What a Time to Be a Buyer!
Building on our last blog post, we want to expressly speak to buyers about your options and our recommended strategies right now. At Armas Realty, we invite you to see the opportunity in every type of market because there is no time like the present to buy real estate. And now – more than any point in the last few years – is the best time to get under contract.
A Golden Opportunity
With interest rates on the rise and talks of recession looming on the horizon, everyone is worried – especially sellers. Inventory is at a two-year high, and days on market are exponentially increasing, signaling to sellers that it will be harder to sell their property. As a buyer, this is your golden opportunity.
No Time to Hesitate
In the current landscape, many people are being priced out of the market due to inflation and mortgage rates. These folks can no longer afford what they want and are holding off for a later time. Other buyers suffer from “analysis paralysis,” sitting in wait for a housing market crash that may or may not come.
Both of these groups are not playing with a winner’s strategy. For the former, buying real estate is sometimes a chess move, not a valentine (to paraphrase Rebecca Solnit). You cannot always get what you want right now. In order to start building up equity, you may have to compromise to get in the game. Did you initially want a 4/4 in the trendiest part of town? Consider a 3/2 or a 2/1 nearby. Or better yet: Look into up-and-coming areas to get ahead of the equity trend that will help you get to your dream home faster.
The latter group may wait forever. When the housing market crashes, who knows what will go with it. This group needs to ask themselves if the savings are worth the potential that they may not be able to get a mortgage to buy. That would suspend their plans for an indeterminate amount of time while everyone else is building equity.
Being willing to seize the current opportunity as a decisive buyer in the market means you face less competition and intimidated sellers eager to negotiate.
Our recommendation to buyers is to work with your agents to get the best possible deal. At Armas Realty, before we submit a contract for purchase, we do comparison research to ensure our offer is at market value. Gone are the days when buyers needed to offer tens of thousands over asking. Our pricing strategy ensures our offers are fair but enticing enough to sellers.
Because competition is becoming scarce, buyers can start negotiations from the beginning.
Here are a few strategies:
- Ask sellers to buy down an interest rate from your mortgage company. These seller-paid points are usually for higher-value homes. It benefits sellers because they can get more for their property by helping the buyers reduce their upfront costs. This strategy usually makes sense for buyers who intend to hold the property for over five years.
- Cover no appraisal gaps. A few months ago, it was a common strategy for buyers to agree to cover many thousands over appraisal value. This gave sellers some peace of mind that they would get what they asked for. But sellers no longer have that leverage. Buyers can now say that they will pay whatever an appraisal indicates and not a penny more.
From there, the hard work of negotiation continues. We ensure our inspections are thorough, so we have data to back up our asks. A few hundred dollars of investment can save thousands.
Here are some of the typical asks after inspection:
- If a property needs a bit of fixing up, buyers can ask the sellers to do the work. This allows the sellers to control the costs of the project while giving buyers what they need.
- If a seller does not want to do repairs or updates, we ask for seller concessions. This is money that the sellers return to the buyers on closing to use for whatever they need. The costs are financed into the loan. This is a great deal for buyers looking to update a property but don’t have cash upfront to complete the work.
Exhausting these strategies and more can land buyers with a better deal than any bear housing market could provide. At Armas, we encourage you to speak with an agent today to review your options.