If you've been following recent articles on my blog and posts on social media, you're already aware that today's real estate market can hold incredible opportunities for buyers. You might be wondering how this could be the case, especially with the current high mortgage rates, the highest we've seen in decades. Well, the answer lies in the very thing everyone is complaining the most about.
The Rise of Buyer Opportunities
In a housing market characterized by high mortgage rates, a unique situation unfolds—there's less competition among buyers. With fewer potential buyers submitting offers on homes, this market scenario can provide a distinct advantage. You gain the power to negotiate savings that can sometimes counterbalance the increased financing costs.
A Recent Success Story
Let me illustrate this with a recent success story from one of my clients. The property they were interested in was located in a highly sought-after Santa Cruz neighborhood. In recent years, a home like this would have received dozens of offers within a few short days - perhaps sight unseen for some buyers.
While the property had deferred maintenance and needed updates, this alone wouldn't have deterred potential buyers in the past, given its incredible potential and low inventory of homes to choose from. However, today's market has a smaller buyer pool, resulting in decreased demand for such properties.
The Offer Price
Initially priced beyond my client's preferred budget, we took a closer look at this home after it was listed for sale for several weeks. The decision was made to go for it, and their offer was accepted at 7% below the asking price.
| Pro Tip: In today's market don't overlook homes that initially seem out of your budget, especially if they've been listed for a while.
If we rewind to when rates were lower and competition was more fierce this home likely would have sold for $50,000 - $75,000 above asking instead.
Sellers Offering Repairs
In a market where buyer demand is softening, more sellers are open to providing concessions to attract potential buyers. In this case, the seller offered to cover $14,000 for essential electrical upgrades and repairs, a significant cost saving advantage for my clients.
While more competitive markets often require buyers to waive contingencies to be in the running, my clients had a considerable inspection contingency in place here. This allowed the opportunity to conduct thorough inspections and investigations of the home. As a result, we successfully negotiated $10,000 in credits towards closing costs. This translates to valuable cash savings, which they can use for future home updates.
| Pro Tip: In some cases this credit can be used to buy down (lower) your rate.
Appraisal Value Surpasses Expectations
As I mentioned earlier, my clients were able to retain their contingencies, including the appraisal contingency. To their delight, they didn't need it, as the appraisal value exceeded the contract price by a substantial $20,000. This means instant equity in their new home.
| Did You Know: In competitive markets, buyers often remove appraisal contingencies, potentially overpaying in the eyes of appraisers and becoming liable for the difference between the appraised value and their offer price.
Seize the Opportunity
In a market with lower rates and increased buyer demand my clients likely could not have secured all of these wins, and such sizable ones at that.
Are you ready to embark on your own home-buying adventure? Allow me to guide you on how to take advantage of today's real estate market while your competition remains on the sidelines. Don't miss out on these incredible opportunities. Contact me today and let's get started.
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