Buying a home in today’s market
Sellers are feeling the pinch of high interest rates as much as you are. The good news is this can open some opportunities to the buyer to get a better deal. Also, the market is leaning towards a buyers’ market and its not so heavy in the seller’s favor.
Here are 3 things you can ask for to get a better deal.
1. Ask for closing costs help
2. Do an interest rate reduction buydown
3. Ask for a price reduction
Closing costs help
This is a great way to save a few dollars on the front. Your lender will have the actual numbers you are going to work with, but figure it is somewhere around 2-3% of the purchase price. This could include closing costs, taxes insurance and maybe some inspections. Asking for both a price reduction and a closing cost contribution may be too much. But you can always ask. With where the market is today, it is reasonable to ask for one or the other. Asking for both will likely generate a counteroffer from the seller. Don’t get me wrong, it is not bad thing to get a counteroffer, but I have noticed that asking for one or the other usually gets a better response.
Get an interest rate buydown – paid by the seller
Why would they do this.
They can actually net more money and you can save long term.
How does it work?
Simply put, it allows the seller to pay for the interest rate buydown and it allows you to qualify for more house.
This is a great option if the home is just out of your approval reach. For example, if you were approved for $400,000 and the ask price of your dream home is $425,000. The seller can pay a couple points and lower the interest rate enough for you to qualify for the difference. This is better for you and the seller doesn’t need to reduce the price $25,000. Now this is just a fictional example, and your numbers will vary. The basic idea is that for an $8000 fee, the seller can buy down your rate. This lowers your payment and allows for a higher purchase price.
This is a little advanced and may be difficult to comprehend. Basically, for a fee you can qualify for more. I found that the math usually works out to be a win-win situation. If you want to learn more about this idea, please feel free to reach out.
Ask for a price reduction
The market has changed. You don’t need to pay full price (or more) for every house anymore. There are a lot of good deals to be had. Sellers are terrified of not selling their home so a low offer may be outright accepted, or maybe a counteroffer is presented that is acceptable for both parties.
Don’t pass up this opportunity to get a home. House prices are not going to reduce much. Even if they do, they will be worth more in a few years. The reality is that if the interest rates go up, the prices willdrop some. But in the end, you are likel y paying more per month for a home than you were last year. And in ten years, you will not regret buying.
Best advice: if you want to buy a home, buy one. Don’t worry about the interest rate or price. Timing the market is almost always lucky as opposed to skill. Homes always go up in value over time and you can refinance when the rates drop. If you can afford it, go ahead and buy. In later years you will be glad you did.