If You’re a Buyer, Is Offering Asking Price Enough?

In today’s real estate market, buyers shouldn’t shop for a home with the expectation they’ll be able to negotiate a lower sales price. In a typical housing market, buyers try to determine how much less than the asking price they can offer and still get the home. From there, the buyer and seller typically negotiate and agree on a revised price somewhere in the middle.Things Are Different TodayToday’s housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:Receiving an average of  3.8 offersSelling in just 17 daysHomes selling quickly and receiving multiple offers highlights how competitive the housing market is right now. This is due, in large part, to the low supply of homes for sale. Low supply and high demand mean homes often sell for more than the asking price. In some cases, they sell for a lot more. Selma Hepp, Deputy Chief Economist at CoreLogic, explains how these stats can impact buyers:“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months. Now, almost 6 in 10 homes listed are selling over the asking price.”You May Need To Rethink How You Look at a Home’s Asking PriceWhat does that mean for you? If you’ve found your dream home, you need to be realistic about today’s housing market and how that impacts the offer you’ll make. Offering below or even at a home’s asking price may not cut it. In today’s market, the highest bidder often wins the home, much like at an auction.Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the sellers are asking. That’s important to keep in mind as you work with your agent to craft an offer.Understand An Appraisal Gap Can HappenBecause of today’s home price appreciation and the auction-like atmosphere in the selling process, appraisal gaps – the gap between the price of your contract and the appraisal for the house – are more frequent.According to data from CoreLogic:“Beginning in January 2020, nationally, 7% of purchase transactions had a contract price above the appraisal, but by May 2021, the frequency had increased to 19% of purchase transactions.”When this happens, your lender won’t loan you more than the home’s appraised value, and the seller may ask you to make up the difference out of pocket. Buyers in today’s market need to be prepared for this possibility. Know your budget, know what you can afford, and work with a trusted advisor who can offer expert advice along the way.Bottom LineBidding wars and today’s auction-like atmosphere mean buyers need to rethink how they look at the asking price of a home. Work with a real estate professional who can advise you on the current market and help determine what the market value is on your dream home.The post If You’re a Buyer, Is Offering Asking Price Enough? appeared first on Keeping Current Matters.

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It’s Still a Sellers’ Market [INFOGRAPHIC]

Some HighlightsDue to low supply and high demand, today is one of the strongest sellers’ markets we’ve seen.Sellers can benefit from more offers to pick from, higher home values, and a faster sales process. That might be why 73% of people believe it’s a good time to sell.Sellers, don’t miss out on this unique opportunity. Work with an agent to take advantage of this hot sellers’ market.The post It’s Still a Sellers’ Market [INFOGRAPHIC] appeared first on Keeping Current Matters.

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Two Reasons Why Waiting a Year To Buy Could Cost You

If you’re a renter with a desire to become a homeowner, or a homeowner who’s decided your current house no longer fits your needs, you may be hoping that waiting a year might mean better market conditions to purchase a home.To determine if you should buy now or wait, you need to ask yourself two simple questions:What will home prices be like in 2022?Where will mortgage rates be by the end of 2022?Let’s shed some light on the answers to both of these questions.What will home prices be like in 2022?Three major housing industry entities project continued home price appreciation for 2022. Here are their forecasts:Freddie Mac: 5.3%Fannie Mae: 5.1%Mortgage Bankers Association: 8.4%Using the average of the three projections (6.27%), a home that sells for $350,000 today would be valued at $371,945 by the end of next year. That means, if you delay, it could cost you more. As a prospective buyer, you could pay an additional $21,945 if you wait.Where will mortgage rates be by the end of 2022?Today, the 30-year fixed mortgage rate is hovering near historic lows. However, most experts believe rates will rise as the economy continues to recover. Here are the forecasts for the fourth quarter of 2022 by the three major entities mentioned above:Freddie Mac: 3.8%Fannie Mae: 3.2%Mortgage Bankers Association: 4.2%That averages out to 3.7% if you include all three forecasts, and it’s nearly a full percentage point higher than today’s rates. Any increase in mortgage rates will increase your cost.What does it mean for you if both home values and mortgage rates rise?You’ll pay more in mortgage payments each month if both variables increase. Let’s assume you purchase a $350,000 home this year with a 30-year fixed-rate loan at 2.86% after making a 10% down payment. According to the mortgage calculator from Smart Asset, your monthly mortgage payment (including principal and interest payments, and estimated home insurance, taxes in your area, and other fees) would be approximately $1,899.That same home could cost $371,945 by the end of 2022, and the mortgage rate could be 3.7% (based on the industry forecasts mentioned above). Your monthly mortgage payment, after putting down 10%, would increase to $2,166.The difference in your monthly mortgage payment would be $267. That’s $3,204 more per year and $96,120 over the life of the loan.If you consider that purchasing now will also let you take advantage of the equity you’ll build up over the next calendar year, which is approximately $22,000 for a house with a similar value, then the total net worth increase you could gain from buying this year is over $118,000.Bottom LineWhen asking if you should buy a home, you probably think of the non-financial benefits of owning a home as a driving motivator. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.The post Two Reasons Why Waiting a Year To Buy Could Cost You appeared first on Keeping Current Matters.

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