Here’s how buyers and sellers can win in this tough market.
In case you don’t know, interest rates have shot up over the last couple of weeks. Some people are panicking, but they shouldn’t be. There’s a method for savvy buyers and sellers to beat the market and create a win-win situation, and today I want to discuss how you can use it.
First, what exactly is happening with interest rates? Rates were about 3.5% at the beginning of the year, but now they’re closer to 5.5%. As a result, demand is slowing, and more homes are staying on the market longer. Some buyers are sitting on the sidelines waiting for prices to fall, but I’m not sure if this is a good idea. Supply is still relatively low, so our high prices aren’t going anywhere.
To explain how you can win in this tough market, let’s go over an example. Let’s say someone is listing a home for $400,000. Some agents tell their sellers they need to lower their prices if they want to secure a sale, but that isn’t necessarily the case. If the buyers want to keep their monthly payments low, sellers can offer to pay for some closing costs instead of lowering their prices. The buyer can then use this extra money to buy down their interest rate.
"Both buyers and sellers can win in this market."
On a $400,000 home, paying $15,000 to buy down a buyer’s rate will create more savings than dropping the price by $15,000. Buying down the rate to 4.5% will create a monthly savings of around $300. Lowering the price will only save the buyer $85 per month. By offering to help buy down the buyer’s rate, both parties can win in this market.
If you have questions about today’s topic or anything else related to real estate, please call or email me. I am always willing to help!