Since the begining of the Pandemic in March of 2020 we have seen several major changes when it come to purchasing a home. With extremely low interest rates and a desire to create a sanctuary to feel safe during Covid-19 home sales and prices took off, creating the greatest sellers market ever. Well, finally after 2 1/2 years we are finally seeing signs that this runaway train real estate market is coming back to reality.
With inflation on the rise the Fed Chief started raising interest rates and that has led to a slow down in sales as the cost of financing a home has priced many buyers out of the market. While most buyers have fixated on the interest rates, they have lost sight of what they have gained. Here are the 3 main reasons why now is the best time buy.
Bidding Wars - Over the last 2 + years it was more common for homes to receive multiple offers than not to. It was not uncommon for a home to have 10-15 offers within 2-3 days and sometimes we would see houses with 30 or more offers. Even home in poor condition were still receiving 3-5 offers. All of these bidding wars would push the price up 5% or more over listing price. We are starting to see this practice come to an end as demand started to level off. While there are still homes receiving multiple offers, the homes that used to get 10-15 offers are now only seeing 2-3. This give you a much better chance against other offers.
Inspections - Home Buyers during the extreme sellers market were looking for any advantage they could to get their offer accepted, one of the big give aways was inspections. The winning offer on most houses either waived inspection completely or waived their right to request repairs. Often leaving the buyers with anything from costly repairs right upfront or the total unknown. Move forward to now and buyers are not only to have a home inspection but in most cases will be able to renegotiate for repairs or price concessions.
Appraisal - One of the biggest issues centered around appraisals. With buyers bidding 20, 30 and even 50 thousand or more over list price, the sellers wanted a contingency for any possible appraisal issues. This would leave buyers stuck with bringing substantially more cash to closing if the home did not appraise for the agreed upon price. Now that we are seeing less bidding wars, we expect less appraisal concessions and the ability to renegotiate if the home doesn't appraise. This also won't force you to find extra cash if it doesn't appraise.
While interest rates may be higher, you have to look at what you gained in the process. Remember, you can always refinance down to road.
Date the Rate , Marry the House!
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