Liz Kroft | November 7, 2023
If you've been keeping up with recent articles on our blog and social media, you're likely already aware that today's real estate market can offer incredible opportunities for buyers. You might be wondering how this could be the case, especially with the current high mortgage rates, the highest we've seen in decades. Well, the answer lies in the very thing everyone is complaining the most about.
In this client success story, we'll explore how our co-founder, Liz Kroft, helped buyers seize unique opportunities in the real estate market by strategically leveraging high mortgage rates, ultimately leading to substantial savings and instant equity in their new home.
In a housing market characterized by high mortgage rates, a unique situation unfolds—there's less competition among buyers. With fewer potential buyers submitting offers on homes, this market scenario can provide a distinct advantage. You gain the power to negotiate savings that can sometimes counterbalance the increased financing costs.
Let's illustrate this with a recent success story from one of Liz Kroft's clients. The property they were interested in was located in a highly sought-after Santa Cruz neighborhood. In recent years, a home like this would have received dozens of offers within a few short days - perhaps sight unseen for some buyers.
While the property had deferred maintenance and needed updates, this alone wouldn't have deterred potential buyers in the past, given its incredible potential and low inventory of homes to choose from. However, today's market has a smaller buyer pool, resulting in decreased demand for such properties.
Initially priced beyond the client's preferred budget, they took a closer look at this home after it was listed for sale for several weeks. The decision was made to go for it, and their offer was accepted at 7% below the asking price.
| Pro Tip: In today's market, don't overlook homes that initially seem out of your budget, especially if they've been listed for a while.
If we rewind to when rates were lower and competition was more fierce, this home likely would have sold for $50,000 - $75,000 above asking instead.
In a market where buyer demand is softening, more sellers are open to providing concessions to attract potential buyers. In this case, the seller offered to cover $14,000 for essential electrical upgrades and repairs, a significant cost-saving advantage the buyers.
While more competitive markets often require buyers to waive contingencies to be in the running, Liz's clients had a considerable inspection contingency in place here. This allowed the opportunity to conduct thorough inspections and investigations of the home. As a result, they successfully negotiated $10,000 in credits towards closing costs. This translates to valuable cash savings, which they can use for future home updates.
| Pro Tip: In some cases, this credit can be used to buy down (lower) your rate.
As mentioned earlier, the buyers were able to retain their contingencies, including the appraisal contingency. To their delight, they didn't need it, as the appraisal value exceeded the contract price by a substantial $20,000. This means instant equity in their new home.
| Did You Know: In competitive markets, buyers often remove appraisal contingencies, potentially overpaying in the eyes of appraisers and becoming liable for the difference between the appraised value and their offer price.
In a market with lower rates and increased buyer demand, these homebuyers likely could not have secured all of these wins, and such sizable ones at that.
Are you ready to embark on your own home-buying adventure? Allow us to guide you on how to take advantage of today's real estate market while your competition remains on the sidelines. Don't miss out on these incredible opportunities. Contact us today, and let's get started.
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