10 Awesome Real Estate Tips for Home Sellers – Redfin

When you bought your first house, you likely felt excitement with a hint of nervousness and maybe you even had a “What have I gotten myself into?” kind of moment. However, those emotions passed and you settled in and made that house your home. Whether you’ve stayed in this home for a couple of years or a couple of decades, when you decide it’s time to sell, you might experience a very similar emotional roller coaster, especially in today’s housing market. To ease your stress, here are 10 awesome real estate tips that will help you get started and possibly even take some of the emotion out of the ride.

An agent discussing with a couple great real estate tips to consider to help them sell their home.

An agent discussing with a couple great real estate tips to consider to help them sell their home.

Tip #1 Find the perfect listing agent 

Probably the best real estate tip there is: find a dedicated, responsive, and knowledgeable real estate agent – someone you can trust to guide you through every step of selling your home. A good seller’s agent will make informed recommendations about a listing price, advise you on which repairs will help you sell your home, and make recommendations about decluttering, staging, and maximizing your curb appeal.

A good seller’s agent shines the most when it comes time to negotiate an offer. The goal is to make sure you earn top dollar for your house and to sell it quickly. This process starts by honing in on the right listing price. 

  • If your home is priced too high it will likely sit on the market and possibly longer than most homes in your area. This may cause prospective buyers to second-guess its value.
  • If your home is priced too low, you could leave money on the table and diminish the equity you’d bring to the purchase of your next home.

Your ideal selling agent will have well-developed instincts for what the real estate market is doing in your area. Take your time and speak to several agents to find someone you can comfortably work well with and will work hard for your interests. 

Tip #2 Determine the best time to list your home

Reliable real estate wisdom suggests that spring into summer is when most people start hunting for a new house. Buyers will typically research properties online months before touring their first home in person. This way they can understand how much house they can afford in neighborhoods that appeal to them most. 

Usually, the end of March or the beginning of April is considered the start of homebuying season. However, this year’s homebuying season seems to have hit early as nearly half the homes listed mid-January into February went under contract in under two weeks. Meaning we are currently in a seller’s market and you don’t have to wait to fetch top dollar for your home.

Getting a 3D walkthrough scan of your home is a great real estate tip that will help you sell your home.

Getting a 3D walkthrough scan of your home is a great real estate tip that will help you sell your home.

Tip #3 Professional photography and 3D walkthroughs are key

Many real estate agents now offer 3D tours of their listings. Virtual walkthroughs are a massive advantage for both buyers and sellers. Buyers can “shop” any time of the day or night, and sellers can “show” their house 24/7. It also cuts down on showings to only the serious buyers. If a buyer is genuinely interested, they will view the virtual walkthrough (probably several times) and then request a showing. 

Professional photography is another great option to show your home in its best light.. Homes listed with high-quality, professional images are known to sell quicker and for more money. A professional real estate photographer will capture each room at the best angle, and highlight its best features. You can also request photos shot at dusk with both interior and exterior lights shining. It’s all about painting those special pictures in your buyer’s mind. 

If you’re selling a luxury listing with a view or large plot of land, consider drone photography to fully capture everything your property has to offer.

Tip #4 Handle the repairs from a pre-listing home inspection

It might be tempting to put off small repairs and let the next owner handle them. Unfortunately, if you list a house with evident and necessary repairs, prospective buyers will also scrutinize your property more closely for larger deferred maintenance issues. If you want to be proactive, one of the best real estate tips for selling your home is setting up a pre-listing home inspection

When you choose to fix everything the inspector finds before you list your house, you gain valuable peace of mind during the closing process. Your buyer will most likely want their own inspection as part of the sales contract, but when that inspector finds everything is in perfect order, your buyer will have confidence in the sale.

Tip #5 Boost your curb appeal

It may feel counterintuitive to work on the outside of your home as you get ready to sell. But when you keep up with lawn maintenance, pull weeds, fix the fence, power-wash the siding, and clean up the cobwebs, your property will stand out and really “wow” prospective buyers. 

Think back to the last time you drove around looking at houses for sale. If the house looked like it was in rough shape on the outside, most of the time, you probably didn’t bother to request a showing. Good curb appeal will draw buyers into your home. They will start to envision themselves playing basketball, grilling in the backyard, or relaxing on the porch. You want to help buyers fall in love with your house and curb appeal will help you do that. 

Tip #6 Declutter… and then declutter some more 

It’s no secret, we all accumulate stuff. However, you want potential buyers to be looking at your home, not your belongings. So another great real estate tip is to have your home appear move-in ready so homebuyers can see themselves – and their things – in your space. To do this, you’ll need to be relentless about removing as many personal items as possible and commit to a minimalist lifestyle, at least until you go under contract on your house. 

Of course, you have items you use daily and weekly. Keep those accessible but out of sight if you can. Remove anything seasonal, like decorations, extra blankets, or anything you won’t use for months. Renting a storage unit or on-site storage container could be helpful and allow you to eliminate extra furniture and other items from your home until you move into your new space. It’s all about perception. A house with minimal furniture, unstuffed closets, tasteful artwork, and a general lack of surface clutter will look clean, spacious, and appealing. 

Staging your home is a great real estate tip to consider when selling your home.

Staging your home is a great real estate tip to consider when selling your home.

Tip #7 Stage your home

One of the most important real estate tips is staging your home. Key staging tactics involve placing furniture and throw pillows invitingly. You can also set a dining room or kitchen table. And placing a vase or two of fresh flowers around the home is a nice touch. The purpose of staging is to show buyers the home’s potential. You want all the main rooms – kitchen, dining room, living room, bathrooms, and master bedroom – to create the feeling that they are already home. 

Tip #8 Always be ready for a showing

When you list your home, you could get calls from agents within hours regarding potential buyers who want to see your home. It’s easier to handle those calls if you do your best to keep your home “show ready.”Of course, that involves keeping the home clean at a minimum. Before you list the house, do a good deep cleaning in every room. 

Be sure to give extra attention to air vents and ductwork by cleaning out the dust and any debris stuck in the vent. Dust all remaining furniture and artwork. Wash the windows and glass doors so they sparkle, and run the vacuum to help refresh the carpets.

Finally, use an odor remover to eliminate any pet odors or lingering smells from last night’s dinner. You can make an incredibly positive impression if the only scent a buyer remembers is the smell of fresh-baked cookies or fresh flowers. 

Tip #9 Accommodate requests for last-minute showings

Unfortunately, buyers are not always available to see the home when it’s most convenient for you. Here’s a list so you can easily clean up and be out of the house in 20 minutes. 

  • Place any dishes in the dishwasher.
  • Wipe down the bathroom and kitchen countertops.
  • Wipe down the toilet seats.
  • Grab a bin and place any loose toys or books inside.
  • Toss any stray clothing in the laundry hamper.
  • Close all the closet doors.
  • If you have paperwork or other clutter on the countertop, tuck it out of sight in a drawer, or worst case, make an organized pile. Organized is better than scattered. 
  • Make the beds.
  • Sweep the floors. 
  • Take out the garbage as you leave and bring your pets with you.

And real estate tip #10 Respond to offers in a timely manner

Be respectful of all reasonable offers. You know what price you’ll accept and on what terms, including what you’d be willing to negotiate on if asked. Most contracts expect a response within 48 hours, but why wait? Respond with a counteroffer or acceptance as soon as a good offer comes in. 

Selling your first house is not easy. But with these 10 real estate tips, moving on to the next chapter in your life can be just as exciting.

Source: redfin.com

10 Awesome Real Estate Tips for Home Sellers

When you bought your first house, you likely felt excitement with a hint of nervousness and maybe you even had a “What have I gotten myself into?” kind of moment. However, those emotions passed and you settled in and made that house your home. Whether you’ve stayed in this home for a couple of years or a couple of decades, when you decide it’s time to sell, you might experience a very similar emotional roller coaster, especially in today’s housing market. To ease your stress, here are 10 awesome real estate tips that will help you get started and possibly even take some of the emotion out of the ride.

An agent discussing with a couple great real estate tips to consider to help them sell their home.

An agent discussing with a couple great real estate tips to consider to help them sell their home.

Tip #1 Find the perfect listing agent 

Probably the best real estate tip there is: find a dedicated, responsive, and knowledgeable real estate agent – someone you can trust to guide you through every step of selling your home. A good seller’s agent will make informed recommendations about a listing price, advise you on which repairs will help you sell your home, and make recommendations about decluttering, staging, and maximizing your curb appeal.

A good seller’s agent shines the most when it comes time to negotiate an offer. The goal is to make sure you earn top dollar for your house and to sell it quickly. This process starts by honing in on the right listing price. 

  • If your home is priced too high it will likely sit on the market and possibly longer than most homes in your area. This may cause prospective buyers to second-guess its value.
  • If your home is priced too low, you could leave money on the table and diminish the equity you’d bring to the purchase of your next home.

Your ideal selling agent will have well-developed instincts for what the real estate market is doing in your area. Take your time and speak to several agents to find someone you can comfortably work well with and will work hard for your interests. 

Tip #2 Determine the best time to list your home

Reliable real estate wisdom suggests that spring into summer is when most people start hunting for a new house. Buyers will typically research properties online months before touring their first home in person. This way they can understand how much house they can afford in neighborhoods that appeal to them most. 

Usually, the end of March or the beginning of April is considered the start of homebuying season. However, this year’s homebuying season seems to have hit early as nearly half the homes listed mid-January into February went under contract in under two weeks. Meaning we are currently in a seller’s market and you don’t have to wait to fetch top dollar for your home.

Getting a 3D walkthrough scan of your home is a great real estate tip that will help you sell your home.

Getting a 3D walkthrough scan of your home is a great real estate tip that will help you sell your home.

Tip #3 Professional photography and 3D walkthroughs are key

Many real estate agents now offer 3D tours of their listings. Virtual walkthroughs are a massive advantage for both buyers and sellers. Buyers can “shop” any time of the day or night, and sellers can “show” their house 24/7. It also cuts down on showings to only the serious buyers. If a buyer is genuinely interested, they will view the virtual walkthrough (probably several times) and then request a showing. 

Professional photography is another great option to show your home in its best light.. Homes listed with high-quality, professional images are known to sell quicker and for more money. A professional real estate photographer will capture each room at the best angle, and highlight its best features. You can also request photos shot at dusk with both interior and exterior lights shining. It’s all about painting those special pictures in your buyer’s mind. 

If you’re selling a luxury listing with a view or large plot of land, consider drone photography to fully capture everything your property has to offer.

Tip #4 Handle the repairs from a pre-listing home inspection

It might be tempting to put off small repairs and let the next owner handle them. Unfortunately, if you list a house with evident and necessary repairs, prospective buyers will also scrutinize your property more closely for larger deferred maintenance issues. If you want to be proactive, one of the best real estate tips for selling your home is setting up a pre-listing home inspection

When you choose to fix everything the inspector finds before you list your house, you gain valuable peace of mind during the closing process. Your buyer will most likely want their own inspection as part of the sales contract, but when that inspector finds everything is in perfect order, your buyer will have confidence in the sale.

Tip #5 Boost your curb appeal

It may feel counterintuitive to work on the outside of your home as you get ready to sell. But when you keep up with lawn maintenance, pull weeds, fix the fence, power-wash the siding, and clean up the cobwebs, your property will stand out and really “wow” prospective buyers. 

Think back to the last time you drove around looking at houses for sale. If the house looked like it was in rough shape on the outside, most of the time, you probably didn’t bother to request a showing. Good curb appeal will draw buyers into your home. They will start to envision themselves playing basketball, grilling in the backyard, or relaxing on the porch. You want to help buyers fall in love with your house and curb appeal will help you do that. 

Tip #6 Declutter… and then declutter some more 

It’s no secret, we all accumulate stuff. However, you want potential buyers to be looking at your home, not your belongings. So another great real estate tip is to have your home appear move-in ready so homebuyers can see themselves – and their things – in your space. To do this, you’ll need to be relentless about removing as many personal items as possible and commit to a minimalist lifestyle, at least until you go under contract on your house. 

Of course, you have items you use daily and weekly. Keep those accessible but out of sight if you can. Remove anything seasonal, like decorations, extra blankets, or anything you won’t use for months. Renting a storage unit or on-site storage container could be helpful and allow you to eliminate extra furniture and other items from your home until you move into your new space. It’s all about perception. A house with minimal furniture, unstuffed closets, tasteful artwork, and a general lack of surface clutter will look clean, spacious, and appealing. 

Staging your home is a great real estate tip to consider when selling your home.

Staging your home is a great real estate tip to consider when selling your home.

Tip #7 Stage your home

One of the most important real estate tips is staging your home. Key staging tactics involve placing furniture and throw pillows invitingly. You can also set a dining room or kitchen table. And placing a vase or two of fresh flowers around the home is a nice touch. The purpose of staging is to show buyers the home’s potential. You want all the main rooms – kitchen, dining room, living room, bathrooms, and master bedroom – to create the feeling that they are already home. 

Tip #8 Always be ready for a showing

When you list your home, you could get calls from agents within hours regarding potential buyers who want to see your home. It’s easier to handle those calls if you do your best to keep your home “show ready.”Of course, that involves keeping the home clean at a minimum. Before you list the house, do a good deep cleaning in every room. 

Be sure to give extra attention to air vents and ductwork by cleaning out the dust and any debris stuck in the vent. Dust all remaining furniture and artwork. Wash the windows and glass doors so they sparkle, and run the vacuum to help refresh the carpets.

Finally, use an odor remover to eliminate any pet odors or lingering smells from last night’s dinner. You can make an incredibly positive impression if the only scent a buyer remembers is the smell of fresh-baked cookies or fresh flowers. 

Tip #9 Accommodate requests for last-minute showings

Unfortunately, buyers are not always available to see the home when it’s most convenient for you. Here’s a list so you can easily clean up and be out of the house in 20 minutes. 

  • Place any dishes in the dishwasher.
  • Wipe down the bathroom and kitchen countertops.
  • Wipe down the toilet seats.
  • Grab a bin and place any loose toys or books inside.
  • Toss any stray clothing in the laundry hamper.
  • Close all the closet doors.
  • If you have paperwork or other clutter on the countertop, tuck it out of sight in a drawer, or worst case, make an organized pile. Organized is better than scattered. 
  • Make the beds.
  • Sweep the floors. 
  • Take out the garbage as you leave and bring your pets with you.

And real estate tip #10 Respond to offers in a timely manner

Be respectful of all reasonable offers. You know what price you’ll accept and on what terms, including what you’d be willing to negotiate on if asked. Most contracts expect a response within 48 hours, but why wait? Respond with a counteroffer or acceptance as soon as a good offer comes in. 

Selling your first house is not easy. But with these 10 real estate tips, moving on to the next chapter in your life can be just as exciting.

Source: redfin.com

Everything to Consider Before You Sell Pokemon Cards

The resurgence of Pokemon has young adults rummaging through their closets in hopes of finding their old collection of trading cards. 

And, if they’re lucky, a rare card that could make them a fortune.

The 1997 Japanese anime-turned-trading-card-game-turned-video-game series holds a special place in the hearts of ‘90s kids, who cherished the furry creatures with elemental powers that could be traded and battled and hoarded for years to come. 

For Scott Pratte, a Pokemon enthusiast and card-trading expert, the hobby never dimmed. Pratte collects and sells some of the most treasured Pokemon cards in the world.

“I’ve done 7-figure deals,” Pratte says. “That’s just one deal, not even my lifetime” earnings.

Due to nondisclosure agreements, he can’t say exactly which cards have made him the most money, but he says that his trophy cards, aka the rarest Pokemon cards on the market, easily rake in upwards of $1 million.

Only a select few people hold these trophy cards, usually those who won Pokemon tournaments in the early 2000s and were awarded ultra limited edition cards. But there are a fair amount of more common Pokemon cards that could sell for hundreds or even thousands of dollars.

Pokemon Cards Worth Selling

The two biggest value factors to consider about old Pokemon cards are their rarity and condition.

In terms of rarity, “base-set” cards are where the money is for most collectors, and these cards are the most traded ones in the hobby. Set cards are “any card you can pull from a pack” bought from the store, says Pratte. The base set comprises the original 102 cards printed in 1999 and includes classic Pokemon like Pikachu, Blastoise, Charizard and Venusaur.

A complete first-edition base set in mint condition sold for $100,000 in December 2017. If you have a base-set card in your collection, there are a few visual indicators of its worth.

A graphic compares rare and common Pokemon cards
Illustration by Chris Zuppa and Adam Hardy
  1. Holographic cards: These are the most discernable at first glance. The background of the Pokemon illustration is shiny and reflective — not the whole card, only the picture of the monster. They’re typically referred to as “holo” cards, and only 16 of the original 102 are holo.

  2. First-edition cards: Directly next to the left corner of the illustration appears the “edition 1” logo. These cards were bought up shortly after initial release and remain some of the rarest and most sought-after cards.

  3. Shadowless cards: This version is almost identical to the first-edition prints but exclude the first-edition logo. If you don’t have a newer card for comparison, this is particularly hard to notice: the illustration box appears 2D. On newer cards, the picture box has a shadow along the right border to give it a 3D appearance.

  4. Unlimited cards: These cards are still old and rare, but they do not include the first-edition symbol and have an added shadow behind the illustration to give the picture box a 3D effect. To check if your card is part of the base set, look at the bottom right corner of the picture box. If you do not see one of the many later-added set symbols, then you have a base-set, Unlimited card.

The second important factor in a card’s value is the condition. If you do happen to have a first-edition, holographic base-set Charizard, you’re not guaranteed thousands of dollars. The price it fetches depends on how well the card has been taken care of.

If you have a card that you expect is worth more than $100, Pratte recommends getting it graded by Professional Sports Authenticator (PSA). 

Despite its name, the PSA grades all kinds of trading cards, including non-sports cards like Pokemon. PSA’s 10-point grading scale is accepted as the industry standard, and the company also publishes price guides to help determine a card’s worth. According to its current valuations, first-edition cards in perfect condition are valued at a minimum of $40. Those aren’t rarer, holographic cards either. A first-edition holo in mint condition can rake in between $1,000 and $24,000.

So why Pratte’s $100 limit? Well, the number isn’t a hard-and-fast rule, but the card-grading services offered by PSA will cost $20 or more per card, meaning a lower-value card doesn’t always merit the cost to get it authenticated.

“It’s a process,” says PSA spokesperson Terry Melia. “But it’s something that could reap big rewards in the end.”

In addition to grading the condition of the card, PSA ensures the card isn’t a forgery by using high-powered lights and magnifying equipment to check for tampering.

“There are a lot of forgeries and bogus merchandise out there,” says Melia.

Especially so online.

Where to Sell Pokemon Cards

After you’ve done some homework — checking the type of card, estimating its value and sending it in for authentication, if needed — you’re finally ready to sell.

“The main marketplace is for sure going to be eBay,” Pratte says. “Even if you’re someone who just stumbled upon your childhood collection, it’s really easy to take a couple of pictures [and] make a decent listing.”

The PSA’s grading system and authentication make selling online much easier. This process allays fears that the card is a fake and curbs arguments over its true condition. Each authenticated card comes in a protective case with the grade and barcode clearly visible at the top.

As Pokemon re-enters mainstream culture with the release of new video games and movies, expect to see an uptick in buying and selling activity of old cards. But interest doesn’t pick up overnight.

“It’s not binary in that sense,” Pratte says.

Instead, it’s a more gradual process where each new Pokemon-related release reminds twenty- and thirty-somethings of their childhood: the crinkling sound of ripping open a new pack of cards followed by a strong whiff of ink as they shuffle through the set, hoping to find something rare.

Pratte offers this caution about getting rich overnight: “Be realistic.”

“If you put in little or no effort back in the day,” he says, “you probably don’t have the homerun card.”

But as you rummage through your collection, remember that there’s no rush to purge now. Spend some time with your cards. See if they’re valuable. Consider getting them authenticated. Then decide if they’re worth selling. 

After two decades, Pokemon — and its card-collecting hobbyists — aren’t going anywhere anytime soon.

Adam Hardy is a former staff writer at The Penny Hoarder. 

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Source: thepennyhoarder.com

Price to Earnings Ratio Defined (P/E Ratio Formula)

Trying your hand at the stock market? Chances are, you’ve come across the term “P/E ratio”. If you’re like many who are new to the stock market, you’ve looked at this phrase and asked yourself, “What in the world is that?” 

P/E ratio, otherwise known as the price-to-earnings ratio, is a formula that investors use to determine the value of a company’s share. It is one of the most common formulas used to determine the value of a stock. The formula compares the price of a company’s share to the earnings per share (EPS) of the company in order to determine how much an investor is paying for $1 of the company’s earnings. Let’s take a deeper dive into the P/E formula. Use the links below to jump ahead to a section of your choosing. 

P/E Formula and Calculation 

First thing’s first: let’s learn the price to earnings ratio formula and how to calculate it. The price-to-earnings ratio formula is as follows: the price of a single share of a company’s stock (What is a stock?), divided by the company’s earnings per share (EPS). The ratio of these two variables will tell you exactly how much an investor is spending for a single dollar of the company’s earnings. 

Finding the cost of a company’s stock is extremely simple. In order to find the price of a single share of a company’s stock, all you need to do is enter the company’s stock ticker symbol (the series of characters that represents that company on the stock market) into a finance website, such as investor.gov. You’ll quickly find the current cost for a single share of that company’s stock. Google also keeps an up-to-date Market Summary for the prior day’s stock market, so a quick Google search will often bring exactly the answer you’re looking for. 

Determining a company’s earnings per share (EPS) can be a bit trickier. Earnings per share are broken down into 2 categories: trailing earnings and forward earnings. Trailing earnings, often shortened to TTM, are the company’s core earnings over the trailing, or prior, 12 months. This number is the profit that the company has generated over the past 12 months of business. Remember that we’re talking about the net income of a business, rather than the gross income (Need a refresher? Learn more about gross income vs net income.). P/E ratios calculated with trailing earnings are known as the trailing P/E (P/E TTM). Forward earnings, on the other hand, are the predicted earnings that the company will generate over the next 12 months. P/E ratios calculated using forward earnings are known as the forward P/E. Both types of earnings are divided by the total number of public shares on the market in order to generate their EPS. More on this later. 

Let’s try out an example. Say you’re looking to determine the trailing P/E of a fictional company AlphaBet Corporation, known on the stock market as ABC. Their share price is currently at $50 per share. Their trailing earnings per share is $5. Divide the $50 per share by the $5 EPS, and you’re left with a P/E of 10. This means that investors are paying $10 for every $1 in earnings per share. 

Understanding P/E Ratio 

So, ABC has a P/E of 10. What does that mean for you? 

In the most general sense, the lower a P/E ratio, the less an investor is paying for each dollar of a company’s earnings per share. A higher P/E ratio means that an investor is paying more per EPS. But, unfortunately, determining which stock to buy isn’t as simple as “look for the lowest P/E ratio”. 

It is imperative to remember that everything on the stock market is relative. “Good” and “bad” numbers are different for each and every industry. An electronics company and an automotive company are functioning in two vastly different landscapes. Therefore, in order to determine what is a good price to earnings ratio, you’ll need to understand the landscape of P/E ratios in the industry. Look at similar companies’ P/E ratios to better understand the relative value of your company’s P/E ratio. If ABC’s price-to-earnings ratio seems extremely high as compared to other companies in the industry, it may be an overvalued stock. On the other hand, if it seems extremely low as compared to other companies in the industry, it may be a very valuable stock. 

Let’s try another example. We’ve already determined that ABC’s price is $50 per share, earnings are $5 per share, and P/E is 10. A competitor, DOG, also has stock for $50 per share. Their earnings, on the other hand, are $2 per share, making their PE 25 (50/2=25). An investor would pay $10 for every $1 of ABC’s earnings per share, but they’d have to pay $25 for every $1 of DOG’s earnings per share. With a better understanding of the landscape, we can see how ABC sits relative to its competitors. 

A company’s price to earnings ratio may also be looked at relative to itself. Remember those two types of earnings we reviewed earlier? We can compare a company’s trailing P/E to their forward P/E to better understand the value of a stock. A company with a high trailing P/E ratio may have been rather unprofitable the prior 12 months because theywere preparing to ramp up business substantially, and took on a number of upfront costs. They may be expecting a boom of profits over the forward 12 months, leaving them with a substantially lower forward P/E. By reviewing these numbers in comparison to each other, we may see an opportunity for a long-term investment. 

Limitations of the P/E Ratio 

While the price to earnings ratio is certainly one of the most widely used calculations among stock market investors and analysts, it’s not a cut and dry way to determine a good or bad stock. It gives investors a good understanding of the value of stock in a particular moment, but it certainly has its short-comings. 

Just as the stock market is relative, it’s also in a constant state of fluctuation. It is re-evaluated and recalculated constantly. Why does this matter when it comes to the price to earnings ratio? Well, just look at the variables we use to determine the P/E ratio. 

First, we have the “price” of the price-to-earnings ratio: the cost of a single share of a company’s stock. Stock prices fluctuate every single day based on supply, demand, current events, and more. Typically, the cost of a company’s stock will be reported as the cost that it was when the stock market closed the prior day. Each time a company’s stock price changes, their P/E ratio will change. Certain companies may tend to have a greater fundamental volatility than others, leaving their stock price changing substantially each and every day. Even those with low fundamental volatility experience routine fluctuation. 

Next, we have the “earnings” in the price-to-earnings ratio. Both trailing and forward P/E ratios have their limitations. Trailing P/E can feel like the more reliable of the two numbers because it’s based on facts. We take their actual earnings over the prior 12 months into account. But, in many situations, a company’s prior 12 months may have little to do with their next 12 months. As mentioned earlier, a company may have spent heavy the prior 12 months in preparation to ramp up the next 12 months. The trailing P/E won’t show us any of that. The forward P/E, on the other hand, is based on predictions. And predictions are quite educated guesses, but at the end of the day predictions are still guesses. A company may fall short of their predicted earnings or blow completely past them. 

Looking to try your hand at the stock market? Don’t go at it alone. Consider opening an investment account with Mint. We believe that there’s no “one-size-fits-all” approach to investment. That’s why we offer a variety of investment partners, suited to each particular need. Let’s find the best to suit yours. 

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Source: mint.intuit.com