What should I ask for in when negotiating a home purchase?
According to the team at Yahoo! Finance, 42% of homes sold in the final three months of 2022 included a concession of some kind from the seller. That’s up from only 30% in the previous quarter. Incentives included were mortgage rate buydowns, additional cash for closing costs, and warranties on household appliances.
The uptick in concessions should be a welcome sign for home shoppers. The days of waving contingencies and inspections appear to be over, and homebuyers should have more power in the future.
Asking for help on the mortgage rate with a buydown, reductions in closing costs, or even a price reduction are all reasonable to ask for in the current market. It’s also a good idea to keep an eye on how long properties remain on the market. A seller may find additional motivation to sell if they have been unable to find a buyer for an extended period of time.
What are the three biggest challenges facing homebuyers right now?
After a discussion with real estate agents and buyers, it’s clear that there are three key challenges facing homebuyers right now. Higher mortgage rates are keeping buyers on the sidelines, home inventory is still at historically low levels, and finding the right price are still challenges that homebuyers are struggling with in the current market.
The good news is that we’ve seen mortgage rates come off their peak, buyers are finding a bit more success in a smaller market, and home prices are cooling in certain areas.
What do homebuyers expect from the housing market?
A recent survey from NerdWallet of potential homebuyers in America showed that there are several common misconceptions that people are holding onto.
Twenty-eight million Americans plan to enter the real estate market in 2023. On average, they expect to spend $269,200 on a new home. This is about $100,000 short of the $388,100 median home price in December 2022.
Prospective homebuyers are optimistic about home prices, with two-thirds of respondents expecting a crash in the real estate market in 2023. However, most real estate economists disagree. Most are only predicting a small decline, not a market crash.
61% of respondents also stated that mortgage rates are unprecedented. However, over the last 50 years the national average for a 30-year, fixed-rate mortgage was 7.75%. Mortgage rates in the 6%-to-7% range were common as recently as 2008.
It’s clear that educating consumers when they look to dive into the market is absolutely paramount to properly set expectations. Providing context and data to clients will help avoid headaches during the home buying process.
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