One Strategy To Help Buyers and Sellers Win

How interest rate buydowns can help both buyers and sellers win.

What exactly is an interest rate buydown? There are a lot of terms within real estate that we can negotiate, including price, closing date, closing costs, and repairs. However, recently the phrase “interest rate buydown” has come up more than it has in the last five to 10 years, so it’s important that you’re informed on what it entails. 

In our market, mortgage interest rates have become what we're calling now “the great equalizer.” Buyers have some power when negotiating contracts, and sellers are using these buydowns as a proactive way to attract buyers. Right now, interest rates are at about 7%, and that is not that palatable for most buyers, so interest rate buydowns are being used to bring down the price. 

There are a couple of different ways to structure an interest rate buydown. The classic way is to do one permanently, which means that you’re paying the lender to bring the cost down for the entire span of the loan. It’s usually a point or 1% of the loan and buys the rate down 0.25%.

"Buydowns are a great temporary solution to help buyers and sellers both win."

What’s becoming more common is a 2-1 buydown. This is temporary and costs less money. It buys the rate down two points for the first year, one point for the second year, and then after that, it will reset up to the full interest rate that was originally quoted. It saves everyone money.

We're anticipating that interest rates will drop back down to normal levels, which is in the 4% to 5% range, in the next 6 to 24 months. Therefore, these buydowns are a great temporary solution to help buyers and sellers both win even with today’s rates. 

If you'd like to talk about buying a home, selling one, or implementing the 2-1 buydown strategy, please reach out; I’d love to help you. Call or email anytime! I am looking forward to connecting with you.

Should You Sell Before Buying a New Home?

Five methods you can use to sell your home before buying a new one.

A topic that comes up often is when someone is looking to buy their next home and they’re fairly sure they need to sell their current one first. There are two main reasons you might need to sell your current home. First, you need the down payment money from the equity in the home. Second, you don't want to or can't carry two mortgages at once. Here are five ways you could handle this kind of transaction:

1. The traditional way. We list the home on the market and pray we find that next home while it’s under contract or during a leaseback.

2. You have a home in mind. You found your next home, and we can help you get it. However, that would require us potentially making a contingent offer on that property. If they accept it, then we can figure out how to sell your home.

   “To find your best-case scenario, call your trusted real estate advisor.”

3. Utilize a home-buying service or bridge loan service. There are a lot of these out there. I can walk you through the different programs to see if they are a good fit for you.

4. iBuyers. iBuyers make you a quick cash offer that’s smooth and seamless, so you don't have to think about selling at all. They just close whenever you're ready, but the downside is that you’ll likely end up giving away a lot of your equity. Please call me first if you’re considering this option. I don’t want you to leave money on the table.

5. HELOC. A home equity line of credit lets you take out a loan on your current property, and then you use that down payment for the next home. Once you close, then you can pay off that HELOC.

To find your best-case scenario, call your trusted real estate advisor. We’ll review your situation and see which option is the best fit. I also highly recommend talking with a lender right away. If you have any questions, don’t hesitate to reach out to me by phone or email. I look forward to hearing from you.

Why You Should Buy In The Fall

It's no secret that Austin is considered by just about every metric to be a strong seller's market right now. In our most recent market report we shared that for August there were 2.8 months of inventory within Austin and balanced market is considered to be 6.5 months of inventory. This just further confirms what we all know - it's great to be selling your home but it can be difficult if you are looking to buy. However if you are looking to buy hope is not lost, we've got a few tips that can help you get the house that you want for the price that you're looking for.  

Currently there 2,519 homes on the Market in Austin, with another 4,874 are listed for sale in the surrounding areas. That is 5% more homes on the market than there were last year. And 958 of them are new construction homes.  Within the last week, of those homes on the market, 404 have lowered their price, 49 homes fell out of contract and came back on the market and about 90 homes came off the market (either withdrawn or expired). This creates an environment that can benefit a smart buyer. 

Here are four reasons it can be better for you to be buying in the fall:

 

Less Competition

Most homes sell in the spring and summer months. Everyone clamors when new houses come on the market during those months and all that competition can make it harder get an offer accepted, or even submit an offer in the first place. This past spring we saw it was quite common that buyers had to submit an offer immediately after the house when to market if they wanted a realistic shot of getting the house. With less buyers crowding the playing feel you've got opportunity to really search for the home of your dreams without worrying it will get snatched up immediately.

Serious Sellers

 There are generally two types of sellers in the Fall, those who's homes went to market in the spring and summer and then sat until the fall or those who have to move out immediately, either because of jobs or family or something similar. This means that most sellers are seriously movtivated to sell. They aren't just testing the market or seeing what's out there, they need to sell and this is to the buyers advantage. 

Negotiating can be a little easier

Now can be a good time to make lower offers to see if the seller will accept them. The average sale in Austin goes for 98% of the asking price. Based on a median sales price of $289,990, that’s an average of about $6,000 of the seller’s asking price.If you can negotiate the seller’s another 1-2% off of that, that translates into a savings of about another $3,000 to $6,000.

Sellers who have been on the market for awhile are more ready to deal    

Of the 2600+ homes in Austin currently on the market, the average days they’ve been on the market is 88. This is double the normal average days on market of 40.  It’s a great time to negotiate for that dream home or that smart investment property purchase.

We hope this post has shed some light on some of the advantages that buyer's have in the fall. Be sure let us know if we can help you out with your home search or if you want to talk about any of the topics we've talked about in this blog.