affinities, Janes and CORs Lisas in the Northeast Heights. So just we like to match people up with the right agent to help them sell their property and help them understand the options.
Home Seller Program: Get your Albuquerque Home Ready for the Market
(Transcript Snippet): “Tego:
Just so you know where we’re going here. So first off we wanna talk about, you know, what our home seller program is. This is the program that we use to get home sellers, the most money that they can for their home. And, you know, you think about this market, yes, homes are gonna sell homes are selling fast, but are you leaving money on the table? So we have a program to make sure that people are getting the most they can. And so you wanted to go over that
Tracy:
Just I’m very high level. Right. Okay. You know, if somebody’s thinking about selling, obviously meeting us, putting, putting together the strategy and the plan, but we have a program where we go through and we help you get your ready to maximize it based on your goals going through and a whole strategy of a grand open house and how we accept offers and how we look at ’em, how we present them to you. So, you know, if it’s something you’re interested in it’s sort of like we put together the auction effect right. For our home seller. And we’ve been doing this for quite a while. So we have a lot of things in place for this program. And, you know, we can go over it and talk to you about how it works with our home selling specialists on our team. So
Tego:
Yeah, we we’ve had great success with that, you know, getting, getting sellers the most and you know it, and I see homes that come on the market. I don’t, you know, I’m, I don’t wanna disparage anybody, but I see homes that come on the market, you know, in this current market, it’s like, yeah, homes are gonna sell. And the, the way they’re presented, you know, maybe not the best photographs, you know, just, it, it doesn’t look very good. And so you wanna be careful not to do, just because it’s gonna sell leave money on a table. Now, now with that being said, there’s gonna be situations where people just want to be done with it. They don’t want to do anything. They don’t want to clean the house. They don’t want to clean out the house. And, you know, there’s people out there that’ll buy those homes as well, but they’re gonna discount ’em substantially. Right.
Tracy:
We buy those houses too. So I was reading Tego. We were, we’ve been really like talking a lot about home sellers and making sure our program is the best it can be. I read a lot of stats this week for home sellers. Like, should I choose a solo broker or a team? Should I get a large brokerage or a small boutique brokerage? Should I choose somebody that’s been doing it a long time or somebody who’s maybe newer in real estate state that might have new energy or something. I thought it was interesting all of the different bullet points underneath all of those different topics. And, and one of the things that I, I came across a couple times was to be careful, well, don’t walk right into a, a real estate office and say, I need to sell my house. And they call up to the front whoever’s on duty, right? Whatever agent is up next you know, as a home seller, you have,
Tego:
I, I thought you were gonna give away some, some, you know, real estate business secrets there.
Tracy:
Yeah, no, I’m just, you know you have the opportunity to work with the best. You might as well, interview the best and make sure that you’re gonna work with the best, with the best marketing plan, with the best program, to, to take care of you depending upon your needs and how you want it to work. One of the things I really wanna talk about for home sellers Tego, we have strategies for people who need a house to move to, right? So a lot of what we’re hearing these days are people who wanna sell their home, but they don’t know where they’re moving and they wanna buy front home, whether it’s in this market or a different market. And they’re like, well you know, houses are scar. So I, I have to have a house to buy, to sell, sell, to buy. And you know, we’ve the, just this past month, we’ve helped a couple of home sellers with strategies so that they could buy that house. They wanted and sell the house they have. So if you’re thinking you need to sell to buy, and you’re worried that it won’t work quite right. We’ve been quite successful in helping people with that.
Tego:
So that’s one of the, the challenges we’re seeing in this current market is there’s people that do want to sell their home, but with the low number of homes on the market that they just they’re stuck they’re or they feel like they’re stuck. Right. Feel like they’re stuck. Thank you. That that’s, that’s a better, and, and there are solutions for that there’s ways to work through that, correct?
Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago.
However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist at First American,tweeted just last week on this issue:
“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”
Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value).
To this point, Pulsenomics just released the latest Home Price Expectation Survey – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. Itforecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections:
2022: 9%
2023: 4.74%
2024: 3.67%
2025: 3.41%
2026: 3.57%
Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years.
What Does This Mean for You as a Buyer?
With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.
As an example, let’s assume you purchased a $360,000 home in January of this year (the median price according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below):
Bottom Line
If you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today.
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