It’s no secret that the housing market is changing. In fact, it’s been in a state of decline for some time now. If you’re a first-time buyer, it’s more important than ever to be aware of the current market conditions and what strategies you can use to get the best deal on your new home. Here are three tips that you can use right now to help you get started!
- Rate buy-down – how can this strategy help you get the best deal on a new home purchase?
- Ask for seller concessions – what are they and how can they benefit you in a housing negotiation?
- Make disrespectful offers – why is this strategy becoming more popular in today’s housing market?
Rate buy down – how can this strategy help you get the best deal on a new home purchase?
When it comes to buying a home, it’s important to be as informed as possible about the current market conditions. One strategy that you may want to consider in today’s market is rate buy-down. This is where you agree to pay a certain interest rate on your mortgage, and the lender agrees to lower the interest rate on the loan by a certain percentage. This can be a great way to get a good deal on your new home purchase.
Keep in mind that rate buy-down is not available in every market, so be sure to check with your lender to see if it’s an option. Also, make sure that you are comfortable with the interest rate that you are agreeing to since it will likely be higher than the current market rate. If you’re able to get a good deal on your mortgage this way, it can be well worth it!
Ask for seller concessions – what are they and how can they benefit you in a housing negotiation?
When buying a home, it’s important to be aware of all the different strategies you can use in order to get the best deal. One such strategy is asking for seller concessions. Seller concessions are a way for the seller to offer you some financial assistance with the purchase of the home. This could include anything from offering to pay part of your closing costs, to lower the price of the home, to agreeing to fix certain things in the home before you move in.
The key thing to remember is that you have to ask for these concessions. Many sellers won’t offer them unless you specifically request them. And, even if they do offer them, it’s important to make sure that you’re getting a good deal. After all, the seller is still trying to make a profit on the sale of their home.
So, how can you go about asking for seller concessions? The best way is to be prepared and know what you want before you even begin negotiating with the seller. This means doing your homework on both the market and the property itself. Know what similar homes are selling for in the area, and be prepared to make a fair offer based on that information.
If you can show the seller that you’re knowledgeable about both the market and their particular property, they’ll be more likely to listen to your requests for concessions. And, if they do agree to any concessions, make sure you have a realistic plan for how you’ll be able to afford them. After all, nothing is free!
Make disrespectful offers – why is this strategy becoming more popular in today’s housing market?
In a declining housing market, it can be essential to employ creative strategies in order to get the best deal on a home. One such strategy is making disrespectful offers. While this may seem like an unorthodox way to do business, in a market where buyers are in the driver’s seat, it can be an effective way to get the seller’s attention. By making an offer that is significantly lower than what the seller is asking for, you show that you are serious about buying the property and that you are not afraid to negotiate.
Another benefit of making a disrespectful offer is that it can often result in the seller being more willing to negotiate. Since they know that you are not afraid to walk away from the deal, they may be more likely to agree to your terms. However, it is important to note that making disrespectful offers can be risky. If the seller decides to reject your offer, you may end up losing out on the property altogether. So make sure that you have done your research and are confident in your offer before submitting it.
Overall, if you are looking for a home in a declining housing market, making a disrespectful offer may be your best bet. Just make sure that you are aware of the risks involved, and that you are prepared to walk away from the deal if necessary. Rate buy down, asking for seller concessions, and making disrespectful offers are all creative strategies that can be used in a declining housing market. While they may seem risky, they can be effective ways to get the best deal on a home. So if you are looking to buy a property in a declining market, make sure to consider these strategies. Happy house hunting!
Video Transcription:
In today’s video, I will share with you three tips that you can use in the current housing market where the buying demand has gone down, but there’s still a lot of sellers out there. So if you are a buyer right now and want to take advantage of the market and save thousands of dollars, you definitely wanna stay until the end of this video. Markets will always dictate buying and selling decisions. This is how it’s been forever. So you must educate yourself on what kind of market we’re in right now in order to adjust your strategy. And there’s always opportunities to be made in every kind of marketing cycle. Right now, we are in a declining market with the luxury market seeing about a 30% decline in home prices. Luxury market is defined as the top 2% tier in any market. For example, here in the City of Hayward, you’ll say the luxury market is homes that are 1.6 million or above. Those homes are seeing declining values. Now this is not applied to every single market, but it’s happening in a lot of markets across the country. So you definitely wanna know your numbers right now and if you haven’t talked to a loan officer, talk to one today. And if you also haven’t watched this video up top, watch it now after this video, because it’ll tell you if this market is a good fit for you or not. So now let’s get to what we were supposed to be talking about, which are the three tips that you should be using right now to buy a home to save you thousands of dollars. Tip number one, rate buydown. And I abbreviated there in parentheses right there, the 2-1 buydown. And what that pretty much is, is you can get seller concessions from the seller, seller credits in your transaction, which are not common or pretty much not really available during a seller’s market. Right now, we’re in more of a buyer’s market with declining values, you can request seller credits that you can use towards your rate buydown and get a rate that is lower than the current rate right now and lock it in for two years. So here’s how this works. So say the current rate right now is 6.875, and your loan amount is 700,000. Your current principal interest payment is gonna be $4,598.50. Say you use a rate buydown for the first year, your loan amount stays the same, but your rate buydown rate can be almost 2% lower in some cases. Say, in this case, it was at 4.875%, so your principal interest would be $3,704.46. Your monthly P&I difference from the original rate, if you lock the 6.875%, and then the 4.875%, is $894.04, a total saving for the whole year of 10,728.48. Now the rate buydown for the second year, loan amount stays the same, but the rate is gonna be about 1% higher than what the initial buydown was. So it’ll be 5.875%, and the principal interest on that would be $4,140.76. Monthly P&I difference of $457.74. Total savings for the second year would be 5,492.88. Your total savings for the both of those years would be 16,221.36. Now you’re probably wondering what the 2-1 means. So with the rate buydown, if your initial rate was 6.875, like I showed you on the board there, the first year the rate is gonna be locked for one year and it’s usually gonna be 2% to a 1.5% lower than the average rate. So I showed you, in this case, it was 4.875. So it’ll be locked for that for the first year, and then the rate will go up about a percent higher than that lock, so it’ll be close to 5.875, and it’ll be locked for the second year. And then, what happens the third year? The third year, your mortgage rate will adjust back to the original rate. Now you’re probably wondering what’s the point here? Well, the point here is that you’re using seller concessions to get this rate buydown to save this money, to lower your payment, for the first two years in hopes of the rates coming down, and then you refinancing if the rates come down. So it provides you that buffer, and you’re able to get this benefit by using seller concessions, money from the seller. So say the rates don’t come down, well, then you’re already locked into the original 6.875, that’ll be locked for 30 years. But since these programs don’t have prepayment penalties, you can always refinance. But you definitely wanna talk to a loan professional to know how much down you’re putting in the house, if it’s a 20% or 10%. And then, they can give you a scenario, what would happen if you locked this 2-1 buydown situation on the second year or the third year? What would happen if you refi? But these programs are being utilized today, and a lot of people are saving money by using seller concessions. Number two, seller concessions overall. So, obviously, we talked about doing the rate buydown by taking the seller concessions and using them and applying them for this rate buydown. But you can even ask for more concessions, in some cases, depending on what market you’re in and how desperate the seller is, because there’s a lot of desperate sellers out there that need to sell right now. So you can ask for more seller concessions that can be applied towards closing costs. So the 2-1 buydown is one thing, which is also part of your overall closing costs, but you can have them give you more credits or concessions that you can now apply for your escrow fees, your appraisal fee, and other things that are coming out from your wallet that are considered as closing costs. And you can get yourself a deal with just worrying about your down payment, and getting your closing costs all covered by the selling party. Number three, make aggressive offers, guys. Like I mentioned to you, there’s serious, serious sellers out there and just not enough buying demand. So if you’re in the market and the numbers work good for you right now, and you’ve run the numbers with your loan officer, and the number is lower than the rent or at par with the rent, or is just comfortable for your lifestyle, it’s a great time to buy. ‘Cause this is the time when you can really make disrespectful offers that are lower than the purchase price and get your offer accepted. So make sure what you wish for, because it might come true. That’s it for today, guys. Thank you for watching so much. If you thought this video was valuable, leave me some love below by leaving a comment, and don’t forget to follow us and subscribe to our channel. Until next time, this is Karan Singh.
