Earlier today I got to thinking about a current client who made an offer 3 weeks ago on a house at $95,000 but the seller countered much higher. It is listed at $115,000. My client kept telling me he wants to get the house and will pay up to $100,000 and no more.
I ran some numbers and was astonished by what I came up with. If he sticks to his no higher than $100,000 and seller finally gives in 4 months later the interest rate will be up to around 4.5% or even maybe 5%. That principal and interest payment would be $536.82(5%). If he were to meet this seller half way at $105,000 and lock in now he would get a rate around 4% with a payment at $501.29 or even at 4.5% rate the payment would be $532.02 which is still less than holding out for $100,000.
Car dealers oftentimes quote cars based on monthly payments and now I know why. Most people think in terms of monthly payments. I should know in a little while if my strategy worked but my guess is yes!