The real estate market is an entirely different world than it was a year ago. Between interest rates, availability of homes, and buyer demand, it’s truly a radically changed landscape. Many have given up on looking for their next home or trying to sell their current one. While it’s true you may not have the same opportunities you had a year ago, there are also new opportunities as a result of the changing market conditions. Let’s take a look at a few ways to win in this market, whether you’re buying, selling, or even investing.
Sellers, make no mistake - bidding wars are few and far between. Seller contingencies are back. You can’t just list your home and expect it to sell within a week - or can you? When you’re selling anything, it’s crucial to understand your target market - in this case, home buyers. Put yourself in their shoes; they’re looking at dramatically increased mortgage rates and higher home prices. While there are more homes for sale, who wants to buy at 7+%?
To stand out from other sellers and close on favorable terms, you’ll need to make your ‘offer’ (home) more attractive. As we discussed last month, staging, professional photography, and data-driven pricing based on current trends may be enough, but how can you differentiate yourself even more? With mortgage rates more than double what we saw just a year ago, the challenge for many is the affordability of their monthly payment. This is your chance to shine with creative mortgage products that directly address buyers' number one concerns. One way to do this is with a 3-2-1 Buydown.
Essentially how it works is you, the seller will pay the amount of interest it would take to make the buyer’s interest rate 3% less in the first year, 2% less in the second year, and 1% in the third year. Now you may be asking yourself, why would I want to do that? Well, on average, homes are on the market four times longer than they were last year, and you see price reductions daily. By offering a 3-2-1 Buydown, or another creative mortgage solution, you have a much greater chance of attracting buyer interest and closing faster than average. Give your 8z agent a call if you’d like to discuss the best way to sell your home right now, there’s a good chance we can uncover the perfect solution for you!
Buyers, we get it - things are tough out there! But one thing you have to realize is that there are plenty of homes for sale compared to a year ago, more than double in most areas. This is a huge opportunity for you to actually find the home of your dreams, rather than close on the 16th home you put an offer on. Understand this - anyone selling right now is highly motivated; they don’t want their home to sit on the market, and they don’t want to reduce their asking price. Unlike last year, YOU now have much more negotiating power. Whether that’s inspection objections, closing under asking, an adjustable-rate loan, or working with the seller on a creative mortgage solution, there are new opportunities for you to ‘win’ in this market.
One amazing solution is 8z Cash Buyer. Cash offers were very popular in the frenzy we saw last year, allowing buyers to stand out from the competition. But now with less competition, the benefits of a cash offer have shifted. Again, sellers are highly motivated. Let’s say you’re looking at a home with a $500,000 asking price. Since you’re coming to the table with all cash, let’s say you offer the seller $440,000. Many would entertain this offer right now - it’s a quick close, and they receive a huge lump sum of cash. And for you, this means your loan amount is $60,000 less! Your monthly payment will be lower with the $440,000 loan, and you essentially pocket the $60,000 which you can use to soften the blow of your 7% rate, buy down your rate, make improvements to the home, etc. If you’re thinking about buying, make sure you check out 8z Cash Buyer or give your 8z agent a call to discuss all of your options!
It’s true the market has shifted dramatically over the last 12 months. But don’t throw in the towel - adapt! The first step is speaking with your agent and lender to understand not only how market changes impact you, but how you can adapt and overcome them.
