Q&A: Answering Your Questions about Buying in Today’s Market

Buying a home can be confusing. That’s why we’re here to provide answers to some of the most common questions we get, so you can become better informed and more reassured.

Question:  How do I get a good deal?
Good question and one we focus on for each and every one of our clients!  We always say you make money when you buy in real estate, so making sure you buy right is HUGE.

The one and only way to make sure you are getting a good deal is to look at the specific neighborhood you are buying in and compare your home to what has sold in that area.

We will analyze the price per square foot that homes are currently selling for in your desired area.  It’s important to check comparables for the appropriate time period. For example, homes are still selling significantly above the price that they were priced at this time last year.  However, the price could be lower than the February-Junes sales from 2022.  We will help you look at the data that’s most comparable to the current market.  That helps you ensure you are buying at the best price possible.

Once you determine the average square footage price in your desired area, you can start looking for the best deals on the market by looking for homes that are priced lower per square foot than the rest. You might find a motivated seller, a home that needs a little work, and end up with a home priced less than others in the area. We can help you with this by adding you to property email updates for your desired area.  That will help you search for homes and recognize when deals are available. We can also help you monitor the market daily, so you don’t miss anything! 

Finally, to get the best deal, be ready to move quickly when those deals come on the market. Get your financing in order to be ready to make an offer as soon as possible.

Question: Should I wait for interest rates to go down? 
That’s a tough one! The good news is that rates are down this week to 6.58% from 6.61% last week. The rate for a 15 year mortgage fell to 5.90% from 5.98% the week before.  In addition, some buyers are finding savings with adjustable rate mortgages (ARM) to reduce the monthly payments in the first years of ownership.  Buyers can also find savings from a mortgage rate buy down. A buyer can pay a specific amount at closing to reduce the interest rate.  A buyer can also request that a seller help contribute to buy down the buyer’s mortgage to ease the interest rates over the short-term or life of the loan.

Whatever route you choose, the decision to buy now or later depends on the overall monthly payment you are comfortable with.   If you examine creative financing options and still feel like the payment is too high, then maybe it’s time to find a different price point for your purchase or delay the purchase for another time.
However, if your monthly payment numbers still work after factoring in current interest rates, then today could be a great time to move forward.  You can always refinance when rates come down.

Question: Should I put a deadline on an offer?
In more competitive neighborhoods, most sellers want to give their home full market exposure to get the highest price possible. That means sellers tend to have their own deadline for any and all offers.

If you are going to put in a deadline, make sure to give one that allows for enough time for the seller to respond, but not long enough for another offer to swoop in.

Again, it depends on the particular situation.  We have found that 8-12 working hours (not sleeping hours) is often a good time period for a deadline.  Often times, this could mean avoiding a bidding war.

In some situations, a deadline will not make the seller respond, so be prepared for that outcome as well!

Question:  If the house I want is $20k over my price range, does that mean I can’t afford it?
Maybe, maybe not…We tell our clients to focus on your monthly payments, not just on a purchase price. By doing this, you’ll know what you may or may not be comfortable paying for a home every month.

In other words, focus on the fact that you want to pay, say, $2,500 per month on your new home and NOT on a somewhat arbitrary price point.

Why?

Because for every $10,000 change in price, your monthly payment only goes up about $50 per month.  When you look at it that way, you might be able to afford the home of your dreams or that home you just fell in love with.

So, that extra $20,000 price tag equates into an extra $100 per month.  Is that something you can handle? If so and it’s a home that has everything you’d ever want, go for it…as long as it doesn’t break the bank or make you change your lifestyle in any way that is uncomfortable.

On the other hand, if you buy something not as updated for less money, you might have to spend money on repairs, etc. You’ll need to weigh the pros and cons of each situation when determining what is affordable to you.

If you have additional questions, simply text Ginger at 334-703-4340, and we’ll respond promptly to answer any other questions you might have.  Even if you plan to buy in the next several months, we can start getting you prepared today.