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Tag: buying faq

  • How to Budget for Home Maintenance

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    As a homebuyer, home maintenance is key to keeping your property in good condition for years to come—but without a solid plan, those costs can add up quickly. 

    The most effective way to budget for home maintenance is to set aside about 1% to 4% of your home’s value each year (or break it down into monthly amounts), then adjust depending on your home’s age, size, and location. Keep this money in a dedicated fund for unexpected repairs. 

    Whether you’re budgeting for home maintenance in Richmond, VA, Salisbury, MD, or Irvine, CA, this Redfin guide will walk you through how to budget for home maintenance effectively so you can avoid unexpected costs in the future. 

    How to budget for home maintenance

    Maintaining your property is crucial for homebuyers, and a clear financial plan prevents unexpected costs. One practical approach is to base your budget on your home’s age — older homes typically require more frequent and expensive repairs than newer builds. For example, a house that’s 30 years old may need major system updates, like roofing or HVAC replacements, sooner than a home built within the last decade.

    Another simple way to budget is by using your home’s size and square footage—just save about $1 per square foot each year. So if your home is 3,000 square feet, try to set aside around $3,000 annually for upkeep.

    Pick the method that feels more manageable for your budget, and consider setting up automatic transfers so saving becomes one less thing to think about.

    How much should you save each year for home maintenance?

    “A good rule of thumb is for homeowners to set aside 1–3% of their home’s value each year for maintenance and unexpected repairs.” says Ryan Hopkins, Co-Owner of Handyman Connection. “For example, on a $400,000 home, that’s $4,000–$12,000 annually.”

    The biggest factors that influence this number include: 

    Age and condition of the home 

    Newer homes typically only require routine upkeep, whereas older homes often demand more frequent and extensive maintenance, necessitating a larger allocation in your home maintenance budget.

    Prior Maintenance 

    When it comes to home maintenance, past care makes all the difference. “Homes that have been well maintained in the past require less maintenance than homes that have been neglected.” Ryan adds, highlighting why regular upkeep pays off over time.

    Home size and complexity 

    Maintenance costs are typically higher for larger homes or those with complex features such as multiple HVAC systems, extensive landscaping, swimming pools, or smart home technology.

    Climate and location 

    If your home is located in an area with extreme weather, like heavy snow, excessive rain, or heat waves, these conditions can accelerate the wear and tear on your home’s exterior, roof, HVAC systems, and more. Because of this, you’ll likely face higher maintenance costs over time and should plan to budget accordingly.

    Type and quality of materials used

    Homes built with high-quality or low-maintenance materials (like composite decking or metal roofing) may reduce annual upkeep costs compared to homes with cheaper or more maintenance-heavy finishes.

    Your long-term plans for the home 

    If you plan to stay long-term, it may make sense to invest more in preventative maintenance and updates. If it’s a short-term residence or rental, you might prioritize only essential upkeep.

    >> Discover: How Long Should You Live in a House Before Selling?

    Monthly vs. annual budgeting

    There’s no single right way to budget for home maintenance; it really depends on what works best for you. Here are two common approaches to consider:

    • Monthly Budgeting: Start small and automate. Even $50–$100 per month can build a cushion over time. Ideal for:

      • Unexpected repairs




      • Ongoing tasks like lawn care or air filter changes




      • Spreading out the cost of larger maintenance projects




    • Annual Budgeting: Best for planning around predictable, seasonal tasks and big-ticket items. Ideal for:

      • HVAC servicing




      • Gutter cleaning




      • Exterior painting




      • Major upgrades like new appliances or a roof replacement

    Using a mix of monthly and annual budgeting gives you the flexibility to handle surprise repairs while planning ahead for bigger projects.

    Common home maintenance costs to expect

    Planning ahead for home repairs can save you a lot of stress (and money) down the road. While prices can vary depending on where you live and how busy local contractors are, it’s helpful to have a ballpark idea of what major replacements might cost. While prices vary depending on your location and market demand, here are some general cost ranges to keep in mind:

      • HVAC servicing: Heating and cooling systems typically need professional inspection and cleaning once or twice a year. Expect to pay around $150–$300 per visit.




      • Roof repairs: Basic repairs, like missing shingles or minor leaks, might cost $200–$500, while more extensive damage could reach into the thousands.




      • Plumbing fixes: Whether it’s a dripping faucet or a clogged drain, plumbing issues are among the most frequent. Minor repairs usually range from $180–$600.




      • Water heater maintenance or replacement: Regular flushing and inspections can extend the life of your water heater, but replacement is inevitable. Maintenance costs about $100 annually, while a full replacement can cost between $800–$1,500.




      • Gutter cleaning: Clogged gutters can lead to water damage, so plan on cleaning them at least twice a year. This service typically costs $50–$175 per hour for gutter cleaning.




      • Pest control: Seasonal pest prevention or removal may be necessary. These costs range from $100–$600 depending on the type of pest, severity and frequency of services.




      • Deck (wood/composite): Power washing, sealing, or staining a deck typically costs $300–$1,000, while replacing a deck can run between $4,125–$11,650.




      • Furnace: Annual furnace maintenance typically costs $100–$300, while replacing a furnace can range from $2,500–$7,500.




      • Windows: Minor window repairs may cost $100–$500. Full replacement, especially for energy-efficient models, ranges from $400–$1,200 per window.




      • Appliances: Common appliances like dishwashers, ovens, or refrigerators may cost $100–$400 to repair. Replacements vary widely, from $500–$3,000, depending on brand and features.

    Creating a home maintenance checklist

    Staying on top of home maintenance can feel overwhelming, but a checklist can simplify the process. By breaking tasks down by season or priority, you’ll reduce the risk of overlooking important upkeep and catch small issues before they turn into costly repairs. 

    Monthly

    • Change HVAC filters




    • Test smoke and carbon monoxide detectors




    • Check for signs of leaks under sinks




    • Inspect visible plumbing for drips or corrosion




    • Clean kitchen vent hood filter

    Seasonally (Spring and Fall)

    • Inspect roof and gutters for damage or buildup




    • Clean gutters and downspouts




    • Schedule HVAC service




    • Check and reseal windows and doors




    • Inspect the foundation for cracks or water intrusion




    • Trim back trees and shrubs near the house

    Annually

    • Flush water heater




    • Clean dryer vent and exhaust duct




    • Inspect chimney and fireplace (if applicable)




    • Test and reset GFCI outlets




    • Deep clean carpets and flooring




    • Review and update home maintenance budget

    As Needed

    • Touch up exterior paint and siding




    • Power wash driveway, siding, and deck




    • Replace weatherstripping




    • Check attic and basement for pests or moisture

    Other ways to prepare for home costs

    Beyond regular maintenance, unexpected home expenses can pop up at any time. While having a dedicated maintenance fund is essential, here are a few additional ways to stay financially prepared:

    • Invest in a home warranty: A home warranty covers major system and appliance repairs or replacements due to normal wear and tear, reducing out-of-pocket costs.




    • Review your homeowners insurance: Ensure coverage reflects current home values and area risks (e.g., flooding, earthquakes). Add riders for high-value items or specific unlisted risks.




    • Plan for long-term replacements: Be aware of your home’s component ages (appliances, roof, HVAC, water heater) and save for their eventual replacement.




    • Keep a running list of repairs and upgrades: Documenting past work and future needs helps you prioritize spending and avoid surprise costs down the line.

    >> Read: Home Warranty vs. Home Insurance: Do You Need Both?

    Final thoughts: stay ahead, save more

    Homeownership comes with many responsibilities but planning ahead can make all the difference. By setting aside funds, following a maintenance checklist, and preparing for both routine and unexpected costs, you’ll be better equipped to handle whatever comes your way.

    FAQs: How to budget for home maintenance

    The best practice for budgeting is to start with what is manageable, even if it’s small, the money you save will grow into a cushion over time. In the meantime, look for low-cost or DIY ways to maintain your home as you save and increase your contributions as your budget allows.

    2. Should I increase my maintenance budget as my home gets older?

    Yes. As systems age, they will likely require more frequent repairs or even replacement. It’s wise to reassess your budget every few years and gradually increase it based on your home’s condition.

    3. Is home maintenance tax deductible?

    A routine maintenance for primary residents isn’t typically deductible. However, if you rent out a part of your home or you have a home office, some maintenance expenses related to those areas could possibly be a tax deductible.

    4. What’s the difference between maintenance and home improvements?

    Maintenance involves preserving what already exists within your home to prevent wear and tear. On the other hand, improvements add value or functionality to your home, like finishing a basement or installing solar panels. It’s best to budget for both of these apart from each other.

    5. How do I keep track of maintenance tasks and costs over time?

    Consider using a home maintenance app or create a spreadsheet that logs tasks, due dates, and receipts. This will make it easier to plan your budget, track your expenses, and keep records for resale and warranty purposes.

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    Emily Pascale

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  • The Most Expensive Home Sales of 2025 – So Far

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    A $133 million Florida compound is the highest-priced sale so far this year 

    Coastal Florida takes the cake for the most expensive home sale of 2025 so far, with a beachfront compound in Naples going for $133 million. It’s followed by two Los Angeles estates, each fetching $110 million. Every home on this year’s top 10 list has sold for more than $55 million, with Florida and California dominating. The Sunshine State and the Golden State have long been ultra-luxury hotspots.

    In total, Los Angeles and coastal Florida each account for four of the ten most expensive sales this year. An oceanfront estate in Hawaii and a Manhattan duplex round out the list.

    The most expensive home sales of 2025

    1. 2200 Gordon Dr., Naples, FL 34102: Sold for $133 million in April
    2. 630 Nimes Rd., Los Angeles, CA 90077: Sold for $110 million in May
    3. 594 S. Mapleton Dr., Los Angeles, CA 90024: Sold for $110 million in July
    4. 88 La Gorce Cir., Miami Beach, FL 33141: Sold for $74.3 million in April
    5. 4823 Kahala Ave., Honolulu, HI 96816: Sold for $65.8 million in March
    6. 71 Beverly Park, Beverly Hills, CA 90210: Sold for $63.1 million in June
    7. 66 La Gorce Cir., Miami Beach, FL 33141: Sold for $60 million in March
    8. 150 Charles St., Unit 9A, New York, NY 10014: Sold for $60 million in March
    9. 1028 Ridgedale Dr., Beverly Hills, CA 90210: Sold for $60 million in April
    10. 391 N. Carolwood Dr., Los Angeles, CA 90077: Sold for $57.3 million in May

    The most expensive home sales of July

    We also took a look at the most expensive home sales of August. 

    August’s highest-priced sale was a Beverly Hills estate previously owned by Rick Caruso, which went for $47.5 million. It was followed by a Greenwich, CT mansion, a Lake Tahoe getaway, and multiple oceanfront properties. The fourth-priciest sale was Rosie O’Donnell’s former coastal compound.

    1. 912 Benedict Canyon Dr., Beverly Hills, CA 90210: Sold for $47.5 million 
    2. 214 Clapboard Ridge Rd., Greenwich, CT 06831: Sold for $43.5 million 
    3. 1013 Lakeshore Blvd., Incline Village, NV 89451: Sold for $37.5 million
    4. 43 Star Island Dr., Miami Beach, FL 33139: Sold for $36 million
    5. 33 Arvida Pkwy, Coral Gables, FL 33156: Sold for $34 million 
    6. 109 E. 79th St., Unit 16, New York, NY 10075: Sold for $33 million
    7. 68 La Gorce Circle, Miami Beach, FL 33141: Sold for $32.7 million
    8. 419 Sheridan Rd., Winnetka, IL 60093: Sold for $31.3 million
    9. 1200 S. Ocean Blvd., Manapapan, FL 33462: Sold for $28 million
    10. 5-8192 Kuhio Hwy, Hanalei, HI 96714: Sold for $27.6 million

    Four of last month’s most expensive home sales were in Florida, and the rest were spread across the country. All of them sold for more than $27 million, but none made the list of the most expensive sales of the year. 

    Florida’s housing market has slowed significantly as soaring home insurance premiums and HOA fees – driven up by increasingly frequent natural disasters – push costs out of reach for many buyers. But it’s still a popular place for ultra-luxury homebuyers, who typically have the means to move or rebuild.

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    Dana Anderson

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  • Is It a Buyer’s or Seller’s Market?

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    The U.S. housing market finally favors homebuyers, but few can afford it

    It’s a buyer’s market, meaning buyers have the upper hand. Following the pandemic-fueled seller’s market in 2021, sellers now outnumber buyers by over 500,000 due to two years of rising mortgage rates and prices. 

    Affordability remains the sticking point for everyone, though: Most buyers can’t afford a home, which is leading to fewer sales, deterring sellers, and slowing down an already sluggish housing market. You can see this in the data: Over the past six months, prices have risen while demand has dropped – almost the opposite of typical spring and summer buying seasons.

    So, where do we go from here? Here’s what to know about buyer’s vs seller’s markets, how to tell which market you’re in, and where each side has the most leverage right now.

    What is a buyer’s market vs seller’s market? 

    Buyer’s market 

    A buyer’s market typically happens when there are more homes for sale than buyers to purchase them. When this is the case, buyers usually drive negotiations and are more likely to receive concessions. 

    Home price growth is typically lower in buyer’s markets than seller’s markets. But if a buyer’s market sees prices cool substantially, the pendulum may swing back toward sellers as more homebuyers come off the bench

    Seller’s market

    A seller’s market often occurs when demand exceeds supply. Buyers outnumber sellers, creating more competition and fueling bidding wars. Sellers typically lead negotiations and see homes sell for above asking. House prices also tend to rise more quickly and sell faster in seller’s markets.

    >> Read: Disadvantages of Sellers Paying Closing Costs

    The strongest buyer’s markets in 2025

    Sellers outnumber buyers by the most in these ten metros, giving buyers more leverage. Redfin defined a “buyer’s market” as one where sellers outnumbered buyers by at least 10%.

     

    The Sun Belt – cities stretching from the Southeast to the Southwest – is home to all of the nation’s strongest buyer’s markets. 

    Florida and Texas in particular saw a surge in homebuilding during the pandemic, but many of these homes are now sitting unsold as buyers back off. Florida’s housing inventory reached its highest level on record this year. Demand has dropped quickly due to rising prices, climate risks, and high insurance costs.

    The strongest seller’s markets in 2025

    In a handful of metros, buyers still outnumber sellers, giving sellers the edge. Redfin defined a “seller’s market” as one where the buyers outnumbered sellers by at least 10%, and only five metros made the cut.

     

    The Midwest and Northeast are home to the remaining seller’s markets. New construction has lagged here, and with more people looking to move to the region for homes they can afford, supply is falling far short of what’s needed and pushing prices up.

    What buyers should do right now

    • If you’re buying in a buyer’s market: This is the ideal time for buyers to make a move, if they can afford to. Home prices may decline, listings stay on the market longer, and sellers are more likely to negotiate. You may see price reductions, seller concessions, or repairs included to close the deal. With less competition, buyers have more leverage to secure a home at a better price.
    • If you’re buying in a seller’s market: Sellers hold the upper hand, and competition among buyers can be fierce. Homes often sell quickly and attract multiple offers, which can drive prices well above asking. If you’re buying in a seller’s market, be prepared to act fast and make strong offers; trying to negotiate too aggressively could cost you the home.

    >> Read: Is Now a Good Time to Buy a House?

    What sellers should do right now

    • If you’re selling in a buyer’s market: Selling becomes more challenging when inventory is high and demand is low. Homes tend to sit on the market longer – in fact, the average home today takes over 40 days to sell, and nearly half have sat for 60+ days. To attract buyers, sellers should price competitively and remain flexible.
    • If you’re selling in a seller’s market: This is a great time to sell. Homes typically move quickly, and competition among buyers can lead to multiple offers, bidding wars, or offers above asking price. With high-demand and limited inventory, sellers have the upper hand and are more likely to get favorable terms, including waived contingencies and minimal concessions.

    >> Read: Should I Sell My House Now? 

    How to tell if you’re in a buyer’s or seller’s market

    Even if the national housing market favors buyers or sellers, individual cities and regions usually vary widely. Sometimes, even adjacent neighborhoods will have completely different trends. That’s why it’s important to do your research to understand which way your market leans. Here are a few ways to do that.

    Check the Redfin Data Center

    Redfin publishes its buyers vs sellers dynamics research to the Redfin Data Center for public viewing. On the dashboard, you can see whether the national housing market – and any of the 50 largest metros – leans toward buyers or sellers. This is a good way to get a baseline picture of the housing market, but it may not reflect your neighborhood or include your city. That’s where additional research and insight comes in.

    Talk with a local agent

    Local real estate agents know the market the best. They have up-to-date knowledge on how long homes are sitting on the market, whether sellers are cutting prices, and how competitive offers are. An experienced agent can tell you if buyers have the upper hand or if sellers are still in control, and help you make informed decisions in your neighborhood.

    Research housing inventory

    A common way to gauge which way a market leans is to look at “months of supply” – the number of months it would take for available inventory to sell at the current rate. Supply below 4 months tends to favor sellers, while supply above 5 months tends to favor buyers. Redfin publishes this data on the Redfin Data Center for every city and metropolitan area in the country.

    Track sale price trends

    Price growth often accelerates during a seller’s market and cools during a buyer’s market, sometimes even causing home prices to fall. If prices are growing and show no signs of slowing down, you could be in a seller’s market.

    Look at mortgage rates

    Mortgage rates play a huge role in the housing market. Typically, the higher the rates, the less buyers shop for homes, making sellers more desperate for offers. This is the case today, which is putting buyers in the driver’s seat.

    Looking forward

    Economic uncertainty continues to throw a wrench into the housing market, with a weak job market, tariffs, and immigration policy all playing a role. Homebuilding is also more expensive than ever, putting pressure on the nation’s ailing housing stock. 

    But there are positives on the horizon. In part because housing costs are so high and so few homes are selling, price growth has slowed – and in some places, they’re falling. Plus, mortgage rates have dropped to recent lows, which may help bring life back to the housing market. 

    The prolonged seller’s market is over, so serious buyers with the budget may want to act now while competition is low.

    Methodology

    Based on a September 2025 Redfin report. All data covers the period of August 2025 and is seasonally adjusted, dating back to 2013. Please see this article for the full methodology.

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    Jamie Forbes

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  • Should You Get a Home Inspection on a New Construction Home?

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    The short answer: Yes. Even new homes can have defects, ranging from misinstalled appliances to roof damage to grading problems.

    New construction single-family home sales have been rising since the pandemic, with builders frantically trying to keep up with the housing demand uptick that began in 2020. Builder incentives, mortgage-rate buydowns, and cash toward closing costs have also made new builds more enticing, especially as the gap in sale price between new construction and older homes starts to close.

    Many buyers think that investing in new construction means they’re moving into a home with zero problems. But “new” doesn’t necessarily mean “perfect” — something that many new build homeowners may discover if they opt to skip a new construction home inspection, whether buying a house in Washington, DC or Dallas, TX.

    Is a home inspection needed for new construction?

    Yes, almost always. When you buy a pre-owned home, it’s practically a given that the buyer will get a home inspection. With new construction, many buyers assume that municipal building inspections or builder warranties make an additional inspection unnecessary — but what it comes down to is builder goals vs buyer expectations.

    “Builders are under a lot of pressure to deliver as many houses as they can, as fast as they can, to fulfill their financial obligations with their shareholders,” says Fred Rodrigues, owner and inspector at Damngood Inspection in South/Central Florida. “The builders’ goals are to deliver the house as fast and as efficiently as possible; the expectation buyers have is that what you are buying is a great quality product.”

    When to schedule a home inspection for new construction

    When you’re getting an inspection on a new construction home, there are a few key timing points to keep in mind: depending on whether you’re building and buying a new construction home, or closing on a newly completed spec house.

    1. From the ground up

    If you’re involved during construction, a 3-phase inspection is when a home inspector looks at the house during three crucial parts of the building process, with an optional check after move-in:

    • Foundation inspection: after the concrete is poured.
    • Pre-drywall inspection: before walls are sealed up.
    • Final inspection: when the home is nearly complete, before closing.
    • 11-month warranty inspection: before the builder’s warranty expires (optional).

    2. Buying a finished “spec house”

    If the home is already built or nearly done, schedule an inspection before closing. This is your chance to request repairs or negotiate with the builder, says Rodrigues. “The builder wants to close on the house to get the money, but you as the buyer need to make sure the product they are delivering is as promised.”

    What inspectors look for in new construction homes

    As long as the home is almost ready, an inspector will be checking for the same things they would on any other house.

    On a new construction home, inspectors will check the house’s:

    • Foundation
    • Exterior walls
    • Roof
    • Garage, crawl space, & attic
    • Electrical panels
    • Plumbing
    • HVAC
    • Appliances

    “One of the first things we do in a new construction inspection is to inspect the roof,” Rodrigues says. That’s where a lot of problems can start, either from improper installation or sustaining damage throughout construction.

    Common problems to watch out for in new construction homes

    The pressure to build quickly and the large number of sub-contractors working on a new build are often the biggest factors in construction mistakes. Some of the most common issues Rodrigues finds during new construction inspections are missing insulation, drainage issues, and small leaks that could turn into expensive repairs if not caught and remedied early on.

    A 2022 survey revealed the most common problems found during new construction home inspections:

    • HVAC system issues
    • Safety issues
    • Problems with finishes
    • Drainage issues
    • Structural problems
    • Leaks or water damage
    • Foundation problems
    • Drafty doors / windows
    • Roof problems
    • Non-functioning electrical outlets

    The same survey found that nearly 9 in 10 new homes still required maintenance sooner than expected, with the most frequent issues tied to electrical, HVAC, plumbing, flooring, foundations, and drywall.

    Bottom line: don’t skip the home inspection 

    New construction homes have a lot of moving parts, tight deadlines, and profit margins to consider. Even with new materials and modern construction, errors happen. A professional inspection helps catch problems early, so they can be fixed before closing or under warranty.

    That’s why it’s important to hire both an inspector and a real estate agent that will be on your side, says Rodrigues. If buying a new construction home, a Redfin agent can help you find a trusted inspector, guide you through phase inspections, and help protect you, and your investment, every step of the way.

    FAQs about new construction home inspections

    How much does a new construction home inspection cost?
    A standard new construction home inspection typically costs $300 to $500, depending on the size and complexity of the property. Larger homes or houses with basements, crawl spaces, or special add-ons can cost $600 or more.

    If you choose a 3-phase inspection package (foundation, pre-drywall, final, and optional 11-month warranty check), many inspectors charge $800 to $2,000 total. Each inspection phase can run between $100-$500, and some inspectors offer discounted rates if you book the full package upfront. These are typical estimates and can vary by location and provider.

    What is the biggest red flag in a home inspection?
    The biggest red flag in a home inspection is usually structural, like foundation cracks, uneven floors, sagging roofs, or framing problems. These can mean serious problems that are expensive to fix. Other major issues could include water intrusion, faulty electrical systems, and plumbing or HVAC failures, which can create both safety risks and ongoing maintenance headaches.

    What is the final walk through inspection for new construction?
    The final walkthrough on a new construction home is also called a “blue-tape walkthrough,” and is the last inspection before closing. Buyers walk the property with the builder to make sure all the work has been completed as planned, the systems and appliances work, and all the finishes meet expectations. Blue painter’s tape is often used to point out any flaws or unfinished details, otherwise known as a “punch list” of items the builder needs to fix before move-in.

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    Ashley Cotter

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  • Property Taxes By State: What You’ll Pay Based on Where You Live

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    Buying a home isn’t just about the purchase price; you’ll also need to budget for ongoing costs like property taxes. These taxes can vary widely depending on where you live. Homebuyers in Boston will pay more than those buying homes in Los Angeles, even if the houses have the same value. So read on as we break down property taxes by state so you’ll know what states charge the highest rates and where you might be able to save some cash.

    What are property taxes, and what do they do?

    Property taxes are charged to homeowners based on the assessed value of your property. They help local governments pay for things like schools, public transportation, fire departments, and other necessary public services and government expenses.

    Your local tax assessor calculates your property tax based on methods defined by state and local laws. If you itemize deductions, property taxes may be deductible on your federal tax return.

    Property taxes by state

    Keep in mind that property tax rates can vary significantly within the same state. What you ultimately pay depends on your county or city’s specific rate and your home’s assessed value. The figures below show statewide averages based on the most recent data available; your actual tax bill may differ. Effective property tax rates are from 2023, while median sale prices reflect July 2025 Redfin data.

    State

    Effective Property Tax Rate (2023, %)

    Median Sale Price (July 2025)

    Estimated Annual Property Tax
    Alabama 0.36 $300,100 $1,080
    Alaska 0.91 $422,900 $3,848
    Arizona 0.44 $439,000 $3,995
    Arkansas 0.53 $273,100 $1,447
    California 0.70 $830,400 $5,812
    Colorado 0.50 $598,400 $2,992
    Connecticut 1.48 $491,700 $7,277
    Delaware 0.50 $385,000 $1,925
    District of Columbia 0.61 $675,000 $4,118
    Florida 0.74 $404,100 $2,990
    Georgia 0.77 $382,000 $2,941
    Hawaii 0.32 $733,800 $2,348
    Idaho 0.48 $491,200 $2,358
    Illinois 1.83 $320,800 $5,871
    Indiana 0.77 $281,400 $2,167
    Iowa 1.23 $252,200 $3,102
    Kansas 1.19 $314,000 $3,737
    Kentucky 0.73 $280,300 $2,046
    Louisiana 0.55 $252,700 $1,390
    Maine 0.94 $416,600 $3,916
    Maryland 0.9 $461,100 $4,150
    Massachusetts 0.97 $686,700 $6,661
    Michigan 1.15 $291,500 $3,352
    Minnesota 0.99 $371,300 $3,676
    Mississippi 0.58 $265,700 $1,541
    Missouri 0.88 $288,700 $2,541
    Montana 0.60 $541,200 $3,247
    Nebraska 1.43 $305,400 $4,367
    Nevada 0.49 $465,500 $2,281
    New Hampshire 1.41 $513,100 $7,235
    New Jersey 1.77 $579,000 $10,248
    New Mexico 0.61 $364,800 $2,225
    New York 1.26 $597,000 $7,522
    North Carolina 0.62 $388,400 $2,408
    North Dakota 0.94 n/a n/a
    Ohio 1.31 $275,600 $3,610
    Oklahoma 0.77 $258,900 $1,994
    Oregon 0.78 $516,600 $4,029
    Pennsylvania 1.19 $325,800 $3,877
    Rhode Island 1.05 $518,800 $5,447
    South Carolina 0.47 $387,900 $1,823
    South Dakota 0.99 $332,400 $3,291
    Tennessee 0.49 $394,800 $1,935
    Texas 1.36 $351,700 $4,783
    Utah 0.47 $560,600 $2,635
    Vermont 1.42 $430,500 $6,113
    Virginia 0.77 $474,700 $3,655
    Washington 0.75 $648,900 $4,867
    West Virginia 0.48 $249,400 $1,197
    Wisconsin 1.25 $342,600 $4,283
    Wyoming 0.55 $487,900 $2,683

    Note: Data may not be available for every state; in these cases, figures are marked as “n/a.”

    Property taxes by state FAQ

    Which states have the highest property tax rates?

    The following states have the highest effective property tax rates:

    1. Illinois (1.83%)
    2. New Jersey (1.77%)
    3. Connecticut (1.48%)
    4. Nebraska (1.43%)
    5. Vermont (1.42%)

    Which states have the highest property tax payments?

    Here are the states where you can expect to pay the most in property taxes:

    1. New Hampshire ($9,133)
    2. Connecticut ($8,408)
    3. New York ($8,119)
    4. Massachusetts ($7,348)
    5. Rhode Island ($7,159)

    How are property taxes calculated?

    Your annual property tax payments are determined by your home’s assessed value, not the purchase price of the home. Assessors may use market value, recent sales, or state-specific formulas to determine assessed value. Once that number is set, your local property tax rate is applied to calculate your annual bill.

    Do property tax exemptions exist?

    There are property tax exemptions for certain groups. Veterans, elderly homeowners, low-income homeowners, and those with disabilities are eligible for exemptions that can lower or eliminate their tax bill.

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    Chibuzo Ezeokeke

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  • How to Make an Offer on a House in 6 Steps

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    Making an offer is one of the most important steps in the homebuying process. It’s the point where you find out if the home will be yours or not. From deciding how much to offer to choosing contingencies and earnest money, and preparing for negotiations, there’s a lot to consider. 

    In this Redfin article, we’ll outline how to make an offer on a house in six steps. Whether you’re buying a home in Minneapolis, MN, or a townhouse in Austin, TX, here’s what you need to know about making an offer on a home so you have the best chance of getting it accepted. 

    6 steps to make an offer on a house
    1:     Decide on how much to offer
    2: Choose your contingencies
    3: Decide on earnest money amount
    4: Write up the offer letter
    5: Submit your offer and wait
    6: Negotiate the terms of the sale

    What to do before making an offer

    Before making an offer on a home, there are a few things you should do that can help make the process smoother. Let’s explore them.

    Get a mortgage pre-approval

    A pre-approval letter tells you how much a lender will loan you to buy a home. Most sellers won’t take an offer seriously without pre-approval, so having one ready lets you move fast when you find a home.

    Keep in mind that a pre-approval is different from a pre-qualification. A pre-approval is the more serious of the two, as a lender examines your finances to decide how much to lend. A pre-qualification only uses the information you provide.

    Learn about the local housing market

    If homes are selling quickly and above the list price, you’re likely in a competitive market. You could end up competing with other buyers or get drawn into a bidding war on a home. Knowing the market can help you decide what price to offer. Look up housing trends in your area and ask your real estate agent for their expertise.

    Get insight from your agent

    Your real estate agent may also know information about why the sellers are selling their home. If the sellers are in a hurry to sell, you may be able to submit a slightly lower offer. However, if the sellers aren’t in a rush, they may be more likely to wait for a higher offer.

    Understand the basics of an offer

    Your real estate agent will put together your offer using a standard template that includes all the key details:

    • Your offer price
    • Your down payment amount
    • The amount of earnest money you’ll deposit
    • A copy of your pre-approval letter
    • Any contingencies you want to include
    • A breakdown of the closing costs and who will pay each one
    • When you hope to close (i.e., complete the purchase)
    • The offer’s expiration date

    We’ll cover some of these, but your agent should be able to walk you through them all and help you decide how to make an offer that works for you.

    How to make an offer on a home

    Once you’ve learned what to do before making an offer on a house, you can move on to the steps of making an offer.

    Step 1: Decide on how much to offer

    If you’ve already been pre-approved, you probably have a good idea how much you can afford to spend on a home. But the price you decide to offer will depend on many factors – the competitiveness of the housing market, the home itself, your budget, and more. 

    Housing market conditions: 

    • Buyer’s market: More homes for sale than buyers – you may have the opportunity to offer lower than the home’s listing price.
    • Seller’s market: Fewer homes for sale than buyers – you may need to offer above the listing price to stand out above the competition. 

    Budget: Your budget is often the biggest factor in determining how much to offer on a house. Even if you’re approved for a larger mortgage, that doesn’t mean you should buy more than you can afford. Consider offering less than your mortgage amount to leave room for negotiation.

    The home: There are circumstances where it makes sense to offer an amount above or below the list price, and others where you should meet the list price. Your agent can help you determine the right offer for you. Some factors include: 

    • Time on the market: The longer the home has been on the market, the more likely the seller is to consider a lower offer.
    • Necessary repairs: If the property needs lots of repairs or is turnkey, it can affect how much you offer. 
    • Comparable homes in the area: Your real estate agent can pull comparable homes, also called “comps,” which are similar homes for sale or recently sold in the area. This gives insight as to whether the home is fairly priced. 
    • Competition: Competition for a home can highly influence your offer. Talk with your agent about handling a bidding war or making a backup offer if the seller has already accepted one.

    Step 2: Choose your contingency clauses

    Contingencies protect you as the buyer by giving you a way to back out of the deal if certain conditions are not met. When you use a contingency to cancel the deal, you can usually recover your earnest money. 

    Sellers prefer offers without contingencies, so use them sparingly if you can. The contingencies available depend on your location and the current housing market, but here are the most common ones:

    Step 3: Decide on the earnest money amount

    The third step is deciding how much to offer in earnest money. Earnest money is a deposit, usually 1-3% of the home’s sales price, that you pay after your offer is accepted. It shows that you’re committed to purchasing the home.

    If the sale goes through, it’s applied to closing costs. If you back out of the sale due to a reason covered in your contract, such as a contingency that isn’t met, earnest money will be refunded to you. The seller keeps the earnest money if you withdraw from the sale for another reason.

    Step 4: Write up the offer letter

    This refers to the legal offer document, not a personal letter to the seller. Personal letters to sellers are discouraged as they can violate Fair Housing laws.

    Your real estate agent will draft up the offer letter for you, but if you’re working without an agent, here’s what you’ll need to include:

    • Address of the home you’re offering to buy
    • Your name and anyone else’s name that will be on the house title.
    • Your offer price
    • Any contingencies you want to include
    • Any seller concessions you’re asking for, like repairs or closing costs
    • Your mortgage pre-approval letter
    • Items you want in the sale, such as appliances
    • Earnest money deposit amount
    • The date you anticipate the loan closing
    • The date you expect to move in
    • Deadline for the seller to respond to the offer

    Step 5: Submit your offer and wait

    Once your offer is ready, your real estate agent will submit it on your behalf. If the seller has received other offers or expects to, you may have to wait a few days for an answer. 

    Step 6: Negotiate the terms of the sale

    It’s common to negotiate with the seller, and having an experienced real estate agent is crucial. Discuss ahead of time which aspects of the offer you’re willing to negotiate and which are non-negotiable. Here are three scenarios you may face after submitting your offer. 

    Scenario 1: The seller accepts your offer

    If the seller accepts your offer, then you’ll move on to the next steps. This means signing the purchase and sale agreement, gathering your earnest money, and applying for a mortgage. 

    Scenario 2: The seller makes a counteroffer

    The second option is that the seller makes a counteroffer. It’s up to you and your real estate agent how you’d like to proceed. The negotiations are typically informal and help you come to an agreement – or walk away from the deal.

    Here are some things to consider:

    • You don’t have to negotiate the purchase price: While it may be that the seller’s counteroffer is a higher purchase price than you offered, that doesn’t mean you have to accept that. You can consider negotiating repair costs or other concessions. 
    • Learn what the seller is looking for: Your real estate agent will reach out to the sellers and their agent to determine what the sellers are looking for. Do they want you to remove contingencies? Were they looking for a higher price? This information can help you determine what to negotiate. 

    Scenario 3: The seller rejects your offer

    The final scenario is that the seller rejects your offer. Maybe your offer was too low, or there was a cash buyer. If your offer is rejected, then you can begin looking at other homes on the market. 

    What happens after your offer is accepted?

    Congratulations, your offer was accepted. Here’s what you can expect next:

    • Sign the contract: Read it carefully, and make sure you understand the details before you sign.
    • Secure your mortgage: You’ll need to apply for your home loan. Your lender will conduct a deeper financial review, finalize your loan terms, and order an appraisal to confirm the home’s value. 
    • Schedule your inspection and appraisal: Be sure to have a home inspection to uncover any issues with the property and arrange a home appraisal.
    • Close on your new home: When any contingencies are met and your mortgage is ready, you can sign the paperwork and close on the home. Your lender will transfer your funds to the attorney or title company to finalize your purchase and receive the keys.

    FAQs about making an offer

    How much should I put down?

    How much your down payment is will vary depending on your loan type and budget, but here are some things to consider. 

    • 0% down – VA or USDA loans
    • 3-5% down – FHA and some conventional loans
    • 10-20%+ down – Helps avoid private mortgage insurance (PMI) and lowers monthly payments. 

    What if I’m caught in a bidding war?

    A bidding war happens when a seller receives multiple offers in a short amount of time. Because buyers are competing against each other, they may raise their offer price, give up contingencies, or make other “concessions” to make their offers more appealing. Your agent can give you advice to help you avoid bidding wars when possible, and navigate them wisely when you can’t.

    How much is too low to offer on a home?

    Offering a lower offer on a house than the list price depends on several factors. Your real estate agent will have insight as to what is too low to offer. 

    How long does it take to close on a home?

    Closing on a home with a mortgage can take anywhere from 30 to 60 days. There are things you can do to prevent delays and speed up the closing process.

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    Alison Bentley

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  • How Much House $500K Buys in Major Cities Across the U.S. (and What This Means for Investors)

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    For many buyers and investors, $500,000 is a benchmark budget. But in today’s housing market, that number doesn’t stretch the same way everywhere – and the trade-offs reveal a lot about both affordability for buyers and opportunity for investors. In cities like San Francisco or Los Angeles, half a million dollars may only stretch to a condo or small starter home, while in markets like Boston or Seattle, buyers get noticeably more space for the same budget. 

    These differences aren’t just important for homebuyers, they also shape how investors think about where to put their money. By comparing how much house $500K buys in major U.S. cities, we can uncover not only affordability trends but also where opportunities may lie for long-term real estate growth.

    What determines how far $500K goes?

    A half-million dollars may sound like a big budget, but location ultimately determines buying power. In some metros, $500K secures a family home with room to grow; in others, it barely covers a starter unit.

    For homebuyers, these factors determine what kind of space you can afford. For investors, they highlight differences in affordability and entry costs across markets.

    Key factors that influence how far $500K goes include:

    • Cost of living and demand: In high-cost metros like San Francisco or New York, limited land and intense demand mean higher prices and less space for the same budget.
    • Price per square foot: Cities with lower housing costs translate into larger homes for $500K. By contrast, expensive coastal markets eat away at square footage quickly.
    • Inventory levels: When the number of homes for sale is low, competition drives prices higher and narrows buyer options. Expanding inventory, on the other hand, can stretch your dollars further.
    • Local economy and jobs: A strong job market pulls in new residents, which raises housing demand and pushes up prices, reducing affordability.
    • Neighborhood factors: School quality, public transit, and access to amenities can significantly impact what $500K buys, even within the same metro.

    With those dynamics in mind, here’s how much square footage $500K buys in major U.S. metros today.

    How much house $500K buys in major U.S. cities

    Using July 2025 housing data from the Redfin Data Center, here’s how much square footage $500,000 buys across five major metros:

    Metro SqFt for $500K Median $/SqFt Median Sale Price Home type for 500k
    San Francisco, CA 500 $1,000 $1,510,000 Compact condo or studio
    Los Angeles, CA 826 $605 $926,000 Condo or bungalow-style starter home
    Seattle, WA 1,046 $478 $849,388 Townhome or small single-family home
    New York, NY 1,042 $480 $807,000 1-2 bedroom condo
    Boston, MA 1,160 $431 $775,000 Large condo or modest single-family home

    In San Francisco, half a million dollars only covers about 500 square feet, roughly the size of a studio apartment. In Boston, the same budget buys more than 1,100 square feet, enough for a single-family home or spacious condo. Cities like Los Angeles and New York fall somewhere in between, with $500K stretching to just over 800–1,000 square feet.

    What this means for investors

    To understand what these differences mean for investors, we spoke with Dave Meyer, Head of Content Strategy at BiggerPockets, a leading online community and resource hub for real estate investors.

    “As more markets shift to a buyer’s market with flat or declining prices, investors are presented with both opportunity and risk.

    Investors should keep an eye out for opportunities to acquire strong assets in fundamentally strong markets, as modest price and mortgage rate declines are increasing affordability. Of particular interest are strong markets with great long-term growth potential, like Seattle, Dallas, and San Diego, for example, but are seeing softening prices and better buying conditions.

    Of course, as prices moderate or fall in many markets, investors need to protect themselves and should be wary of “catching a falling knife,” acquiring an asset that is likely to lose further value. The best way to protect against this is to aim to buy below list price and below current comps. While investors always want to buy for value, a sale-to-list ratio of 99% nationwide indicates that after many years of fierce competition, buyers have returned to the driver’s seat when negotiating on price.”

    Key takeaways for homebuyers 

    For buyers, the biggest lesson is that $500,000 doesn’t mean the same thing everywhere. In some metros, it’s enough to secure a spacious single-family home, while in others, it barely covers a starter condo. That’s why looking beyond just the price tag is so important.

    A few takeaways for homebuyers include:

    • Size vs. location trade-offs: A bigger home in a lower-cost city may sound appealing, but if your job, family, or lifestyle ties you to a pricier metro, you may need to compromise on square footage.
    • Affordability goes beyond the sale price: Property taxes, insurance, and HOA fees can vary widely from city to city and can significantly affect your budget.
    • Long-term value matters: Even if $500K buys less space in high-cost markets, those homes may appreciate faster, adding long-term value to your purchase.
    • Consider emerging markets: Cities with growing inventories and moderate prices could offer both affordability today and solid appreciation in the future.

    FAQs: How much house does $500K buy?

    Why does buying power vary so much between cities?

    Local housing demand, price per square foot, inventory levels, and cost of living all play a role. A strong job market or limited supply often pushes prices higher and reduces what $500K can buy.

    Is $500K a good budget for real estate investors?

    Yes, but it depends on your strategy. In some cities, $500K could fund a rental condo in a high-demand market, while in others it could purchase a larger property with strong long-term appreciation potential.

    What should buyers and investors consider before spending $500K?

    Beyond square footage, look at property taxes, ongoing costs, and long-term appreciation trends. Location determines not only what you can buy today, but how much your investment may grow in the future.

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    Allie Drinkward

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  • 10 Pros and Cons of Down Payment Assistance Programs

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    For many future homebuyers, the hardest part of purchasing a home isn’t finding the right place, it’s saving up for a down payment and closing costs. Down payment assistance programs can help renters become homeowners sooner by covering part or all of these upfront costs.

    In this Redfin article, we’ll cover 10 pros and cons of down payment assistance. Whether you’re looking to buy a home in Anaheim, CA, or a townhouse in Atlanta, GA, you’ll have the answers about whether down payment assistance is right for you. 

    Key takeaways

    • Down payment assistance can help make buying a home more affordable.
    • Loans, grants, and credits are the three main types of assistance programs.
    • Pros: Buying a home sooner, deferred repayment, less financial strain.
    • Cons: Qualification and occupancy requirements, longer closing, paying more over time.

    What is down payment assistance?

    Down payment assistance helps lower the cost of buying a home by reducing the down payment or closing costs. These programs are offered at the federal, state, and local levels, and are often aimed at first-time buyers or those with low-to-moderate incomes. 

    Types of down payment assistance programs

    There are three main types of down payment assistance programs:

    • Loans: These are often second mortgages that help you cover your down payment or closing costs. They’re typically deferred-payment loans, meaning you don’t have to repay them until you sell, refinance, or pay off your first mortgage. Some loans can be partially forgiven after living in the home for a certain amount of time. 
    • Grants: Typically, you don’t have to pay back grants. However, you may need to meet specific eligibility rules, such as income caps or staying in the home for a certain period, for the grant to be fully forgiven.
    • Credits: Also called “mortgage credit certificates,” credits help reduce the amount you pay in federal taxes on your mortgage interest. State or local housing agencies usually issue these credits, which can help you save money each year you own the home.

    10 pros and cons of down payment assistance programs

    There are pros and cons to down payment assistance programs to consider before applying for one.

    5 pros of down payment assistance

    1. You can buy a home sooner: The biggest advantage of a down payment assistance program is that homeownership becomes easier to achieve. If the biggest hurdle in your way is saving for a house, then assistance programs can help open the door.
    2. Grants don’t require repayment: Most grants are essentially free money, as long as you meet the program’s conditions.
    3. Some loans may be forgiven: Depending on the program, some loans may be partially or fully forgiven. There are usually requirements, such as living in your home for a certain number of years. 
    4. Less financial strain: Assistance programs can reduce down payment and closing costs, which can make it easier to afford a home, and put less stress on your finances. 
    5. Room to invest: If you have some funds leftover after purchasing, you may be able to use leftover funds for renovations, emergency reserves, or other investments.

    5 cons of down payment assistance

    1. Qualifying may be difficult: Every program has unique requirements, which may be difficult to meet based on your financial situation, location, and long-term goals. Many programs have income limits and may require you to live in the home for at least 5 years to avoid repayment.
    2. Your lender may not accept assistance programs: Some lenders don’t accept assistance programs, so you may not be able to use one even if you qualify. It’s important to find the right mortgage lender who meets your needs. 
    3. You could pay more in the long run: Most loans require repayment after a certain number of years, which means you may end up paying more in the future. 
    4. Closing can take longer: Using down payment assistance can complicate the closing process, as you may need to wait for the funds to arrive or have a second underwriting process.
    5. There may be property requirements: Most programs require that the home you purchase is your primary residence, meaning that you live there full-time. They may also have requirements that you live in the home for a specific amount of time, and if you move out before that time is up, you’ll need to repay any loans or grants. 

    Is down payment assistance right for me?

    If you meet income requirements and plan to stay in your home for years to come, then a down payment assistance program may be the right choice for you. If you don’t plan on staying in the home as your primary residence or don’t meet the qualifications, then down payment assistance may not be the best option. 

    Next step: You can speak to a real estate agent or mortgage lender familiar with local programs. They can help you compare your options and see if DPA aligns with your financial goals.

    FAQs about down payment assistance 

    Who is considered a first-time homebuyer?

    First-time homebuyers are individuals who have never owned a home or have not owned a primary residence in the last 3 years.

    How much can you receive from down payment assistance programs?

    The amount you receive from down payment assistance programs varies widely depending on the program’s details. For example, Fannie Mae’s HomePath Ready Buyer™ Program (a federal assistance program) offers up to 3% in closing cost assistance to first-time homebuyers purchasing a HomePath Property.

    What is a second mortgage?

    A second mortgage is a second loan on top of your first mortgage. Second mortgages are usually used to cover down payments or closing costs. It depends on the program when you need to repay these loans or if they are partially or fully forgiven.

    Are there alternatives to down payment assistance?

    There are several low and no-down-payment loans available that you may qualify for, like FHA loans, VA loans, and USDA loans. Other alternatives include a rent-to-own program or obtaining gift funds from family members.

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    Alison Bentley

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  • Assessed Value vs. Market Value Explained: What is My Home Actually Worth?

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    When you own or are buying a home, you’ll encounter assessed value and market value. While they both measure what your home is worth, they’re used for very different purposes. 

    Assessed value: The value your local government assigns to your home for tax purposes.

    Market value: The price a buyer would realistically pay for your home in the current real estate market.

    This Redfin real estate article dives deeper into the differences between assessed value vs. market value, helping you understand how each is determined, why they matter, and how they impact your finances.

    What is assessed value?

    The assessed value, also known as tax-assessed value, is the official value your local government assigns to your property for tax purposes. It’s not what you could sell your home for today – it’s a value used primarily to calculate your property tax bill.

    County or municipal tax assessors calculate this value using a combination of property details and market data. Factors often include:

    • Lot size and square footage
    • Home type (single-family, condo, multi-family, etc.)
    • Age and condition of the home
    • Location and neighborhood desirability
    • Recent renovations or improvements
    • Comparable home sales in the area

    Most jurisdictions apply an assessment ratio (a percentage of the home’s market value) to determine the assessed value. For example, if your home’s market value is $250,000 and your county uses a 60% ratio, your assessed value would be $150,000.

    This number is used to calculate your property tax bill. Your tax rate, often called a mill rate or levy rate, is then applied to the assessed value. Because assessments are tied to taxes – not necessarily the real estate market – assessed value is often significantly lower than market value.

    Example: If your assessed value is $150,000 and your county’s tax rate is 1.2%, your annual property tax bill would be $1,800.

    What is market value?

    The current market value of a home is the price it would sell for in today’s real estate market. Unlike assessed value, this figure is shaped by what buyers are willing to pay rather than a tax assessment.

    Market value is shaped by several key factors:

    • Comparable sales (“comps“): Recent sales of similar homes in your neighborhood.
    • Housing demand: Competition among buyers and the number of homes available.
    • Property features: Size, layout, upgrades, curb appeal, and amenities.
    • Economic conditions: Mortgage interest rates, inflation, and employment trends.
    • Timing: Seasonal market shifts or broader economic cycles.

    Real estate agents, appraisers, and buyers use market value to guide pricing and negotiations. Because it captures what buyers are willing to pay, your home’s current market value may differ widely from its tax-assessed value.

    Key differences between assessed value vs. market value

    Assessed Value Market Value
    Used by local governments to calculate property taxes Reflects the price a property would likely sell for in the current market
    Determined by local tax assessors Determined by market conditions, agents, and appraisers
    Typically reassessed every 1-5 years Fluctuates constantly based on real estate market conditions
    Calculated using a percentage (assessment ratio) of the market value Based on comparable home sales and buyer demand
    Affects property taxes Affects home sale price, refinancing, and home equity

    Why the difference between market value and tax-assessed value matters

    Whether you’re paying property taxes, selling your home, refinancing, or appealing an assessment, each situation depends on a different value.

    For sellers: Market value determines your sale price

    • Buyers and real estate agents ignore assessed value when making offers.
    • Your home’s selling price depends on market value, based on recent sales of similar homes.

    For homeowners: Property taxes are based on assessed value

    • Your assessed value determines your property taxes, not your home’s market value.
    • Even if home prices in your area rise, your property taxes won’t increase immediately because assessed values are updated periodically and are typically lower than market value.

    For refinancing or taking out a HELOC: Market value matters

    • Lenders base refinance terms and home equity loans on market value, not assessed value.
    • A higher market value means more home equity, which can help you qualify for better loan options.

    For appealing property taxes: Focus on assessed value

    • If your property tax bill seems too high, you can challenge the assessed value.
    • Providing evidence that similar homes are assessed for less, or that your assessment is outdated, could lower your property taxes.

    FAQs

    How can I determine the current market value of my home?

    There are several ways to estimate what your home could sell for in today’s market:

    • Online home valuation tools: The Redfin Estimate provides a free and instant estimate of how much your home is worth based on various data points, such as market conditions, your home’s features, location, etc.
    • Comparable market analysis (CMA): A real estate agent can create a report comparing your home to similar recently sold properties to estimate a realistic selling price.
    • Home appraisal: A licensed appraiser conducts a detailed evaluation of your home’s condition, features, and comparable sales, providing an official value often required for mortgages or refinancing.

    Using one or more of these methods gives you a clear picture of your home’s current market value and helps guide decisions about selling, refinancing, or leveraging home equity.

    What is appraisal value, and how is it different from market value?

    An appraisal value is determined by a licensed appraiser, often during the mortgage process. While market value reflects what buyers are willing to pay in the current market, an appraisal provides a professional opinion of value based on the home’s condition, location, and comparable sales. Lenders rely on appraisal value to ensure they’re not financing more than a home is worth.

    Why is my tax assessed value lower than my home’s market value?

    Local governments often set assessed values below full market value to stabilize tax bills and avoid sharp annual increases. This benefits homeowners by keeping property taxes more predictable, even when home prices rise quickly.

    Can you appeal your assessed value?

    Yes. Homeowners can challenge their property’s assessed value if they believe it’s too high. This typically involves filing an appeal with your local assessor’s office and providing evidence, such as recent sales of comparable homes or proof of inaccuracies in the assessment. A successful appeal could lower your property tax bill.

    Do improvements to my home affect assessed value or market value?

    Major improvements like renovations or additions can increase both assessed and market value, but assessed value may take time to reflect changes, depending on your local reassessment schedule.

    Can market value change even if the assessed value doesn’t?

    Yes. Market value fluctuates constantly due to supply, demand, and economic conditions. Assessed value is updated periodically, so it may lag behind market trends.

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    Mekaila Oaks

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  • Should I Sell My House Now?

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    Key takeaways:

    • It’s a good time to sell your house if you price correctly and are open to negotiation. 

    • Mortgage rates are holding at 11-month lows, keeping the door open for some priced-out buyers to re-enter the market.

    • There are far more home sellers than buyers, tipping the scales toward buyers – but sellers can still get competitive offers.

    • Selling now could help you avoid potential price swings if the economy moves toward recession or inflation.

    If you’re thinking about selling your home, you’re not alone. But with today’s near-record housing costs keeping everyone on the sidelines, it’s natural to wonder if now is the right time. 

    The typical monthly housing payment is close to $2,900, and house prices have risen for more than two years straight. These costs have frozen the housing market, scaring buyers and prompting more sellers to stay put. On top of that, President Trump’s policies are rattling the economy, further weakening demand. 

    The result is a housing market with more listings than buyers, affecting housing markets nationwide. Mortgage rates recently dropped, though, giving wary buyers a window of opportunity.

    So, what does this all mean for home sellers? Let’s dive into the data to help you decide if you should sell your house now, or wait.

    >> Read: How to Sell Your House in 2025: A Comprehensive Guide

    What sellers need to know about the housing market

    Here are some market trends to keep an eye on before finding an agent and listing your home for sale.

    Buyers are in charge, mostly

    “Home sellers should prepare for a buyer’s market,” said Daryl Fairweather, Redfin Chief Economist. “Rising inventory has given buyers more options, but near-record costs have made them wary. Those willing to brave today’s market are prepared to lead negotiations and pay a fair price.”

    Nationwide, there are 500,000 more sellers than buyers. So to stay competitive, homeowners need to be flexible on pricing and willing to offer concessions. Many are doing so, but a growing share of would-be sellers are choosing not to list, or even delist their homes altogether, pushing prices higher.

    That said, trends vary widely across the country. In the Midwest, there aren’t enough homes for sale to meet demand, so sellers in cities like Milwaukee and Detroit may see bidding wars and quick sales. On the flip side, most Sun Belt cities now favor buyers, as homeowners look to escape worsening climate risks and climbing insurance costs. 

    Here are the top states where buyers have the upper hand, according to days on market. As a rule of thumb, the fewer days a house spends on the market, the more demand there likely is.

     

    The economy is volatile

    House prices are high, and economists are concerned that inflation could increase due to President Trump’s tariffs. However, the now-slowing job market has had the beneficial effect of pushing mortgage rates down. Rates have hovered at 11-month lows for weeks, helping buyers afford $20,000 more than they could in May. 

    “Mortgage rates are falling, but with house prices near all-time highs, homebuyers are still struggling through an expensive housing market.” said Chen Zhao, Head of Economics Research at Redfin. “Unless the new tariffs are entirely eliminated, inflation doesn’t increase, or the country falls into a severe recession, housing affordability and buyer activity are unlikely to improve substantially.”

    Upcoming economic data could also influence rates substantially. In these uncertain times, it’s essential to talk with your agent to decide if now is a good time to sell.

    >> Read: How to Buy, Sell or Rent a Home Amid Economic Uncertainty

    When is it usually a good time to sell your house?

    Spring is generally the best time to sell, when buyers are most likely to be active. However, market trends and personal considerations matter the most. 

    In today’s market, sellers should prepare for lower demand, plan ahead for their next home, and be realistic about pricing.

    Here are some general rules for sellers to follow to decide if it’s a good time to sell.






    If housing supply is low

    Fewer homes on the market can push prices up and lead to faster sales. That’s the case in many metros today, especially in the Midwest and East Coast, where demand outpaces supply.

    If mortgage rates drop

    Falling mortgage rates can spark a surge in buyer demand. More buyers in the market often means higher prices, stronger offers, and possible bidding wars – good news for sellers. As rates fall today, sellers should keep an eye on local market trends.

    If you need to sell

    Sometimes, life necessitates that you sell. Maybe your family is growing, you need to relocate for work, or want to be closer to family. In these cases, it may not matter if it’s an objectively “good” time to sell. 

    >> Read: How to Sell Your House Fast – and for More Money

    When is it typically a bad time to sell your house?

    You may have no choice but to sell your house, but when these trends are at play, you’re less likely to sell quickly or above market value.






    If mortgage rates are high

    Higher mortgage rates effectively shrink buyers’ budgets, meaning they get less house for the same amount of money. This often means fewer, lower offers. If you can’t command the price you want, it may be worth waiting to sell.

    If you’ve recently refinanced

    Selling soon after refinancing could wipe out any savings you gained from a lower rate, especially once you factor in closing costs and fees. Many sellers today are “locked in” to a pre-pandemic rate and see no reason to give it up.

    If your home needs work

    A home that needs some love can be harder to sell and may attract lower offers. If you have major repairs on your to-do list, consider tackling them before listing.

    >> Read: 7 Common Home Selling Mistakes and How to Avoid Them

    So, should you sell your house now?

    If you’re financially ready, know your next move, and have a great agent, now may be a good time to sell a house. 

    However, house prices are sky-high and climbing, pushing more buyers to hold out for a good deal. Sellers still don’t have the negotiating power they’re used to, so you may need to offer incentives to attract serious offers.

    Home sellers should connect with an agent, price competitively, and be open to concessions. Selling with Redfin real estate gives you options to reduce your listing fee, top-tier marketing and pre-listing help, and access to the best agents. Qualified Redfin customers can also unlock Rocket Preferred Pricing, a new program that helps you save when you buy with Redfin and finance through Rocket Mortgage.

    There are always good reasons to sell your house – maybe you’re relocating, downsizing, or hoping to cash in on your home’s equity. You may also simply need to move. There isn’t a right answer for everyone, but when selling in today’s unpredictable market, timing and strategy matter more than ever.

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    Jamie Forbes

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  • Should You Ever Consider Waiving the Home Inspection?

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    With the housing market more competitive than ever, more and more buyers are feeling the pressure to make their offer stand out. One tactic is waiving the home inspection contingency. While this move can make your offer more attractive to sellers, it’s important to know the risks of waiving the home inspection.

    Waiving the home inspection contingency means the buyer is giving up their right to negotiate repairs or back out after an inspection — potentially putting themselves on the line for expensive problems after move-in. And many buyers are taking that gamble. Data from the National Association of Realtors (NAR) shows that 25% of buyers waived an inspection contingency in April 2021, the first month the group began tracking this trend. That number climbed to 30% in June 2022 before dropping to 18% in August of this year.

    But is it worth the risk?

    What does waiving a home inspection actually mean?

    Some people believe that waiving a home inspection means skipping the inspection altogether. But that’s not the whole picture.

    When people say they’re waiving the inspection, what they’re actually referring to is waiving the inspection contingency. When a buyer waives the inspection contingency, you’re agreeing that you:

    • Won’t use the inspection results to cancel the purchase agreement — and if you do, you’re out your earnest money.
    • Won’t renegotiate the price or ask the seller for repairs after the inspection.
    • Are agreeing to purchase the home “as is” in the eyes of the seller.

    But homebuyers usually still have the right to hire a home inspector after an offer is made, even if they’re waiving the inspection contingency. This is called an inspection for informational purposes only, and is just for buyer knowledge rather than a negotiation tactic.

    Why buyers waive inspections

    In fast-moving housing markets, especially in cities with limited inventory, buyers can face fierce competition. Homes may receive multiple offers within days, sometimes even hours, of being listed. To stand out, many buyers may choose to waive the home inspection contingency, making their offer more appealing to sellers.

    Common reasons buyers waive the inspection contingency include:

    • Strengthening their offer: Sellers want certainty. An offer without contingencies means fewer potential holdups and negotiations, and sellers are off the hook for repairs.
    • Speeding up the sale: By removing the inspection contingency from negotiations, the transaction timeline shortens. This is attractive to sellers hoping for a smooth close.
    • Winning a dream home: In high-cost markets, buyers are sometimes willing to accept more risk if it means securing the property they truly want. When a home is more expensive, potential repair expenses are often a smaller percentage of the overall value of the home.
    • Investing in real estate: For investors, speed outweighs repairs. Renovations are usually expected, so waiving contingencies helps them lock in properties with strong rental or resale potential.

    Risks of waiving the home inspection contingency 

    A home inspection is a standardized practice in real estate, designed to uncover major issues in a home that could affect a buyer. After an offer is accepted, the buyer hires an inspector to look at the home’s key systems and overall condition. 

    In most cases, buyers don’t want to waive the home inspection contingency — not only does it financially protect the buyer, it could be a matter of safety as well. 

    When buyers skip the home inspection, they risk:

    1. Being accountable for hidden or expensive problems

    Without an inspection contingency, you could unknowingly purchase a home with serious problems. Structural issues, roof damage, mold, or outdated electrical are common, especially in older homes, and can easily cost tens of thousands of dollars to fix.

    2. Having negotiation power or a safety net for backing out

    An inspection contingency gives buyers the option to walk away without losing their earnest money if the inspection reveals problems the buyer can’t or doesn’t want to address. Waiving the inspection removes that safety net and the full cost of any major problems is your responsibility. If you decide later to back out, you risk forfeiting your deposit — which in competitive markets, can be heftier than usual.

    3. Emotional stress and buyer’s remorse

    While there’s a lot that goes into buying a home, it should ultimately be more exciting than overwhelming. Unfortunately, discovering major problems after you’ve already committed can lead to buyer’s remorse. Many homeowners who waived inspections have experienced the stress of unexpected, expensive repairs outweighing the joy of moving in.

    Alternatives to waiving a home inspection entirely

    While waiving an inspection contingency can make an offer more appealing to a seller, it also shifts more responsibility onto the buyer. But there are other ways to keep an offer strong while ensuring you’re not walking blindly into a home purchase.

    1. Pre-inspection walkthrough (the “walk & talk”)

    A growing trend in hot markets is the pre-inspection walkthrough, sometimes called a “walk & talk.” You hire a home inspector for a shorter time (usually around two to three hours) before making your offer.

    Instead of a full written report, the inspector walks through the home with you and points out visible potential problems, like areas where there might be water damage, foundation issues, or HVAC systems that are on the way out. They may even give you rough repair cost estimates on the spot.

    2. “Informational only” inspections

    Another option is to conduct an inspection for informational purposes only. This means you still hire an inspector after your offer has been accepted, but you explicitly state in the contract that the results will not be used to renegotiate price or request repairs.

    This gives buyers a heads-up about potential problems while keeping them committed to purchasing the home as-is, or risking their earnest money if they back out. The exception is if there is a serious safety issue that legally lets buyers off the hook for a home, even if they waived the inspection contingency.

    Buyers will choose this route to know what they’re getting without weakening their offer. Sellers like it too, since they know you won’t be coming back to nickel and dime them with a long list of repairs.

    3. Relying on seller-provided inspections and disclosures

    In some high-end competitive markets — especially in places like San Francisco, CA or Boston, MA — sellers might provide inspection reports, disclosure packets, and receipts for repairs upfront. Sometimes, major issues have already been fixed before the listing even goes live.

    These documents can give buyers a good idea of the home’s condition. The goal for sellers with this tactic is to get top dollar for their home and completely streamline the selling process. Still, it’s a good idea to have your own inspector go over the paperwork or walk through the home with you, just to double-check.

    How to make a competitive offer without skipping the inspection

    You don’t necessarily have to give up your right to an inspection contingency to help your offer in a seller’s market. There are other strategic ways to stay competitive in a bidding war without sacrificing the protection of a home inspection:

    • Get pre‑approved for a mortgage: A fully underwritten pre‑approval shows the seller that you’re not only serious about the home but financially positioned to close smoothly. It proves you’ve cleared financial hurdles and adds more weight to the offer. 
    • Move quickly: If homes are moving fast, match that speed. Sellers sometimes value a smooth, stress-free closing process over top dollar. If you can line up a lender who’s quick with paperwork, schedule inspections right away, and be flexible on closing dates, that kind of certainty can sometimes beat out a higher offer that comes with delays.
    • Use an escalation clause: This lets your offer automatically top competing bids by a set increment, up to a cap you choose — for example, outbidding other offers by $1500. Sellers appreciate the lack of back-and-forth and your offer is competitive without overpaying.
    • Offer stronger financing: Whether it’s a larger earnest money deposit, a heftier down payment, or even cash-offer financing, proving financial commitment makes your bid stand out. These moves can be equally as attractive to sellers as skipping an inspection contingency, and less risk for you. 
    • Write a personal letter (where allowed): A note explaining why you love the home and your situation can sometimes resonate with a seller (just don’t violate fair-housing laws in the process). This human touch could be what nudges you to the top, especially when other offers are equal on paper.

    Bottom line

    The home inspection is there to protect buyers — and waiving that right comes with real risks. For some, the trade-off may feel worth it to get their dream home in a hot market, especially when paired with pre-inspections or strong seller disclosures.

    Still, the smartest move is to never waive your right to understand a home’s condition. With the right approach, you can take steps to protect yourself while staying competitive. A local Redfin real estate agent can help you navigate these decisions, craft a strong offer, and strike a good balance between buying the home you want and looking out for your investment.

    FAQs about waiving home inspections

    Is it smart to waive a home inspection?
    Waiving an inspection is usually discouraged, but it can be strategic in competitive markets. If the home comes with recent inspection reports and you’ve done your own pre-inspection, it may make sense. Otherwise, it’s a big risk to buyers.

    What happens if you waive a home inspection?
    You lose your contractual right to walk away or renegotiate based on inspection results. Any issues that surface after closing are your responsibility.

    Why would a buyer waive an inspection?
    To make their offer stronger in bidding wars. Sellers prefer fewer contingencies because they reduce the risk of the home sale falling through.

    Can you still do an inspection after waiving?
    Yes. Many buyers hire inspectors “for informational purposes only.” You just can’t use the results to cancel the contract without penalty.

    What’s the difference between waiving an inspection and waiving an inspection contingency?
    Waiving an inspection contingency means you give up your legal right to walk away penalty-free. Waiving the inspection itself means you skip it entirely — a much riskier move.

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    Ashley Cotter

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  • Can I Use My 401(k) to Buy a House? Yes, Here’s How

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    If you’re struggling to save enough for a downpayment, you may be wondering if tapping into your 401(k) is the right option. While it’s possible, doing so comes with significant risks, like early withdrawal penalties and lost investment growth. 

    In this Redfin article, we’ll answer your questions about using your 401(k) to buy a home through loans or withdrawals and the drawbacks of the process. That way, whether you’re buying a home in Tampa, FL, or in Newark, NJ, you’ll know what options are available if you want to use your 401(k). 

    Key takeaways

    • You can use your 401(k) to buy a home with a 401(k) loan or withdrawal.
    • A 401(k) loan allows you to borrow the money without penalty, but you need to repay it.
    • A 401(k) withdrawal is subject to a 10% penalty and income tax.

    Can I use my 401(k) to buy a house?

    The short answer is yes, you can use your 401(k) to buy a house. There are two options to consider – 401(k) loans and 401(k) withdrawals. 

    401(k) loans to buy a house

    The first option is a 401(k) loan for your home purchase. A 401(k) loan allows you to borrow from yourself, so you don’t have to pay penalties or taxes on the funds. However, you’ll need to pay back the loan with interest. 

    Most 401(k) loan interest rates and repayment plans are pre-determined by your employer or 401(k) provider. It’s common to repay the amount within five years, but some plans allow you to repay over 15 years if the funds are used to buy a home. 

    You can usually borrow up to half of the money in your 401(k) that you fully own (your “vested balance”), but no more than $50,000.

    Depending on your 401(k) plan, you may not be able to make additional contributions until you pay back the loan. Any loan repayments are not considered new contributions either. 

    401(k) withdrawals to buy a house

    Withdrawing from your 401(k) can be riskier, but there are reasons why it may work for you. Some 401(k) providers don’t allow loans, so withdrawing may be the only option available. Additionally, if you need more than $50,000, withdrawing can give you more funds. 

    There are other drawbacks to keep in mind: 

    • If you’re under 59 ½ years old, you’ll incur a 10% penalty for withdrawing from your 401(k), unless you meet certain exemption requirements. You’ll also need to pay income tax on any money withdrawn from your account, even if you meet the exemption requirements. 
    • If you have a Roth 401(k), your contributions are made after taxes, so you can usually withdraw contributions without additional taxes. However, withdrawing earnings before age 59½ (and before the account has been open for at least five years) may trigger taxes and penalties.

    When can you withdraw from your 401(k) without penalty?

    A hardship withdrawal allows you to withdraw from your 401(k) without penalty, but is restricted to “immediate and heavy financial need.” Here are some examples of what circumstances may qualify:

    • Certain medical expenses or medical debt
    • Expenses to prevent eviction or foreclosure
    • Income after the withdrawal age of 59 ½
    • Funeral expenses for certain family members
    • 12 months of educational expenses, like tuition

    There are additional circumstances that may qualify as a hardship withdrawal, so be sure to research your options. For example, you may qualify for a hardship withdrawal to cover your down payment or closing costs. However, these rules can be strict and you may still need to pay the 10% penalty on the funds you withdraw.

    How to borrow from your 401(k) account to buy a house

    To borrow from your 401(k) loan to finance a down payment, you’ll need to talk to your employer’s benefits office or HR department, or with your 401(k) plan provider. You can also consult your plan document to find out if your plan permits borrowing from your 401(k) to purchase a home.

    You’ll want to find out how much you’re able to borrow, the interest you’ll have to pay, and the repayment period. Additionally, ask about repayment options, such as whether your employer will deduct the monthly payment from your paycheck or if they will allow you to make 401(k) contributions while you pay back the loan.

    If you choose to leave or lose your job during the repayment period, your repayment schedule will change. Most times, you’ll need to repay the total amount by the next tax deadline. If you don’t, you’ll face a 10% penalty. 

    Pros and cons of buying a home with 401(k)

    Here are some factors to consider before using your 401(k) to buy a home: 

    Pros of using 401(k) funds

    Easier qualification process: With most loan approvals, they’ll examine your finances and run a credit check. Typically, applying for a 401(k) loan doesn’t need that information since the money is already yours. 

    Receive funds faster: You’ll usually get the funds within a few days since the approval process is much faster. 

    You receive the interest payments: Unlike a mortgage loan, your interest payments don’t go to the lender. Any interest payments go back into your 401(k) as part of the repayment process.

    401(k) loans don’t count towards your debt-to-income ratio: Your debt-to-income ratio (DTI) is typically used when you apply for a new line of credit or loan. A 401(k) loan won’t impact your DTI, meaning you could apply for a new credit card or get a car loan if needed.

    Cons of using 401(k) funds

    Reduced retirement savings: When you withdraw or take out a loan, you’ll lose some of your retirement savings. While you’ll eventually pay them back, this temporary reduction in savings may lead to long-term losses.

    Taxes and additional penalties: If you choose to withdraw 401(k) funds, you’ll have to pay income taxes on the funds. You’ll also have to pay a 10% penalty for withdrawing those funds early. 

    Lost investment growth and contributions: Some 401(k) accounts won’t let you contribute to the account while you repay your loan. You may lose out on the interest your funds build as well.

    Additional monthly payments: While you repay your loans, you’ll have to factor that into your monthly payments. In some cases, repayments are made with after-tax dollars and may be taken directly from your paycheck, which could cause additional financial strain. 

    Is using a 401(k) to buy a home a good idea?

    Using a 401(k) to buy a home can work in certain situations, but it comes with risks. It may make sense if:

    • You have no other savings
    • You qualify for a 401(k) loan with reasonable repayment terms
    • You plan to stay in the home long-term

    Alternatives to using your 401(k) to buy a house

    There are several alternatives to using your 401(k) to buy a home. Let’s take a look at them:

    Individual retirement accounts (IRAs)

    Individual retirement accounts (IRAs) have options available for first-time homebuyers and those who have not owned a primary residence for two years. This gives you the opportunity to withdraw up to $10,000 for traditional or Roth IRAs with no penalty, even if you’re under 59 ½ years of age. Consider speaking with your financial advisor if you have questions. 

    Low and no-downpayment mortgages

    There are plenty of low and no-downpayment mortgages available for qualified homebuyers, like FHA, USDA, and VA loans. For example, FHA loans, backed by the Federal Housing Authority, offer loans with down payments as low as 3.5%. These loans have more stringent requirements, so it may not be the right option for everyone. 

    Down payment assistance programs

    Whether you’re a first-time homebuyer or a repeat buyer, there are plenty of down payment assistance programs available. Most are geared toward first-time buyers, but there are lots of options that reduce the amount you pay in down payment or closing costs.

    FAQs about using your 401(k) to buy a house

    What is a 401(k)?

    A 401(k) is a type of retirement savings account, where you elect a certain portion of your income to go into the account. There are two types of 401(k) accounts, a traditional 401(k) and a Roth 401(k). Traditional 401(k) contributions are pre-tax, so you’ll be taxed once taking them out. On the other hand, a Roth 401(k) has taxes taken out before contributing, so you won’t have to pay tax on them later.

    Will my employer know if I withdraw from my 401(k)?

    Your employer, most likely the human resources department, will know if you withdraw from your 401(k), but not your direct manager.

    How does withdrawing from a 401(k) affect mortgage approval?

    Using a 401(k) loan or withdrawal can impact your mortgage application in different ways. While a 401(k) loan won’t count against your debt-to-income (DTI) ratio, a withdrawal could reduce your available assets and affect your lender’s view of your financial stability. Always check with your lender before using 401(k) funds for a home purchase.

    Can I use a 401(k) loan and withdrawal at the same time to buy a house?

    In most cases, you can’t combine a 401(k) loan and withdrawal at the same time. Most plans only allow one type of 401(k) distribution at a time, but this depends on your employer’s plan rules.

    Is there a 401(k) first-time homebuyer exemption?

    There are no exemptions for first-time homebuyers looking to use their 401(k) to fund their home purchase.

    Can I use my 401(k) to buy a second home?

    Yes, you can use your 401(k) to buy a second property. You’ll still face the same penalties and repayment regardless of whether you have a loan or withdraw funds.

    Can I use my 401(k) to cover closing costs?

    Yes, you can use a 401(k) loan or withdrawal to cover closing costs, including lender fees, appraisal costs, and escrow expenses. Withdrawals still come with penalties and taxes, while loans must be repaid.

    The post Can I Use My 401(k) to Buy a House? Yes, Here’s How appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

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    Alison Bentley

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  • Can You Negotiate Real Estate Commissions? Yes, and Here’s How

    Can You Negotiate Real Estate Commissions? Yes, and Here’s How

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    When buying or selling a home, understanding real estate commissions is essential. These fees, typically a percentage of the final sale price, compensate agents for their services in guiding you through the process. However, contrary to popular belief, real estate commissions aren’t set in stone and can be negotiated

    With recent changes due to the NAR settlement, you may be confused about how agents are paid and whether you can negotiate real estate fees. In this article, we’ll break down how commissions work, how Redfin handles them, and provide tips on negotiating to save you money.

    What is real estate commission, and how much is it?  

    A real estate commission is a payment the homebuyer or seller makes to their agent(s) for their services in helping them purchase or sell a home. The commission is often a percentage of the final home sale price and is exchanged during the final transaction at closing.

    A common misconception is that there’s a set fee or percentage for real estate commissions across the industry. In reality, commissions are negotiated between the agent and the homebuyer or seller, and can vary.

    Can you negotiate real estate agent fees?

    Absolutely! Real estate commissions have always been negotiable, and that remains true even after the recent real estate commission changes. Commissions aren’t regulated by law, and can vary by area, giving both buyers and sellers the opportunity to negotiate these fees.

    Real estate agent showing houses

    5 Tips for negotiating real estate commissions 

    Negotiating realtor fees can seem like a daunting task, especially if you’re a first-time homebuyer or seller. However, negotiating real estate fees has always been allowed and there aren’t any laws against doing so. Let’s take a look at some of the strategies that can help you lower commission fees. 

    1. Do your research

    Understand the typical commission rates in your area so you have a starting point for negotiations. Rates can vary depending on the market, the property type, and the agent’s experience.

    2. Leverage competition

    Interview multiple agents and use competing offers as leverage to negotiate lower fees. Agents may be more willing to reduce their commission to win your business.

    3. Highlight your situation 

    If you’re selling a high-value property or buying in a hot market, mention this to the agent. A quicker sale or higher price point may motivate them to lower their fee.

    4. Ask about discounts for repeat business

    If you plan to sell or buy another property with the same agent, ask if they’d offer a discount for your loyalty.

    5. Be upfront about your budget

    Some agents may be willing to adjust their fees if they know you’re working within tight financial constraints, especially if it helps close the deal.

    Refinancing is something to be considered when wanting to lower costs.

    How does Redfin stand out when it comes to commissions?

    At Redfin, we’re committed to offering consumers the best value, which is why we charge sellers a listing fee as low as 1%.*

    For buyers, our fees vary depending on the market but remain competitive, as we understand that these costs can influence whether your offer is accepted or not. We also provide extra savings through our Sign & Save program. If you decide to hire your Redfin agent before your second home tour, we’ll reduce our fee by 0.25%.

    A final note on negotiating real estate commissions 

    Negotiating real estate commissions can seem intimidating, but it’s a perfectly acceptable and often beneficial part of the home buying or selling process. By doing your research, comparing agents, and understanding your leverage, you can potentially lower fees and save money. Remember, real estate commissions are flexible, and with recent changes in the industry, transparency and negotiation have become even more important. Whether you’re a buyer or seller, don’t hesitate to discuss fees with your agent and advocate for the best deal possible.

     

    *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.

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    Alison Bentley

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  • Are Mortgage Rates Dropping?: Explaining What’s Happening to Interest Rates in 2024

    Are Mortgage Rates Dropping?: Explaining What’s Happening to Interest Rates in 2024

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    The short answer to the question “Are mortgage rates dropping?” is yes. On August 5th, daily average 30-year fixed mortgage rates dropped to 6.43% which is the lowest since April 2023. For home buyers, this poses a great opportunity to enter the market after over a year of record-high mortgage rates. 

    So if you’re beginning to look for homes for sale in Seattle, WA after renting an apartment or renting a house in the city or elsewhere in the U.S., now may be a good time to buy. Read on to learn more and make the decision for yourself.

     

    Are mortgage rates dropping right now?

    Today’s mortgage rates are influenced by investor expectations regarding the Federal Reserve’s actions. Investors believe the Fed has finished its efforts to control inflation and anticipate a gradual decrease in mortgage rates for the rest of the year. 

    Although the Fed is poised to cut interest rates in the next month, economists do not foresee a significant drop in mortgage rates beyond current levels, as today’s rates already account for the expected interest rate cuts projected for September.

    is-now-a-good-time-to-buy-a-house

    Why are mortgage rates so high?

    Mortgage rates in the U.S. are influenced by various factors, including inflation, Federal Reserve policies, and economic conditions. Currently, rates remain high due to persistent inflation and the Federal Reserve’s efforts to curb it through interest rate hikes. 

    While some experts predict that rates could stabilize or slightly decrease if inflation continues to cool, significant drops in mortgage rates are not expected in the immediate future. The Federal Reserve has signaled that it may maintain higher interest rates for an extended period to ensure inflation is controlled, which will likely keep mortgage rates elevated in the near term. However, potential economic slowdowns or shifts in Fed policy could eventually create conditions for lower rates, but this may take time.

    What will cause interest rates to drop?

    With skyrocketing prices over the past few years spurred on by low supply of homes and record-low mortgage rates, many home buyers are wondering what signs to look for when entering the market.

    The obvious answer is an announced decrease in interest rates, but there are other signs to look for, including declining home sales, a weakening job market, and cooling inflation. When inflation is high, the Federal Reserve will raise interest rates to combat it. Conversely, the decline of inflation will often result in the Fed easing up on rate hikes and reducing rates.    

    real-estate-agent-negotiation

    Should I lock in the mortgage rate today?

    Deciding whether to lock in today’s mortgage rate depends on several factors, including your financial situation, risk tolerance, and the current market outlook. If you are comfortable with the current rate and your budget can accommodate it, locking in now can provide certainty and protect you from potential future rate increases, especially since rates remain volatile and could rise further. 

    However, if you anticipate that rates might drop soon based on economic forecasts or if you’re willing to take on some risk, you could choose to float the rate instead. Consulting with a mortgage advisor who understands your specific needs can also provide personalized guidance tailored to your situation.

    At what point does it make sense to refinance?

    While rates are unlikely to drop enough in the near future to make refinancing a home loan worth it, it’s smart to know what to look out for if you’re worried you’ll miss out. To determine if it’s a good time to refinance your home loan, consider refinancing when current rates are significantly lower than your existing rate, typically by at least 0.5% to 1%, as this can lead to substantial savings. 

    Improving your credit score, increasing home equity, or switching from an adjustable-rate to a fixed-rate mortgage can also make refinancing appealing. Additionally, calculating your break-even point — when the savings outweigh the costs of refinancing — will help you decide if it’s worth it, especially if you plan to stay in your home long enough to benefit from the lower rate.

    Refinancing is something to be considered when wanting to lower costs.

    Final thoughts

    If you’re in a financial situation where you can purchase a home, now is the right time before competition catches up. Although interest rates may continue to drop, lower mortgage rates means more competition in the market which could result in higher prices.

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    Jeremy Steckler

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  • What percentage of your income should go toward your mortgage

    What percentage of your income should go toward your mortgage

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    When it comes to finding the right balance between saving, spending, and investing, one of the biggest questions many people face is how much of their income should be allocated to their mortgage. It’s a decision that impacts your overall financial health and well-being. While there’s no one-size-fits-all answer, understanding general guidelines and how they apply to your personal situation can help you make the best decision. In this article, we’ll explore recommendations and practical tips to help you determine a mortgage budget that works for you.

    Interested in making a move? Check out spots in these markets: 

    Apartments for rent in Las Vegas, NV | Houses for rent in Jacksonville, FL | Homes for sale in Huntsville, AL

    How to calculate your monthly percentage?

    There are several recommendations on what percentage works best but it is necessary to make a decision based on your situation. Below are the most recommended percentages on which to base your mortgage payments.

    28% / 36% Rule

    A widely used guideline for budgeting your mortgage is the 28/36 rule. According to this rule, your mortgage payment should not exceed 28% of your gross monthly income. This percentage covers the principal, interest, property taxes, and homeowners insurance. 

    Additionally, the rule suggests that your total debt payments, including your mortgage, credit cards, and other loans, should not exceed 36% of your gross income. This approach helps ensure you have enough room in your budget for other expenses and savings. Using this example, if you make $7,000 monthly your max mortgage payment should be $1,960. 

    25% Rule

    Some financial advisors recommend a more conservative approach, suggesting that your mortgage payment should be no more than 25% of your gross monthly income. This lower percentage provides a larger cushion for unexpected expenses and can help you maintain a comfortable lifestyle without stretching your finances too thin. This rule is particularly useful for those who prefer to err on the side of caution or who have other significant financial commitments. Using this percentage, if you make $8,000 monthly your expected mortgage payments should be $2,000. 

    30% Rule

    In certain regions or housing markets, the 30% rule is commonly cited. This rule allows up to 30% of your gross income to be allocated toward your mortgage payment. A higher percentage might be more applicable in areas with high property values or higher living costs. However, it’s important to consider that spending more than 30% of your income on your mortgage can limit your flexibility in managing other financial goals and expenses.

    Which is best?

    Ultimately, the percentage of income that should go toward your mortgage varies based on your financial situation. Factors such as your overall debt levels, savings, and personal financial goals play a significant role. Regardless of which rule you follow, the key is to balance your mortgage payment with your other financial responsibilities and goals. Make sure to account for future expenses, potential income changes, and savings goals. By maintaining a well-rounded budget and regularly reviewing your financial situation, you can ensure that your mortgage remains a manageable part of your overall financial plan.

    How do lenders determine your home affordability?

    When lenders assess your home affordability, they evaluate a variety of factors to determine whether you can comfortably manage mortgage payments alongside your other financial obligations. Here’s a breakdown of what lenders typically consider:

    Credit score

    Your credit score is one of the most important factors lenders examine. It reflects your creditworthiness and financial responsibility based on your credit history. A higher credit score generally indicates that you’re a lower-risk borrower, which can improve your chances of securing a mortgage and potentially lead to better interest rates. Lenders typically look for a score of at least 620, but higher scores are preferable.

    Debt-to-income ratio (DTI)

    The debt-to-income ratio is a key metric lenders use to evaluate how much of your monthly income goes toward debt payments. It is calculated by dividing your total monthly debt payments by your gross monthly income. Lenders generally prefer a DTI ratio below 43%, although some may be flexible depending on your overall financial situation. This ratio helps lenders assess your ability to handle additional debt responsibly.

    Income and employment history

    A stable and sufficient income is crucial for mortgage approval. Lenders will review your employment history to ensure you have a reliable source of income to support mortgage payments. They typically look for a steady job history, ideally at least two years in the same job or industry. Documentation such as pay stubs, tax returns, and employment verification may be required to substantiate your income.

    Down payment

    The size of your down payment affects how much you need to borrow and can influence your mortgage terms. A larger down payment reduces the loan amount and can lower your monthly payments and interest rates. Most conventional loans require a down payment of at least 20% of the home’s purchase price, though there are options available with lower down payments, such as FHA or VA loans.

    Assets and savings

    Lenders also consider your assets and savings to gauge your financial stability. This includes checking and savings accounts, retirement accounts, and other investments. Adequate reserves demonstrate that you have financial cushioning for emergencies and can cover other expenses beyond the mortgage, such as closing costs and home maintenance.

    Loan type and terms

    Different types of loans have varying requirements and terms. Conventional loans, FHA loans, VA loans, and USDA loans each have their own criteria and benefits. The loan type you choose will influence your interest rate, down payment requirements, and other aspects of the mortgage. Lenders will evaluate how these terms align with your financial profile.

    By considering these factors, lenders aim to determine whether you are financially prepared for homeownership and capable of managing the responsibilities of a mortgage. It’s a comprehensive evaluation designed to ensure that you can comfortably afford your new home while maintaining overall financial health.

    Advice on how to lower your monthly mortgage payments

    These strategies can help you reduce your mortgage costs, save money, and achieve financial stability more quickly. Each option has its benefits, so consider your financial situation and long-term goals when deciding which strategies to pursue.

    • Refinance your mortgage:  Refinancing your mortgage can be a powerful way to reduce your monthly payments and overall interest costs. By securing a lower interest rate, you can decrease your monthly payment and potentially shorten the term of your loan. Be sure to compare refinancing offers, including any fees or closing costs, to determine if it’s the right move for you.
    • Make a larger down payment: If you’re in a position to do so, increasing your down payment when purchasing a home can reduce the size of your mortgage loan, thereby lowering your monthly payments and the total interest paid over time. A larger down payment also can help you avoid private mortgage insurance (PMI), which adds to your monthly costs.
    • Consider the loan terms: Opting for a shorter loan term, such as a 15-year mortgage instead of a 30-year mortgage, can save you a significant amount in interest over the life of the loan. While your monthly payments will be higher, the total interest paid will be lower, and you’ll own your home outright sooner. Or you can opt for extending the term of your mortgage reducing your monthly payments. By lengthening the loan term from, for example, a 15-year mortgage to a 30-year mortgage, you spread the repayment of your principal and interest over a longer period. This adjustment decreases the amount you pay each month.
    • Make Extra payments: If possible, paying extra towards your mortgage principal can significantly reduce the total amount of interest you pay over the life of the loan. You can make extra payments on a monthly, quarterly, or yearly basis, or even just add a little extra to each payment. Consider rounding up your payments or making occasional lump-sum payments whenever possible.

    What percentage of income should go to a mortgage: The key takeaway 

    Determining what percentage of your income should go toward your mortgage is a necessary aspect of managing your finances effectively. While guidelines such as the 28/36 rule, 25% rule, and 30% rule provide valuable starting points, the right percentage for you will depend on your unique financial situation. 

    By carefully considering factors such as your credit score, income, debt, down payment, and the overall balance of your budget, you can find a mortgage payment that fits comfortably within your financial plan. Regularly reviewing and adjusting your mortgage strategy — whether through refinancing, making extra payments, or lengthening the loan term — can help you stay on track and make informed decisions. Ultimately, the goal is to ensure that your mortgage payments are manageable and sustainable with your financial goals.

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    Pablo Alvarez

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  • Who Pays the Real Estate Agent Commission?

    Who Pays the Real Estate Agent Commission?

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    Are you buying or selling a home? Then you might be wondering: “Who pays the real estate agent?” Traditionally, this cost has been shouldered by the seller, but recent changes have brought new dynamics into play. 

    The National Association of Realtors (NAR) and Multiple Listing Service (MLS) have implemented new rules about how real estate agents communicate about real estate fees. These changes went into effect on August 17th, 2024, and are intended to provide greater transparency and competition around fees. 

    In this Redfin article, you’ll learn everything you need to know about who pays the real estate agent, agent commissions, and the recent changes affecting them. 

    What is a real estate commission?

    A real estate commission is a payment the homebuyer or seller makes to their agent(s) for their services in helping them purchase or sell a home. The commission is often a percentage of the final home sale price and is exchanged during the final transaction at closing. 

    Who pays the real estate agent?

    Sellers have historically paid both the buyer and seller’s agent fees from the proceeds of the sale. But as of August 17, 2024, buyers will now agree to their agent’s fee in writing before touring. Buyers can still ask the seller to cover the buyer’s agent fee when they make an offer. 

    Because of this change, the amount the seller has to pay a buyer’s agent varies from buyer to buyer. Redfin expects that sellers will continue to cover the buyer’s agent commission fee in many transactions, but increasingly, these fees will be negotiated as part of the offer. 

    Here are two options for how a seller might navigate the new commission process: 

    • The seller can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
    • Sellers can proactively offer a commission or a concession that the buyer could use to pay their agent as part of their home’s marketing strategy. They can still communicate this to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing.

    Why would a seller pay the buyer’s agent commission?

    Whether to offer any buyer agent commission, or how much, is part of an overall marketing strategy geared towards attracting buyers and achieving the sellers’ goals. 

    Instead of authorizing their agent to advertise a selling office commission (which must now be off the MLS in most markets), a seller may choose to offer the buyer a concession that the buyer can choose to use as they see fit. Or, they could instruct their agent to tell the buyer that they’re open to offers. That then puts the ball in the buyer’s court to decide if they want to request any concessions from the seller, or if they want to pay their agent directly.

    How did the NAR settlement affect agent commissions?

    Prior to the NAR settlement, the commission amount that the seller was willing to provide was advertised in the MLS, so that buyer agents would know in advance what a seller was offering to them if they brought a buyer for that listing. Some MLSs required that the listing make an offer of commission to buyers’ agents. Commissions were always negotiable, but were rarely negotiated in practice. Following the settlement, we’re seeing an increase in how often commissions are negotiated. 

    The NAR settlement also established rules designed to help make real estate fees more transparent and competitive. For example, agents must now provide a written agreement to homebuyers that explains their fees before touring. These agreements must also include a statement that all commissions are fully negotiable. 

    Some brokerages now require a full buyer agency agreement that requires the customer to commit to that agent exclusively before touring. Redfin does not. Redfin believes that we should earn a customer’s business. This is why Redfin discloses our fee upfront, but does not require a customer to exclusively commit to us in order to tour a home. 

    Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home. 

    Can you negotiate real estate agent commissions?

    Yes, you can negotiate real estate agent commissions. Commissions are not set by law and are fully negotiable. The commission rates many brokerages charge often vary from area to area, and there are no laws or industry rules that set commission rates.

    How is Redfin different when it comes to commissions? 

    At Redfin, we’ve always believed that consumers should get the best deal. That’s why we charge sellers a listing fee as low as 1%.* 

    Our fees when serving buyers vary by market, but are competitive because we know they could make the difference in your winning or losing an offer. All things equal, a seller will prioritize the offer that is asking them to pay a lower buyer agent fee. 

    We also offer additional savings for buyers who make a commitment to hire us after the first tour. With our Sign & Save program, if you commit to hiring your Redfin agent before the second tour, we’ll reduce our fee by 0.25%. We earn customers’ business by providing the best service and value.

    Final thoughts

    The real estate commission landscape has shifted, offering more transparency and flexibility for buyers and sellers – goals that Redfin has always supported. Whether you’re searching for your dream home or looking to relocate, understanding these new rules can help you make smarter decisions and potentially save money in the process. 

    You can learn more about the NAR settlement here, and how Redfin has embraced this change and always championed better deals for the customer here. You can also connect with a Redfin agent to learn everything you need to know – regardless if you’re buying or selling. 

    The NAR settlement primarily applies to listings on an MLS, and MLS rules may vary. Rules regarding listings not on an MLS also vary widely from state to state. Talk to your agent to learn more. 

    *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.

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    Jamie Forbes

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  • Real Estate Commission Changes: What You Need to Know

    Real Estate Commission Changes: What You Need to Know

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    There are important changes happening in the real estate industry this month. The National Association of Realtors and multiple listing service (MLS) have implemented new rules about how real estate agents communicate about real estate fees. The changes provide greater transparency and competition around fees—goals that Redfin has always supported. 

    We know this can be confusing, but Redfin agents are prepared to answer any questions you have and expertly guide you through your buying and selling journey. 

    So, what is changing exactly?

    It has been customary in most transactions for the home seller to pay a commission to both their agent (the listing agent) and the agent who represents the buyer (the buyer’s agent). While it has always been the seller’s choice to decide whether and how much compensation to offer the buyer’s agent, the process around it has changed in two main ways:

    1. Disclosure of buyer’s agent fees: A buyer will now need to agree to their agent’s fees before touring homes. This sets the maximum amount that your buyer agent will be paid when you purchase a home. 
    2. Advertising of buyer’s agent fee: Offers of buyer agent compensation are being removed from many MLSs, the databases agents use to share and market listings. A seller can still pay the buyer’s agent, but they cannot advertise any offers of compensation in the MLS unless expressly allowed by local rules.  As a result, buyer’s agent fees will increasingly be negotiated as part of the offer.

    What does this mean for sellers?

    Sellers will still have conversations with their listing agents about any compensation they would like to offer to the buyer’s agent. We expect that in many cases, buyers will continue to ask sellers to help cover the buyer’s agent fee as part of their offer. Sellers will evaluate offers and negotiate, like they would with any other terms. 

    What does this mean for buyers?

    As a buyer, you will have an upfront conversation to learn what your agent will charge. Your agent will ask you to sign an agreement about their fee before touring homes.  You can still ask the seller to cover your agent’s fee as part of your offer. Depending on how you structure your offer, the seller could agree to compensate your agent directly or could offer closing concessions that you could allocate to pay your agent at closing. 

    As a buyer, why do I need to sign an agreement so early in the process? I just want to tour a home and I’m not ready to commit to paying an agent.

    The new industry-wide rules require a written agreement that explains the agent’s fees before touring. Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home. Different brokerages have different approaches and policies. Redfin’s approach is transparent and gives buyers flexibility. 

    Is Redfin requiring a buyer agency agreement to tour?

    Unless your state has other requirements, Redfin is adding a simple fee agreement for the buyer to sign when you request a tour with a Redfin agent that discloses the fee we would expect to collect at closing. Many sellers will cover this fee for you at closing. 

    This fee agreement does not lock you in to working with a Redfin agent. Once you’ve had a chance to meet your agent in person, your agent will ask you to commit to working with Redfin. Buyers who commit to working with Redfin before the second tour will get a discount of 0.25% off our fee. 

    What are Redfin’s fees for buyer services?

    Redfin’s buyer fees vary by market. We’ve set our pricing to give our buyers a competitive edge, offering a discount of 0.25% off our fee if you commit to Redfin before the second tour. By reducing our fee by 0.25%, we can make your offer more attractive to a seller. Just like the offer price and contingencies, a seller will compare how much in buyer agent fees each offer is requesting and factor that into their decision. 

    What if the seller doesn’t agree to pay my agent? Am I responsible for paying my agent out of pocket?

    Many buyers are using all of their financial resources for their downpayment and don’t have extra cash to pay agent fees. So far, most sellers understand this and are often willing to cover the buyer’s agent fee from the proceeds of their sale. If the seller doesn’t agree to pay your agent or only agrees to pay a portion of the buyer’s agent fee, you can amend your offer, agree to pay your agent directly at closing, or walk away. In any case, before signing a contract to purchase a home, you’ll be aware of the associated costs so that you can make an informed decision. 

    It’s important to have a good relationship with your mortgage lender, who can help you structure your offer in a way that fits your financial situation. Redfin’s mortgage partner, Bay Equity, has loan officers at the ready to guide you through this process.*

    When I sell my home, do I have to pay a buyer agent commission? Should I offer one?

    A seller has always had the ability to decide how much, if any, compensation to pay the buyer’s agent. As a seller, you have options: 

    • You can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
    • Or, you can proactively offer a commission or a concession that the buyer could use to pay their agent as part of your home’s marketing strategy. This can still be communicated to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing. Whether or not to offer a commission, and how much, can be dependent on various factors your Redfin agent can help you with.

    How do I know what is a fair price for a buyer’s agent?

    Buying a home is a huge commitment; you should focus on finding the best agent at the best rate. Redfin agents have significant experience and we publish their sales and customer reviews online so you can see for yourself. The average Redfin agent sold more than three times the number of homes as the typical agent at other major brokerages. And we’ve set our prices to be as competitive as possible. Connect with an agent to learn more.

    *Bay Equity Home Loans is affiliated with Redfin. You don’t have to work with a Redfin Agent to use Bay Equity’s services. For additional information, please read our Affiliated Business Disclosure.

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    Jamie Forbes

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  • Mortgage Rates Just Hit a 14-Month Low: Is Now a Good Time to Buy a House?

    Mortgage Rates Just Hit a 14-Month Low: Is Now a Good Time to Buy a House?

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    Key takeaways:

    • If you want to beat the competition, now is a great time to buy a house.
    • Daily average mortgage rates hit a 14-month low of 6.34% on Monday, giving buyers thousands of dollars in buying power.
    • Don’t wait to buy; buyers who were scared off by high rates are poised to enter the market, which may boost prices.
    • Total listings are also up 20% over last year, so there’s plenty of inventory to choose from.

    On Monday, August 5th, daily average 30-year fixed mortgage rates plunged to 6.34%, their lowest level since April 2023. Other loan products fell to the high-5% to mid-6% range. This came as a result of a surprisingly weak jobs report that bred fears of a looming recession and triggered a global market cooldown. 

    Following the flurry of events, rates ticked up to 6.52% on August 6th – above Monday’s lows but well below the 7.5% peak in April. In fact, homebuyers today have gained nearly $30,000 (around $200 per month) in purchasing power since just the beginning of July. Many experts now predict the Fed to start cutting interest rates more than anticipated in September, which may push down mortgage rates more. 

    Total listings are also up 20% compared to last year, as more sellers enter the field. The market seems poised to give buyers a break. So, if you’re considering buying, you might be wondering “should I buy a house now or wait?” 

    Is now a good time to buy a house? 

    The short answer: Yes, if you have the means, it’s a good time to buy a house before the market catches up. Waiting for rates to fall further leaves you at risk for increased competition among buyers and subsequent price hikes from sellers. 

    Buying a house now means you’re also maximizing your investment potential. Lower rates save you money over your loan term and mean more of your mortgage payments can go towards building equity. 

    It’s worth noting that the market has been topsy-turvy recently, though. For example, higher mortgage rates typically push house prices down, but they have had the opposite effect over the past two years. Also, declining inventory typically leads to more competition, but prices have been too high for many buyers to afford, causing some homes to sit unsold and others to sell in a few days.

    Additionally, economists aren’t entirely sure what will happen with mortgage rates in the coming months, and housing prices are still near a record high. This week started with good news, but it’s important to be prepared for any surprises that may come. 

    Will mortgage rates fall further in 2024?

    Today’s mortgage rates reflect what investors think the Fed will do. Investors believe the Fed is done limiting inflation and expect a gradual decline in mortgage rates through the end of the year. 

    In other words, economists don’t expect mortgage rates to drop significantly more than they already have, because today’s rates already price in expected interest rate cuts in September.

    How did we get here? 

    In the past decade, there has been a severe shortage of homes. This is part of what caused the housing boom in 2021-2022; too many buyers were fighting for a tight supply of homes, leading to skyrocketing prices. Record-low mortgage rates also fueled the frenzy. (Low supply was partly due to a chronic underbuilding of homes since the 1980s.) 

    However, in 2023 and 2024, as construction rebounded and inventory began slowly recovering, prices kept rising even as mortgage rates remained high. Higher rates typically cause a drop in demand and prices. However, this didn’t happen, because many homeowners had pandemic-era rates and were unwilling to give them up, creating a further shortage of homes for sale. 

    This was a unique trend that continues today – the national median sale price hit a record high in June and many people are still avoiding the market altogether. Those who are buying are often doing so in affordable places like Texas and Upstate New York. Even though inventory is rising and sales are low nationwide, house prices are at record highs and show little signs of falling. 

    However, the recent dip in mortgage rates has given homebuyers a burst of hope.

    Home sellers should get ready for competition 

    Recent drops in mortgage rates sets the stage for more buyers entering the market, meaning more competition for listings. 

    This is because house hunters scared off by high mortgage rates have been waiting on the sidelines for years, especially as inventory flagged due to sellers wanting to hold on to their pandemic-era rates (the lock-in effect). Now that rates are dropping, more buyers will decide that they have the budget to buy a house. 

    Should you lock in your mortgage rate today? 

    If you have the means, now is a great time to lock in a low mortgage rate. Rates haven’t been this low in more than a year. 

    Lower rates mean you can qualify for a larger loan amount or enjoy lower payments within your current budget. If rates still feel too high, you can buy down your mortgage rate, too. 

    All-cash buyers hoping to avoid mortgages altogether should also act now to avoid probable price hikes as rates continue to drop. 

    Final thoughts

    If you’re in the market for a house and have been scared off by high rates, now is a great time to connect with an agent and start your home search. Rates are expected to continue trending slowly downwards, and the market is gaining momentum. The longer you wait, the more competition you’ll see.

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    Jamie Forbes

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  • Buying Your First Home in Portland, OR? Here’s How Much Money You Need to Make

    Buying Your First Home in Portland, OR? Here’s How Much Money You Need to Make

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    It’s less than Seattle, but you still need well over six figures.

    Portland, OR, is known for its quirky vibes, lush urban parks, and delicious Pacific Northwest cuisine. In addition to being a unique and rewarding place to live, Portland is also home to a competitive real estate market that’s seen many changes over the past few years. 

    For many, buying a home in Portland is a dream come true, but it’s also important to know how it will impact your finances. From down payments to monthly mortgage payments, there’s a lot to understand before buying your first home 

    So whether you already live in The City of Roses or are looking to relocate to the area, here’s a breakdown of the income you’ll need to purchase your first home in Portland.

    Check out our original report for a detailed nationwide analysis.

    How much income do you need to buy a starter home in Portland?

    The median sale price of a starter home in Portland is $401,840. In order to afford this, first-time homebuyers in Portland should make $130,715 per year, up 6.0% from 2023. However, the median income in Portland is $101,552, meaning the typical resident cannot afford a starter home.

    As expected, starter homes in Portland are more affordable than the average home (all price brackets combined; see methodology for details). In order to afford any median-priced home in the area, you’ll need to make $149,023 (as of October 2023). 

    Nationwide, you need an income of $75,849 to afford a typical starter home, which costs an average of $240,000. The average U.S. household earns an estimated $84,072.

    First-time homebuyers’ guide to the Portland housing market

    Portland has experienced a mixed market over the past few years. House prices have only risen by 1.3% since January 2021, but the metro saw sharp rises and drops during and following the pandemic.

    The pandemic-driven housing migration boom affected Portland similar to many other coastal metros; more people looked to leave than stay, with buyers searching for sun and affordability. Portland actually lost 3.3% of its population from 2020-2023, a dramatic shift following nearly a decade of sustained growth. This change, along with high mortgage rates, helped drop house prices by 21% from May 2022 to January 2023, from a high of $580,000 to $456,000. Another price spike and drop followed soon after before leveling out in early 2024.

    Importantly, Oregon also has the nation’s highest rate of chronic homelessness. The issue is especially severe in Portland, with the unhoused population increasing 65% from 2015-2023.

    There’s a lot to love about Rose City, though. If you’re looking to move to Portland, the city is home to many famous and eclectic amenities and attractions throughout its diverse neighborhoods. Forest Park, Powell’s Books, and the Hoyt Arboretum are some of the most well known, offering natural beauty and entertainment for people of all ages. Portland also offers 400 miles of bikeways, breathtaking scenery, and is within a few hours from the coast and Columbia River Gorge.

    Some popular neighborhoods in Portland include the Pearl District, Hawthorne, and Buckman. 

    What does a typical down payment look like for a starter home in Portland?

    Here are some common down payment amounts for a typical $401,840 starter home in Portland:

    Down payment percentage Down payment amount
    3% down payment $12,055
    3.5% down payment $14,064
    5% down payment $20,092
    10% down payment $40,184
    15% down payment $60,276
    20% down payment $80,368

    Down payments can range from 0% to 100% of the total house price, depending on your budget, loan type, and long-term priorities. While experts have historically recommended budgeting for a 20% down payment, the increasing cost of homes and continued sluggish wage increases has led to a 15% down payment becoming more common. 

    Some loan types allow for lower down payment amounts. For example, a Federal Housing Administration (FHA) loan requires just 3.5% down, while the lowest possible down payment for a conventional loan is 3%. These amounts typically depend on your credit scores, so buyers with higher credit scores may qualify for lower down payments.

    two story home in housing bubble portland or

    What is the typical mortgage payment for a starter home in Portland?

    The typical monthly mortgage payment for a starter home in Portland is $3,268. This assumes you put 3.5% down and have around a 7% interest rate.

    If this payment sounds too high, you could consider renting an apartment in Portland. The average rent price is $1,802, possibly making it a better option while you save for a down payment on a house. You can also use an affordability calculator to see what you can afford based on your income and down payment.

    What should you do next?

    If you’re in the market for your first home in Portland, it’s important to understand how much house you can afford. Take your annual income, credit score, the current mortgage rates, and local market trends to make a decision that works best for you.

    From there, a Portland agent can help you navigate the entire home buying process and provide valuable local expertise. To learn more about how to buy a home, check out Redfin’s First-Time Homebuyer’s Guide.

    Methodology

    Redfin divides all U.S. properties into five buckets based on Redfin Estimates of homes’ market values. There are three equal-sized tiers, as well as tiers for the bottom 5% and top 5% of the market. Redfin defines “starter homes” as homes whose sale price fell into the 5th-35th percentile of the Redfin Estimate tier. 

    We calculated the annual income needed to afford a starter home by assuming a buyer spends no more than 30% of their income on housing payments. Housing payments are calculated assuming the buyer made a 3.5% down payment and also take a month’s median sale price and average mortgage-interest rate into account. 

    The national income data is adjusted for inflation using the Consumer Price Index. 2024 income is estimated based on projections from the U.S. Census Bureau’s (ACS) 2022 median household income using the 12-month moving average nominal wage growth rate. The rate was compiled from the Current Population Survey and reported by the Federal Reserve Bank of Atlanta.

    We assume housing payments include the mortgage principal, interest, property taxes, homeowners insurance, and mortgage insurance (when applicable).

    All data sourced February 2024 unless otherwise stated.

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    Jamie Forbes

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  • Buying Your First Home in Minneapolis, MN? Here’s How Much Money You Need to Make

    Buying Your First Home in Minneapolis, MN? Here’s How Much Money You Need to Make

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    You need to make nearly $90,000 annually to afford a starter home.

    Minneapolis, MN, is known for its gorgeous lakes, abundant outdoor recreation, deep history, and snowy winters. In addition to being a cultural hub and unique place to live, Minneapolis is also home to a competitive real estate market that’s seen a surge in popularity over the past few years. 

    For many, buying a home in Minneapolis is a dream come true, but it’s also important to know how it will impact your finances. From down payments to monthly mortgage payments, there’s a lot to understand before buying your first home 

    So whether you already live in the City of Lakes or are looking to relocate to the area, here’s a breakdown of the income you’ll need to purchase your first home in Minneapolis.

    Check out our original report for a detailed nationwide analysis.

    How much income do you need to buy a starter home in Minneapolis?

    The median sale price of a starter home in Minneapolis is $255,000. In order to afford this, first-time homebuyers in Minneapolis should make $85,013 per year, up 7.2% from 2023. The median income in Minneapolis is $106,561, meaning the typical resident can afford a starter home. 

    Only California metros require a higher annual income to afford a starter home. Anaheim, Los Angeles, Oakland, San Diego, San Francisco, and San Jose all top $175,000. 

    As expected, starter homes in Minneapolis are more affordable than the average home (all price brackets combined; see methodology for details). In order to afford any median-priced home in the area, you’ll need to make $103,640 (as of October 2023). 

    Nationwide, you need an income of $75,849 to afford a typical starter home, which costs an average of $240,000. The average U.S. household earns an estimated $84,072.

    First-time homebuyers’ guide to the Minneapolis housing market

    Minneapolis has experienced a growing but changing market over the past few years. House prices have only risen by 8% since January 2021, from $299,250 to $325,000. However, like many cities across the country, the area has been grappling with a shortage of homes. As a result, Minneapolis recently saw a sales whiplash – home sales hit a 20-year high in 2021 before falling to a 12-year low in 2023.

    Home prices have somewhat followed this pendulum as well. While prices haven’t risen much overall, they have seen large peaks and valleys. For example, from February 2022 to June 2022, prices rose by 16%. Then, from June to December, they fell by 17.8%. This pendulum swing was seen in many metros across the country, often reacting to changing mortgage rates.

    Minneapolis has also done a lot of work to meet the housing needs of its residents, supplying them with around 3,800 new affordable housing units and nearly 18,000 total housing units in 2022. This work continues and is intended to offset the housing deficit from the Great Recession. 

    If you’re looking to move to Minneapolis, the area is home to plenty of amenities and attractions throughout its diverse neighborhoods. Minnehaha Park, Guthrie Theater, the Chain of Lakes, and the Minneapolis Sculpture Garden are some of the most well known spots, offering waterfront views and fun experiences for people of all ages.

    Popular neighborhoods in Minneapolis include Bryn-Mawr, Calhoun Isles, Camden, and Nokomis.

    What does a typical down payment look like for a starter home in Minneapolis?

    Here are some common down payment amounts for a typical $255,000 starter home in Minneapolis:

    Down payment percentage Down payment amount
    3% down payment $7,650
    3.5% down payment $8,925
    5% down payment $12,750
    10% down payment $25,500
    15% down payment $38,250
    20% down payment $51,000

    Down payments can range from 0% to 100% of the total house price, depending on your budget, loan type, and long-term priorities. While experts have historically recommended budgeting for a 20% down payment, the increasing cost of homes and continued sluggish wage increases has led to a 15% down payment becoming more common. 

    Some loan types allow for lower down payment amounts. For example, a Federal Housing Administration (FHA) loan requires just 3.5% down, while the lowest possible down payment for a conventional loan is 3%. These amounts typically depend on your credit scores, so buyers with higher credit scores may qualify for lower down payments.

    row houses in Novi, Michigan

    What is the typical mortgage payment for a starter home in Minneapolis?

    The typical monthly mortgage payment for a starter home in Minneapolis is $2,125. This assumes you put 3.5% down and have around a 7% interest rate.

    If this payment sounds too high, you could consider renting an apartment in Minneapolis. The median rent price is $1,583, well below the typical mortgage payment. You can also use an affordability calculator to see what you can afford based on your income and down payment.

    What should you do next?

    If you’re in the market for your first home in Minneapolis, it’s important to understand how much house you can afford. Take your annual income, credit score, the current mortgage rates, and local market trends to make a decision that works best for you.

    From there, a Minneapolis agent can help you navigate the entire home buying process and provide valuable local expertise. To learn more about how to buy a home, check out Redfin’s First-Time Homebuyer’s Guide.

    Methodology

    Redfin divides all U.S. properties into five buckets based on Redfin Estimates of homes’ market values. There are three equal-sized tiers, as well as tiers for the bottom 5% and top 5% of the market. Redfin defines “starter homes” as homes whose sale price fell into the 5th-35th percentile of the Redfin Estimate tier. 

    We calculated the annual income needed to afford a starter home by assuming a buyer spends no more than 30% of their income on housing payments. Housing payments are calculated assuming the buyer made a 3.5% down payment and also take a month’s median sale price and average mortgage-interest rate into account. 

    The national income data is adjusted for inflation using the Consumer Price Index. 2024 income is estimated based on projections from the U.S. Census Bureau’s (ACS) 2022 median household income using the 12-month moving average nominal wage growth rate. The rate was compiled from the Current Population Survey and reported by the Federal Reserve Bank of Atlanta.

    We assume housing payments include the mortgage principal, interest, property taxes, homeowners insurance, and mortgage insurance (when applicable).

    All data sourced February 2024 unless otherwise stated. The Minneapolis metropolitan area includes Saint Paul.

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    Jamie Forbes

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