Understanding the mood of a market is a fundamental principle of buying and selling any product, but it’s never more essential than in real estate.
With the market in a post-boom transition period influenced by high mortgage costs and strong prices, buyers and sellers need to understand each other’s perspectives.
Buyers are best served if they realize they won’t get away with crazy lowball offers, while sellers should understand that over-pricing will result in their property languishing on the market, slowly losing value.
The recent Fannie Mae housing sentiment survey put strategies and emotions in the spotlight, finding everyone’s challenge can be boiled down to interest rates edging towards 8%.
Fannie Mae said mortgage costs were “deepening the malaise consumers feel”.
Only 17% of survey respondents expected interest rates to drop this year with sellers expressing the deepest mortgage rate concerns.
However, Fannie Mae’s forecast suggests 30-year mortgage rates will fall into a 6.7% to 7.1% range in 2024, while the National Association of Realtors predicts rates will go as low as 6%.
Check out this list of tips designed to help both buyers and sellers handle the current market dynamics.
SELLERS
Price Strategically
Understand buyers are sensitive to the overall home purchase cost. Price competitively, using results from the past three months of sales of similar properties in your neighborhood as your guide. Be realistic as well-priced homes generate more offers.
Highlight Value
Ensure you have an agent who can highlight your home’s value and unique features. Showcase any energy-saving features that will help buyers minimize running costs. You can sweeten the deal by offering to share closing costs or be flexible on the settlement period.
First impressions
Deals can be won and lost on a buyer’s immediate impression of the property. So, make sure your home looks stunning from the street. Consider repainting the exterior and investing in landscaping. Clean and declutter the area.
BUYERS
Shop Around
Be diligent in finding the right loan for your circumstances. It can be time-consuming, so consider using a mortgage broker with access to an array of mortgage products. Don’t rule out credit unions and online lenders. Investigate government programs if you’re a first-time buyer.
Long-Term Affordability
Mortgage costs will not always be this high. They haven’t nudged 8% for two decades. So, if you can handle some short-term pain, you will likely find purchasing today will serve you well in the future.
Negotiate Hard, Be Flexible
Sellers are not so desperate that they’ll entertain lowball offers, but don’t be afraid to negotiate hard. Use local sales prices for similar properties to justify your approach. Be patient with your search and consider cheaper neighborhoods or smaller homes. A good agent is essential to navigate the market.