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Why right now, buyers and sellers have the best win, win opportunity

Navigate Lending

You are likely hearing a lot of people talk about a shifting real estate market, price reductions, higher rates, inflations, etc. All of these terms relate to what is happening economically and in the real estate market. Many experts are giving the advice that it is still a great time to buy and sell. It's true, this current climate is the perfect opportunity to create a win/win for both the buyer and the seller.

The National Association of Real Estate (NAR) is still reporting many areas in the U.S. are experiencing double digit appreciation on housing values. It has also been expected that this appreciation would slow down as the year continues. Many of the price reductions, or "improvements" we are seeing with homes for sale are a result of a slow down in projected appreciation and more available homes for sale, which is normal this time of year. Often a real estate agent will use appreciation data to price ahead of the market when listing a home. When appreciation has quickly slowed down, or there is an increase in supply, it may become necessary to reduce the projected price. It does not actually mean the value of the home has changed from an appraisal standpoint, just the estimate of the value when it was brought to market. It can also mean that from a supply and demand standpoint, there is not as much demand for that particular home and reducing the price makes it more attractive to a potential buyer compared to another similar property.

This is where the perfect win/win can be created. You see, a local Real Estate expert is a professional in their market who understands more about the micro market than anyone else. They know the trend on value, the demand for type and location, etc. A true local expert knows how to estimate the value of a listing, so just because the price is reduced does not mean it would not have appraised at the higher value. So, how does that help a buyer and a seller?

Right now buyers are facing higher interest rates. There are also many first-time buyers without a large amount of money saved, trying to find something in their budget. Having a seller who is willing to negotiate on the original list price provides the ideal opportunity for both parties to come out ahead.

If a seller reduces their purchase price by $20,000, obviously they make $20,000 less on the home. Although this may seem like a great deal for a buyer purchasing with financing, on average this may only change their payment as little as $120 per month. However, if instead of reducing the purchase price by $20,000, a seller could offer a seller credit to the buyer of $10,000 or more*. The buyer could use that to buy down their interest rate and still potentially save on a monthly basis. Or they could apply it to closing costs in order to use their personal funds for a higher down payment, or save it for potential needs the house may have. The seller benefits by $10,000 and the buyer benefits with potential savings still creating a fantastic win/win for both parties.

*Seller credit amount will be based on loan program. Payment saving is just an average estimated savings use for example purposes only. Appraised value will still be an important factor that all parties will consider. Please utilize the guidance and expertise of a lender and local agent who understand how to properly structure and educate on seller credit negotiations.

Alysha Boles – Mortgage Strategy Advisor for the Navigate Lending Team is a licensed loan officer serving California and Texas personally and in multiple states nationwide as a team. She can be reached at (661) 858-7214, or inquire online at http://www.advisoralysha.com.