Connect2Agent - Home Buyers and Sellers

Sound Financial Advice Can Result in True Savings for Homebuyers

You have been shopping for home listings:  Online, reading through home magazines, and touring homes with your real estate agent.  Then comes the magical day when you step outside your car and into the house that you just know can be the place you will call home. 

Let's say that you have gone through negotiation with the Seller and they are willing to come down off the asking price by $15,000.

Before your real estate agent inks that final offer, you might want to consider applying this same $15,000 towards closing costs and pre-paid expenses and to buy down the interest rate on their home loan to 5.75%, saving you $42,361 over the life of your home loan.

This is the premise and sage advice I found in a blog post yesterday by Dave Porter, "Teaching your clients how to buy a home in a declining real estate market".  The article uses this example as paraphrased above, to educate professional mortgage planners on how they can teach their clients to make more lucrative financial decisions.  Porter's example of the buyer who chooses to apply the $15,000 towards the cost of the loan, rather than the listing price of the home provides a buyer with a long term interest the opportunity to make that $15,000 work for him.

The example also saves the buyer in a significant number of ways as noted by Porter:

• A reduced interest rate of 5.75%
• A mortgage payment that is $79/month lower.
• A savings of $42,361 over the life of the loan.
• A $9600 tax deduction.

Now that's money in the bank.

Low Ball Offers - Should they be considered by a homeseller?

In a buyers market, aggressive home pricing is a reality for home sellers.  But what happens when a seller has listed their home at fair market value (indicative of the current local market trends and local comparables of homes in the area) and you receive a lowball offer from a perspective buyer? 

Usually this will set off the "there's no way I am even entertaining this" reaction, much to the chagrin of the Seller's real estate agent (the listing agent) and later, the detriment of the Seller.

It would be hard for anyone living and breathing in North America today with a slight penchant for news to not understand that we are that we are in a buyer's market.  What exactly does this mean for a Seller? 

Typically this involves more concessions such as:

• Peforming ancillary home repairs- replacing dated/worn carpeting, painting rooms in a netural color, finishing landscaping items.
• Bracing for increased DOM- longer period of time the house will be on the market before an offer is made and accepted.
• Increasing marketing efforts to effectively compete against a larger inventory of similar homes.