If you’re thinking about buying or selling a home, you might have heard that it’s tough right now because mortgage rates are higher than they’ve been over the past few years, and home prices are rising. That much is true. Take a look at the graph below. It breaks down how the current affordability situation stacks up to recent years.
The National Association of Realtors (NAR) explains how to read the values on the graph:
“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home.”
The red dotted line represents that 100 value on the index. Essentially, the higher the bar, the more affordable homes are. As you can see, the orange bar for today shows higher mortgage rates and home prices have created a clear challenge. But, while affordability is definitely tighter right now, that doesn’t mean the housing market is at a standstill.
According to NAR, based on the pace of sales right now, just under 4 million homes will sell this year. With some simple math, let’s break down what that really means for you:
3.96 million homes divided by 365 days in a year = 10,849 houses sell each day
10,849 divided by 24 hours in a day = 452 houses sell per hour
452 divided by 60 minutes in an hour = about 8 houses sell each minute
So, on average, over 10,000 homes sell each day in this country. Whether you’re a buyer or a seller, this goes to show there are still ways to make your move possible, even at a time when affordability is tight.
An Agent Can Help You Make Your Move a Reality You may be wondering how other homebuyers and sellers are making this happen now. One of the biggest game-changers in today’s market is working with a trusted local real estate agent like Scott and Mary Tynell. Great agents are helping other people just like you navigate today’s market and the current affordability situation, and their insight is invaluable right now.
Scott and Mary Tynell will be able to offer advice tailored to your specific wants, needs, budget, and more. Not to mention, they’ll also be able to draw on their experience of what’s working for other buyers and sellers right now. This could mean broadening your search, if needed, to include other housing types like condos, townhouses, or neighborhoods a bit further out to help offset some of the affordability challenges today.
Bottom Line You might think there aren’t many people buying or selling homes right now since affordability is tighter than it’s been in quite some time, but that’s not the case. It’s true that buying a home has become more expensive over the past couple of years, but people are still moving.
If you’re hoping to buy or sell a home today, know that other people are still making their goals a reality – and that’s happening in large part because of the help and advice of Scott and Mary Tynell skilled local real estate agents. Want to talk to a trusted professional about your own move? Let’s connect.
When your offer is not accepted, it can feel disappointing, but don’t let it discourage you! Here are some steps you can take:
Stay positive: Remember that not every offer will be accepted. This is a normal part of the real estate process. Keep a positive mindset and stay motivated.
Request feedback: Contact the listing agent for feedback on why your offer was not accepted. This information can help you improve future offers and understand the seller’s concerns or preferences.
Analyze the market: Take a closer look at the area is current market conditions and comparable sales. This analysis can help you evaluate if your offer was competitive or if you need to adjust your strategy for future offers.
Review your offer: Assess your offer to see if any areas could be improved. Consider factors such as the purchase price, contingencies, closing timeline, or other terms that may have influenced the seller’s decision.
Stay in touch: If you’re still interested in the property, let Scott and Mary Tynell know you are open to backup offers. Sometimes, the initial offer may fall through, and you could have another opportunity.
Keep searching: Do not put all your eggs in one basket. Continue exploring other properties on the market that meet your criteria. Another great opportunity may be just around the corner.
Rely on your real estate agent: Lean on Scott and Mary Tynell a trusted real estate agent for guidance and support. They can provide valuable insight, help you refine your strategy, and assist you in finding the right property.
Remember, the real estate market is dynamic, and offers can be accepted or rejected for various reasons. Stay resilient, learn from each experience, and stay focused on finding the perfect home for you. Good luck!
Seasonality has a significant impact on the real estate market, influencing both buyer and seller behavior. Here are some key points to consider when discussing the impact of seasonality:
Demand and Inventory: The number of buyers and sellers in the market fluctuates throughout the year. Generally, the spring and summer months see increased activity, as families prefer to move during warmer weather and before the new school year begins. This results in higher demand and more inventory during these seasons.
Pricing: Seasonality can also affect home prices. During the peak season, when there is higher demand, sellers may be able to command higher prices for their properties. Conversely, sellers may need to adjust their prices during the off-peak season to attract buyers.
Competition: The level of competition among buyers and sellers can vary based on the season. In a seller’s market, buyers may face more competition and multiple offer situations when demand exceeds supply. On the other hand, in a buyer’s market, when there is an excess inventory, sellers may need to be more competitive in pricing and marketing their properties.
Market Trends: Real estate market trends can vary throughout the year. For example, buyers may surge during holidays or summer in areas with vacation or second-home markets. Additionally, areas with strong university or college presence may experience increased rental demand during the start of the academic year.
Regional Differences: It’s important to note that the impact of seasonality can differ by region. For example, in colder climates, the winter months may experience a slowdown in real estate activity due to weather conditions. Conversely, winter may be considered the peak season in warmer climates.
Understanding the impact of seasonality on the real estate market can help buyers and sellers make informed decisions. Scott and Mary Tynell are real estate professionals who possess a keen awareness of these market patterns. They adeptly adjust their strategies to maximize success in any given season, demonstrating their mastery of the dynamic real estate landscape.
Selling your house when inventory is low can offer several perks for homeowners. Here are some of the advantages:
Increased demand With fewer homes available on the market, there is typically increased competition among buyers. This can lead to multiple offers, bidding wars, and potentially higher sale prices for sellers.
Faster sales process When inventory is low, homes tend to sell more quickly. This is because buyers have limited options and are often motivated to make a purchase sooner rather than later. You might experience a faster sales process and avoid prolonged listing periods as a seller.
Favorable negotiating position Low inventory can give sellers an advantage during negotiations. With limited options, buyers may be more willing to meet your asking price or make concessions to secure the property. This can put you in a stronger position to negotiate favorable terms.
Less competition from other sellers In a low-inventory market, there are typically fewer sellers competing for buyers’ attention. This means your home may stand out more, attracting serious buyers who are actively searching for properties. This can increase your chances of receiving quality offers.
Potential for higher sale prices When supply is low and demand is high, it often leads to an increase in sale prices. With multiple buyers interested in your property, you may receive offers that exceed your initial expectations, resulting in a higher return on your investment.
Less time and effort spent on marketing In a low-inventory market, the demand for homes often outpaces the supply. As a result, you may not need to invest as much time and effort into marketing your property to attract buyers. This can save you valuable time and resources during the selling process.
It’s important to note that the perks of selling in a low-inventory market can vary depending on your specific location and market conditions. It’s always a good idea to consult Scott and Mary Tynell, real estate professionals who can provide tailored advice based on your circumstances.
If you have started researching the home-buying process or have already purchased a home, you probably know one of the first things you need to consider is the size of the downpayment you will need to cover on the home you discover. While that down payment can vary depending on what type of financing you qualify for, it is never a bad idea to start saving as much as possible as soon as possible.
If you have tax refund money tucked away into savings, this would be the perfect opportunity to use that cash. With the average refund for this year around $3000, there is a good chance your tax refund, potentially paired with additional savings, can put a major dent in your down payment.
With a competitive market not cooling off soon, now is the time to buy. Ensuring you have the proper funds to cover that downpayment once you find ‘the one’ can save you heartache in the future.
Call Scott and Mary Tynell today. They can set you up with a lender so you can get pre-approved and find out just how much you need to have saved!
Buying a home is a team sport, especially when buyers face the affordability challenges they face now. Volatile interest rates and tough competition for a limited supply of homes pose unique issues for home shoppers. If you have been writing offer after offer even competitive offers over the asking price and still not getting anywhere, it could be time to change tactics.
Strategies tied to mortgage products and seller incentives can help buyers, even in situations involving cash buyers or shoppers offering above the list price. These tactics won’t apply to every situation. Still, they offer buyers an idea about the adjustments to their offers or financing that can make the difference between getting the keys or attending another open house. It is important to note that every real estate market and buyer/seller transaction is unique and results may vary.
1. Offer a partial appraisal waiver An appraisal establishes the current value of a home and is used by lenders to determine how much they’re willing to lend buyers for a given home. Buyers who make an offer on the house usually include an appraisal contingency that lets them cancel the deal without a penalty if the house does not appraise for the agreed-upon price.
Buyers in competitive markets can be tempted to waive appraisals, but doing so could require them to bring more money to the table at closing if there’s a gap between the price they offered on a home and what an expert appraiser thinks it’s worth. This is because a mortgage is tied to what the appraiser determines the home is worth. Anything over that amount is the buyer’s upfront responsibility.
Instead of waiving an appraisal altogether, some clients agree to pay a specified amount over the negotiated sales price if there’s a gap between the asking price and the appraised value. That way, the buyer can still write a competitive offer, but not to the point of putting themselves at risk of having to come to the table with a big check — or losing their earnest money.
2. Show sellers you’re serious with a “time off market” fee In a market where it’s common for buyers to lose a home to a competitor offering over the asking price, there’s an option that could, in some cases, be just as attractive to sellers and potentially less expensive. It’s called a time off-market fee.
When buyers make an offer on a home, they typically put up earnest money — a relatively small amount that can be refunded if certain conditions aren’t met.
However, with a “time off market” fee or TOM, the seller keeps the money regardless of whether the deal closes. It’s paid to them for accepting the buyers’ offer. It’s a bold strategy and it works really well. If the buyer doesn’t close, they still have to pay that.
A TOM fee in place of earnest money, can be more attractive to a seller than an offer over the asking price, especially if the offer would result in an appraisal gap, where the sales price is more than what an appraiser determines a house is worth in the current market.
For instance, a real estate agent negotiated a deal where a competing offer was about $10,000 over the listing price. Rather than match that offer, they successfully made a case that the house was accurately priced based on the sale of comparable homes; an offer above that price would inevitably result in an appraisal gap that could jeopardize the deal.
This competitive offer strategy can be more attractive to the seller, and ultimately cheaper for the buyer, than making an offer of $10,000 over asking.
The size of the TOM fee depends on the price of the house, but usually, it ranges from $500 to $5,000. The buyer has to understand what a TOM fee is be 100% comfortable with it and be committed to that house or willing to lose that TOM fee in the event they don’t close on it.
3. Pay a lender for a lower interest rate over the life of the loan Buying “mortgage points,” also known as discount points or simply points, from a lender can help reduce the monthly payment on a home. Mortgage points are essentially prepaid interest paid at closing in exchange for a lower interest rate over the life of the loan. Each point typically costs 1% of the total loan amount. The more points you buy, the lower the interest rate.
One point generally reduces the interest rate by a specific percentage, often 0.25%. For example, if a buyer applies for a $300,000 mortgage and decides to buy one point, they would pay $3,000 (1% of $300,000) and receive a reduction of 0.25% on their interest rate.
Buyers considering this strategy should consider how long they plan to stay in the home, how much they’ll save by reducing the interest rate, and how much money they’ll have to spend upfront. A loan officer or financial advisor can help determine whether buying points makes sense for you.
4. Pay a lender to temporarily lower your interest rate Another way to lower a monthly mortgage payment is to cut the interest rate for the first one to three years of the loan. The most common mortgage product to do that is a 2/1 buydown. It allows a borrower to ‘buy’ a lower interest rate for the first two years of their mortgage by prepaying a portion of the interest on the loan. For example, a borrower who applies for a 30-year, fixed-rate mortgage at 7% can lower the mortgage to 5% the first year and 6% the second year by pre-paying the interest they would have paid at the 7% rate for those two years. The mortgage then reverts to 7% in the third year.
It’s important to note that the buydown cost is separate from other closing costs, and can be paid for by the seller, builder, or buyer. Buyers who adopt this strategy either plan on dropping interest rates to refinance or increase their incomes over the two years the lower rate is in effect.
Loan officers can provide accurate and up-to-date information on the cost of a 2/1 buydown and specific details based on different loan amounts, interest rates, and loan terms.
5. Bump up the offer price in exchange for a lower, seller-subsidized mortgage rate This tactic is most effective when negotiating with a seller whose house is not selling as quickly as expected or when the market favors buyers.
Example: Offering about $8,000 over list price and asking the seller to credit that money back so the buyer can purchase a lower mortgage interest rate from their lender at closing.
In effect, the buyer increased the loan amount so they didn’t have to pay out-of-pocket to get a lower rate. The result a lower monthly payment and the ability to spread the cost of the buydown over the life of the loan.
There’s a risk if it doesn’t appraise at the higher amount, but if you can use that money for a 2/1 buydown, or just buy the rate down by a certain percentage point, you can lower the monthly payment.
The 2/1 buydown temporarily lowers the mortgage payment for two years while buying points lower payments over the life of the loan.
In the mentioned example, the client could buy down the mortgage rate by 1.5 percentage points, putting them in a better position on their mortgage payments than if they’d paid the listing price without the lower interest rate.
6. Ask for a lender credit to buy down the mortgage rate This is where professional relationships are especially important. He says that agents who work closely with lender partners can help buyers make a better, more competitive offer in neck-in-neck situations.
While some of these scenarios may seem complicated, an experienced agent and loan officer can discuss options. Buyers who want to explore different scenarios can do so with the many resources available.
7. Consider new construction While buying new construction isn’t a competitive offer strategy, it provides one avenue for more affordable mortgage rates. The added bonus is that there is less competition, no bidding wars, and clients get a brand-new home in certain markets. Many builders offer great incentives with in-house financing, such as a 4.99% interest on financing. The rate was about 2% lower than the rates on a 30-year mortgage.
While builders might hold firm on the asking price so as not to affect prices on homes in the rest of the development, they may be more willing to negotiate around concessions and financing.
Whether you’re in the hunt for a home or you’re still in the dreaming phase, it can help to familiarize yourself with strategies for making competitive offers in a seller market, so that when the time is right, you know your options be sure to talk to your agent to know for sure. Every tactic comes with some degree of risk, and it’s critical that buyers understand tradeoffs and consequences and how the tactics fit into the bigger picture.
If you are thinking about buying or selling a home, you might have heard it’s tough right now because mortgage rates are higher than they’ve been over the past few years, and home prices are rising. It is true. Take a look at the graph below. It breaks down how the current affordability situation stacks up to recent years.
The National Association of Realtors (NAR) explains how to read the values on the graph:
“To interpret the indices, a value of 100 means a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home.”
The red dotted line represents 100 value on the index. Essentially, the higher the bar, the more affordable homes are. As you can see, the orange bar for today shows higher mortgage rates and home prices have created a clear challenge. But, while affordability is definitely tighter right now, that doesn’t mean the housing market is at a standstill.
According to NAR, based on the pace of sales right now, just under 4 million homes will sell this year. With some simple math, let’s break down what that really means for you:
3.96 million homes divided by 365 days in a year = 10,849 houses sell each day
10,849 divided by 24 hours in a day = 452 houses sell per hour
452 divided by 60 minutes in an hour = about 8 houses sell each minute
So, on average, over 10,000 homes sell each day in this country. Whether you’re a buyer or a seller, this goes to show there are still ways to make your move possible, even at a time when affordability is tight.
An Agent Can Help You Make Your Move a Reality You may be wondering how other homebuyers and sellers are making this happen now. One of the biggest game-changers in today’s market is working with a trusted local real estate agent. Great agents are helping other people just like you navigate today’s market and the current affordability situation, and their insight is invaluable right now.
Scott and Mary Tynell will be able to offer advice tailored to your specific wants, needs, budget, and more. Not to mention, they’ll also be able to draw on their experience of what’s working for other buyers and sellers right now. This could mean broadening your search, if needed, to include other housing types like condos, townhouses, or neighborhoods a bit further out to help offset some of the affordability challenges today.
Bottom Line You might think there are not many people buying or selling homes right now since affordability is tighter than it is been in quite some time, but that is not the case. Buying a home has indeed become more expensive over the past couple of years, but people are still moving.
If you are hoping to buy or sell a home today, know that other people are still making their goals a reality – and that’s happening in large part because of the help and advice of skilled local real estate agents. Want to talk to a trusted professional about your own move? Connect to Scott and Mary Tynell today!
Selling your house on your own, also known as “For Sale By Owner” (FSBO), can be tempting for some homeowners who want to save on real estate agent commissions. However, it’s important to understand the risks involved in this approach. Here are a few potential challenges you may face when selling your house on your own:
Limited Exposure: Real estate agents have access to multiple listing services (MLS) and other marketing platforms that can significantly increase the exposure of your property. By selling on your own, you may struggle to reach a large pool of potential buyers, resulting in a longer time on the market.
Pricing and Negotiation: Determining the right listing price is crucial to attract buyers. Without an agent’s expertise, you might overprice or underprice your home, leading to missed opportunities or leaving money on the table. Additionally, negotiating with buyers can be challenging, and without professional guidance, you may not secure the best deal.
Legal and Contractual Complexities: Real estate transactions involve many legal documents and contracts. Without the guidance of an experienced agent, you run the risk of making costly mistakes or overlooking important details, potentially leading to legal disputes or financial losses.
Lack of Market Knowledge: Real estate agents possess extensive knowledge of local market trends, comparable sales, and neighborhood insights. This information is vital when making pricing decisions and marketing strategies. You may miss out on crucial market insights and make less informed decisions by selling on your own.
Time and Effort: Selling a house requires significant time and effort. As a homeowner handling the process on your own, you’ll be responsible for tasks such as marketing, arranging showings, coordinating inspections, and handling negotiations. This can be overwhelming, especially if you have other commitments or need more experience in real estate transactions.
Security Concerns: Opening your doors to potential buyers without professional representation can expose you to security risks. Strangers may enter your property, and without an agent’s screening processes, it can be challenging to ensure the safety of your home and belongings.
While selling your house on your own may work in certain situations, it is important to carefully consider these risks and evaluate whether the potential savings outweigh the potential drawbacks. Consulting with Scott and Mary Tynell a real estate professional can provide valuable guidance and support throughout the selling process. Contact them today!
The direction of mortgage rates is influenced by several factors, including economic conditions, inflation, monetary policy, and market demand. While it is challenging to predict the future with certainty, here are some factors to consider when assessing whether higher mortgage rates are here to stay
Economic recovery: Mortgage rates tend to rise during periods of economic growth and higher inflation. As the economy recovers from a downturn, there is a possibility that mortgage rates will increase. However, the pace and extent of the increase will depend on various economic factors, including job growth, inflation levels, and government policies.
Federal Reserve actions: The Federal Reserve plays a crucial role in setting short-term interest rates, which indirectly affect mortgage rates. Currently, the Federal Reserve has indicated that it plans to keep interest rates low to support economic recovery. However, if the economy strengthens significantly, the Federal Reserve may adjust its policy and raise short-term rates, which could potentially lead to higher mortgage rates.
Housing market conditions: The housing market also plays a significant role in mortgage rate fluctuations. Strong demand for housing and limited inventory can drive up home prices, which can, in turn, lead to higher mortgage rates. Conversely, if housing market activity slows down, mortgage rates may stabilize or even decrease.
Global factors: Mortgage rates can be influenced by global economic conditions and events. Factors such as international trade, geopolitical tensions, and global financial markets can impact interest rates. It’s essential to monitor these factors and their potential impact on mortgage rates.
It is important to keep in mind that while mortgage rates may rise in the future, they are still historically low compared to previous decades. Even with higher rates, homeownership can still be a financially advantageous long-term investment.
If you are considering buying a home or refinancing, consult with a mortgage professional for personalized insights tailored to your circumstances and current market conditions. They can assist you in evaluating options and making informed decisions regarding your mortgage. Scott and Mary Tynell can connect you with a reliable mortgage professional. Contact them today!
When choosing a listing agent for your real estate needs, there are several key skills and qualities you should look for. Here are some important ones:
Market Knowledge A good listing agent should deeply understand the local real estate market. They should be familiar with current trends, comparable sales, and the competition in your area. This knowledge will help them price your property accurately and strategically.
Marketing Expertise Your listing agent should have strong marketing skills to promote and advertise your property effectively. They should be proficient in various marketing channels, such as online listings, social media, photography, and virtual tours. A well-marketed property attracts more potential buyers, increasing your chances of a successful sale.
Negotiation Skills Negotiating is a crucial aspect of the real estate process. Your agent should be a skilled negotiator who can advocate for your best interests. They should know how to navigate offers, counteroffers, and any potential obstacles during the negotiation process.
Communication Skills Effective communication is essential in any real estate transaction. Your listing agent should be responsive, keeping you informed and updated throughout the selling process. They should be able to explain complex concepts clearly and address any concerns or questions you may have.
Professional Network A well-connected agent can tap into their professional network to benefit your listing. They should have relationships with other real estate professionals, such as lenders, home inspectors, and contractors, to streamline the selling process and provide you with reliable referrals.
Problem-Solving Abilities Real estate transactions can sometimes encounter challenges. Your agent should be resourceful and proactive in finding solutions to any issues that may arise. Their problem-solving skills will ensure a smoother transaction and minimize stress for you as the seller.
Scott and Mary Tynell, professional real estate agents, possess key skills to enhance your chances of a successful and profitable home sale. Contact them today!
My Home On The Cape's Blog 