Counseling Your Buyers Through a Bidding War
Spring brings warmer weather, flowers, the urge to clean, and this season it's bringing with it bidding wars. Not yet experienced in every market, but still being experienced in many major markets (especially on the west coast), the bidding war is back. So how do you counsel your buyers when they experience this? Should you tell them to increase their offer?
Based on the variables at play - home prices, inventory, and mortgage rates, the simple answer is YES - you should be helping your buyers along the thought process that they may need to increase their offer. Here's why:
Home Prices: If the buyer doesn't get this house, there is a good chance that the next house they find that is similar may already cost a little bit more, and will continue to cost even more as time goes forward. In fact, experts are projecting home prices to increase 5% to 8% in 2013 alone.
Inventory: If the buyer doesn't get the house they are bidding on, it may be difficult to find one that is similar in a short time frame. The national inventory of homes has fallen to below five months.
Mortgage Rates: Interest rates are poised to inch up through 2013, eating away at the affordability of a home. There is a good chance we will see rates back in the 4% range by the end of the year, greatly affecting the 'cost' of a home.
Last Week's Mortgage Rates Recap
Last week we ended the week with technical indicators pointing to possible higher rates this week. Rates were up just slightly (often times just some decrease to pricing rebate rather than actual mortgage interest rate increase) at the end of the week. As has been a constant trend lately, volatility was experienced throughout the week.
This Week's Mortgage Rates Forecast
Risks Favor: LOCKING
This week promises to continue the recent trend of volatility. As shown in the chart above, we start off the week with the technical indicators all pointing to an interest rate increase, probably of .125% or maybe as much as .25%. Just when we see the shoe drop is the question.
This week for any consumers who are less than 30 days from closing, we advise to lock. This week already appears to be one of a rising interest rate environment, and along with a number of key economic reports.
BOTTOM LINE: Lock in these low rates and don't look back.