Finally, Buyers are Getting Incredible Deals on Homes

Handshake - Buyers are getting incredible deals right now
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Buyers are Getting Incredible Deals on Homes… FINALLY!

With an increase in housing inventory and a decrease in buyer demand, I understand those with concerns about the housing market. But why are some buyers racing headfirst into purchasing homes right now (many of which are investors)? That’s probably because these buyers are getting incredible deals!

How do we know they’re getting a deal?

Appraisals

Three of our families who purchased a home in September got their offer accepted at a price lower than the appraised value. Perfect true example: Buyers purchased a home for $975,000 which we felt was a steal compared to where home values have been. A licensed appraiser reviewed comparable sales and current market conditions and determined the home was worth $1,050,000. Remember just 8-9 months ago, buyers were submitting offers $100k+ above the asking price, appraisals were coming in low, but buyers didn’t care. Getting an offer accepted was the win. Today’s win is getting a home at a price below the appraised value, and it’s happening!

Monthly Payment vs. Mortgage Rate

We’ve been asking potential homebuyers, “What’s more important to you? Your monthly payment on your mortgage or the mortgage interest rate for your home loan?” Almost every buyer answers the same: Monthly payment. So in understanding what’s most important to our buyers, we are making sure we accomplish this goal in two steps: 1) Negotiating a lower price on a home and 2) Utilizing rate buy-down options (paid for by the Seller).

So if we’re able to negotiate a much lower price on a home, and the sellers are paying to buy down the buyer’s mortgage interest rate, the overall monthly payment will come down to a price the buyers are comfortable with.

Who’s winning right now?

I’d argue that the Buyers are winning right now… finally. Buyers are getting offers accepted at lower prices, still locking in on loans with relatively low-interest rates, and securing an overall monthly payment that is comfortable for them to afford TODAY. Remember too, when rates come back down, which they will, these Buyers will have even lower monthly payments. And if their monthly payments were comfortable in terms of affordability, to begin with, guess where they’ll be when rates come down?

The buyers waiting to see what’s going to happen with the market, or waiting for rates to come back down again will have to compete with low supply and high demand all over again. This is because the buyers that are currently in a waiting phase can actually afford to buy a home. They actually have the money for a down payment. But they’re not the only ones. When there were 20 offers on a home, 19 buyers missed out. Those 19 buyers didn’t just disappear. They still want to buy homes, but many are waiting. 

Warren Buffett’s philosophy is to buy when others are selling and to sell when others are buying. Let’s just say buyers are going to be the winners in this market.

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