Here’s a look at the latest developments in the mortgage market this week.
Rising (inventory) tides lift all ships
For the past two years, homebuying has felt like a mad dash with seemingly endless waves of eager buyers rushing to submit offers and homes getting snatched off the market within hours of being listed. But there are indications that this sprint is shifting to a marathon. Today, the slow-and-steady mentality may serve you best. Buyers who can outlast and outsmart the competition could be crossing the finish line having expended less money and effort. Here’s how:
1. Scroll smarter, not harder.
As you thumb through online listings, keep an eye out for houses that have been active for at least 30 days. Make a list of your favorites and set an alert for these properties. As more inventory floods the market, sellers who aren’t seeing competitive offers are likely to get antsy.
2. Keep an eye on your alerts.
Once you have your list of homes to watch, stay tuned in to the activity. Sellers will typically be advised to lower their prices after a month, especially if the original number wasn’t on par with the rest of the market to begin with; a 5%-10% price cut isn’t unusual in these situations. That kind of drop could put a home that was previously out of reach into the “affordable” range of your budget.
3. Be the tortoise, not the hare.
Remember, market shifts are taking place but they likely won’t happen all at once. Not seeing price drops in your area? Consider windeing the parameters of your search (if you’re able) and going where the dips are. Some cities like Detroit, Memphis, Los Angeles, and Chicago are already seeing median list prices decline.2 If that’s not an option, channel your inner tortoise and bide your time. The right sheller—ahem, seller!—could be just around the corner.
How low should you go in limbo listing?
Last week we cautioned that panic-pricing, or impulsively reducing the list price on your home without a strategy in mind, could put you on the fast track to selling yourself short. It’s a warning that bears repeating as the market continues to shift this week. Yes, there’s an uptick in active listings and some buyers are backing off their search altogether thanks to rising interest rates—but sellers still have an advantage in most areas: overall competition, though diminishing slightly from record highs, remains fierce. And while price reductions are likely part of this new reality for sellers, you can still be smart about the process and get the most value for your home.
If you notice prices starting to decline in your neighborhood, consider how urgent your timeline is. If you need to sell your house fast and aren’t getting any bites in the first 10 days, a significant drop in the listing price of your home could generate buyer attention and help move the process along. If you have a bit more time, you can likely afford to start with an incremental drop and hope that motivated buyers start to nibble.
Either way, it’s helpful to determine your lowest number ahead of time and build a strategy based on that figure. Keep in mind that there are costs associated with selling any home, so when reducing your price you should account for things like taxes and agent fees—after all, you still want to make as big a profit as possible. When you work with a Better Real Estate Agent, you pay a 0% listing fee. Our agents also don’t charge commission, which is typically the biggest cost that sellers have to pay in a real estate transaction.
List for free with Better Real Estate
When you work with a Better Real Estate Agent, you pay a 0% listing fee. Our agents also don’t charge commission, which is typically the biggest cost that sellers have to pay in a real estate transaction.
The beginner’s guide to beating buyer’s remorse
TL;DR? Equity gives you options—find out how much you have and use it to help plan your next steps.
During the height of the housing boom, thousands of excited buyers took the plunge and became homeowners. Along the way, many made compromises on their homebuying wish lists, waived contingencies, participated in bidding wars that hiked up purchase prices, and closed on accelerated timelines. When the dust settled, some or all of these factors may have contributed to a sense of regret about the transaction.
If this is you, dear reader, fear not! Although buyer’s remorse is a bitter pill to swallow, equity might be the spoonful of sugar you’ve been craving. Home equity is the difference between how much you owe on your mortgage and how much your home is worth on the market. You gain home equity in two ways: by paying down your loan or when your property value goes up. The fact that housing prices have been on a steady upward trend (the median listing price grew by 18.2% over the last year3) means your home is likely worth more now than when you bought it. And the equity you’ve built since then could help you buy your next home.
As the market continues to become more favorable for buyers, homeowners looking for an out on their current home might get a considerable budget boost from this earned equity when they make their next move. And for those who aren’t quite ready to sell, there are other ways to leverage equity that can help pay off debt or fund other financial goals like building up savings or paying for college tuition.
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This newsletter does not constitute an endorsement or recommendation of Better Mortgage Corporation; Better Real Estate, LLC; Better Cover, LLC; Better Settlement Services, LLC; or their services. Better Cover is solely responsible for homeowners insurance services. Better Mortgage is solely responsible for making all credit and lending decisions with respect to mortgage loans.