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It’s a Buyer’s Market: Part One


Given the increasing interest rates and slower turnover, you may assume it’s not a great time to purchase a house — and you’d be wrong! As we close out the first month of 2023, it’s a buyer’s market. This means that home buyers are entering the market and contract negotiations with the understanding that there are more sellers who want to sell than buyers who want to buy.


What a buyer’s market means for you


For this blog post, we tapped Michael Dean, a branch manager for CrossCountry Mortgage in downtown Orlando. Below, he shares his thoughts on a buyer’s market as well as two tips for home buyers who want to save.


To start, let’s consider why it’s a buyer’s market now. Increased interest rates have caused individuals to be more hesitant when it comes to purchasing a house. With less buyers competing for the same homes, sellers feel like they need to fight for qualified buyers. The real estate market comes down to leverage and who has it. Right now, home buyers are enjoying more leverage than they’ve had in recent years.


Two ways to save when purchasing a home


As a home buyer, you may be wondering how to work with your realtor and lending agent to ensure you get the best deal in the current market. Of course, it’s important to have open and productive communication prior to looking at properties. This approach will allow you to have a realistic idea of what you can expect during house hunting. Right now, property values are remaining steady — something we haven’t seen lately. Listings are also sitting for longer, allowing buyers to have slightly more choices.


One way a realtor can help their buyers get the best deal available is by asking for seller credits at closing, which reduces the amount the buyer has to pay out of their own pocket. You can also ask the seller to complete more repairs prior to closing, saving you money in the long run.


Discount points are another great way to reduce mortgage payment rates when rates are high if you intend to keep your home for three to five years. Points can best be described as paying a percentage of the loan amount in exchange for a lower rate — so one point equals one percent of the loan amount.


In the example below, we outline a standard scenario where there is an option to pay points to lower your payment with the hope of recouping your investment in the long run. By obtaining a lower rate, your payment is reduced monthly. Remember, though, that your reduced payment isn’t free because you are paying a lump sum in exchange for a lower rate. If you pay $2,000.00 up-front to reduce your payment by $49.00 per month and keep you loan for 30 years, you made an incredibly wise investment. In fact, you’ll save $15,609.39 in total. But if your breakeven period is 40.8 months and you sell your house after just a year, that’s not the case.

Paying points should be a lengthy discussion between you, your realtor, and a mortgage professional to ensure that you make the right choice. The key is to balance your long-term goals with your short-term needs.


What’s next


Later this month, we’ll discuss a third way to save money as a home buyer: a temporary interest buy-down agreement. Plus, we’ll share some helpful insights on the housing market in 2023.



Let The Urban Dog Group help you with your real estate needs in 2023. Contact Christine Elias at caerealestate@gmail.com.

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