Selling Your Home? Small White Lies Could Jeopardize the Sale

by Barry Shaw

When you’re selling your home, you want to say everything you can to convince buyers that your home is the perfect property for them.

But what you don’t want to do is lie to them.

While sellers telling white lies about their property isn’t uncommon, it does have the potential to backfire—and cause the entire deal to go downhill.

But what, exactly, are the white lies sellers commonly tell, and why is it important to avoid those lies?

A recent article from realtor.com outlined white lies sellers sometimes tell that could jeopardize your home sale, including:

“The house hasn’t been on the market for long.” Buyers sometimes think that, if a house has been on the market for a while, they can get it for a cheaper price. In an effort to avoid lowball offers, some sellers try to make it seem like the home just hit the market, particularly if they took it off the market for a time and then relisted it. But with so much access to information on the Internet, buyers will most likely find out the truth—and if they feel deceived, it could cause them to not move forward with an offer, or affect how they deal with you if they do.

“We just installed a new roof!” Trying to make your home seem more attractive by claiming you made recent upgrades (for example, a new roof, HVAC system or appliances) will almost surely backfire. Buyers will find out that you were lying about the upgrades during the inspection process. If they find out, for example, that the “new” roof will actually need to be replaced in the next 5 years, it could make them walk away from the deal. You could also get in legal trouble for failing to accurately disclose material facts to a buyer, so make sure to accurately disclose all information about your house.

“This is a great neighborhood.” It’s fine to talk up the positives of your neighborhood. But exaggerating or flat-out lying about neighborhood details is never a good idea; most buyers will do their research on the neighborhood—and if they find out that things aren’t as great as you made them out to be, it could jeopardize the sale.

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Buyers • Local Real Estate Market • Sellers • Uncategorized • March 20, 2023

Will the 2023 Spring Real Estate Market Be Different from the Past Few?

by Barry Shaw

It may not feel or look like spring in many areas yet, but as of Monday March 20th, it’s here! So does that mean the spring real estate market officially begins that day as well? Or does it kick off the weekend before or the weekend after since the first day of spring falls on a weekday? None of the above actually.

In fact, the spring market has already begun! Many people in the industry consider January to be the start of the spring real estate market. At least that’s when buyers who plan on buying in the spring often begin their search, and some even end up buying before spring arrives.

But there is truly a seasonal uptick when more sellers tend to list their houses, and more buyers are actively out looking in most areas. But when that officially begins depends on where you’re looking to buy or sell. If you’re in an area where winter weather is still packing a punch, like us here in Western WI for instance, you probably have a few more weeks before it picks up. But in the south, you might already be seeing the activity. So if you’re looking to either buy or sell this spring, check with your local agent for advice on the best time for you to list or start looking.

Pro tip: You’re probably safer just listing your house or starting your home search ASAP at this point, regardless of when the activity typically picks up in your area. Waiting for everyone else to jump into the mix won’t necessarily help your cause if you’re selling or buying, because then you’re just dealing with more competition.

Will This Spring Market Be Different Than the Past Few?
While the spring market is almost always a busier time of year in real estate, the past few years were more hectic than usual. Mortgage rates were at an all-time low, and there weren’t enough houses listed to satisfy the amount of buyers in the market for one.

So if you put your house on the market, it wasn’t uncommon to see a line of buyers and their agents waiting for a chance to see your house, and there was a good chance your house would sell within days and for over asking price. On the other hand, buyers had to be quick to see new listings and make an aggressive offer — and they still weren’t guaranteed their offer would be chosen.

Well, as you’re probably aware of, some things have changed in the real estate market since then… yet, other things haven’t. Here are the key factors that will affect both buyers and sellers this spring:

Mortgage rates are higher.
This is obviously the biggest change. We went from historically low interest, to rates that are more in line with where they tend to be historically. They’re not necessarily “high,” but they’re higher than they had been for some time, which affects how buyers feel, and how much they can actually afford to pay for a house.

Houses are taking longer to sell in some areas and price ranges.
It’s not like houses aren’t selling, but it may take more time to get offers and go under contract with a buyer. It depends a lot upon your price range and area, so you might find that you can get your house sold quickly and for over asking with multiple offers still, but in some areas your house may take some time to sell and you won’t get over asking price for it. Your local agent can give you insight into which is more likely to happen with your house.

Inventory is still low.
Again, this depends upon where you live and the price range you’re selling or buying in, but overall inventory hasn’t grown considerably. There are still too few houses for the number of buyers who want to buy one.

Buyer demand is still pretty high.
Despite rates having gone up, there are many buyers who are glad to finally be able to look for a house and not have to contend with as many other buyers as they would have over the past few years.

Buyers are more cautious. Even though buyer demand is still high, and there aren’t that many houses to go around, buyers are being more deliberate and cautious. They won’t necessarily make offers as high as they had been, and they might not be willing to waive contingencies like a home inspection.

The spring real estate market has probably already begun (even as far back as January) to some degree in your local market, but it’s surely about to ramp up in the next few weeks with the official arrival of spring.

This spring market will probably not be quite like the past few since mortgage rates have risen, causing houses in some areas to take longer to sell. That said, inventory is still low, and buyer demand is still high.

So, if you’re planning to sell your house:
Make sure it shows as nicely as possible.
Price it appropriately against the competition.
Make it easy for buyers to get in and see.
Be flexible on your price and terms when negotiating. (Buyers may not be willing to pay the prices they were paying, or forgo contingencies as they were in the past few years).

If you’re looking to buy a house:
Take advantage of less competition from other buyers than there was over the past couple of years.
Don’t hesitate when you see a house you like; if you like it, someone else likely will too. Make a strong offer before anyone else does.
Keep eye on rates and lock in your rate if it goes down a decent amount.

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Buyers • Local Real Estate Market • Sellers • Uncategorized • March 13, 2023

Things Parents Should Encourage Their Teens & Twenty-Somethings to Do

by Barry Shaw

Years ago it was common for children to move out and get a place of their own right after they turned 18, or maybe around 22 if they went to college. But times (and costs) have certainly changed over the years, making it difficult for young adults to move out and get a place of their own. So, most people would agree that young adults can probably use all the time and help they can get from their parents for as long as possible nowadays.

Rents and house prices aren’t cheap. Then of course there’s the price of food and utilities every month. And if they went to college, they probably have loans they need to pay off… which is why so many young adults live at home for a lot longer than people used to.

But at some point, they have to move out and get a place of their own. And doing that is difficult if they haven’t been put in a position to prove they can handle paying for a place of their own! Whether they’re dealing with a landlord, or a mortgage lender, they’ll need to be able to show some proof that they’re financially responsible.

So here are a few things you should encourage your kids to do as early in life as possible (within reason!), so they can get a place of their own when the time comes:

1) Earn money they can prove
Odd jobs like babysitting, or doing yard work for neighbors might put some money in their pocket, but it’s also easy to not claim on a tax return. Getting jobs that put them on the payroll and give them an actual paycheck will make it easier for them to prove their income to creditors, mortgage lenders, and landlords. If they get a job that also provides tip money, they should avoid the temptation to fudge the numbers on their tax returns; it might save them a few bucks in taxes, but it will also make it look like they earn less than they actually do, which could affect how a lender or landlord assesses them.

2) Establish credit history
Bad credit isn’t good, but having no credit history isn’t much better. It takes time and a few creditors for a credit report to show that a young person has been given credit in the past. If a lender or landlord sees that they have no previous credit, they’re not likely to want to be the first to take the risk with them.

Have your child open some credit cards in their own name, buy a car, and rack up some monthly recurring bills (like a cell phone in their name) that get reported to credit agencies.

3) Be responsible with their credit
Once they have credit cards, they should use them regularly without maxing them out, and make timely payments each month. When they buy a car, they need to make sure to not miss a payment, and certainly not let it get repossessed. Not only is this good for building their credit history and score, but it also teaches them to handle the responsibility of having bills to pay, and staying within their budget each month.

Doing these 3 things will go a long way in making it easier for them to move out on their own when the time comes. (But don’t be surprised if they ask for a little help with the downpayment on their first house!)

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Buyers • Local Real Estate Market • Uncategorized • March 6, 2023

Planning to Buy a Home? These White Lies Can Jeopardize Your Chances

by Barry Shaw

Have you heard the saying “honesty is the best policy?” That’s generally true in life—but it’s especially true when it comes to real estate.

If you’re buying a home, lying to your lender—even a “harmless” white lie—could jeopardize the whole deal. And while you should refrain from telling any lies, there are certain ones that are almost certain to cause issues with your real estate purchase.

So what, exactly, are those lies? A recent article from realtor.com outlined the white lies that could destroy your chances of successfully buying a home, including:

Saying you’re going to live in the home, when you’re actually planning to rent it out. If you’re planning to buy a house as a rental property (whether for a short-term or long-term rental), you need to disclose it. If you don’t, it could be considered mortgage fraud—which can result in a felony charge.

Not being honest about where your down payment money is coming from. It’s certainly not uncommon for buyers to get financial help when they’re buying a home. But if someone (for example, a parent) has gifted and/or loaned you money to cover your down payment, you need to let your lender know. Generally, it won’t be a problem—but if you lie about where the money came from, that could end up being a problem.

Leaving out debts. When you apply for a mortgage, you need to disclose every single debt, no matter how big or small. Your lender will discover the debt during the underwriting process—and if they find out you knowingly lied, it could cost you your mortgage.

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Buyers • Local Real Estate Market • Sellers • Uncategorized • February 18, 2023

5 Shams and Scams You Should Be Leery of as a Homebuyer or Seller

by Barry Shaw

At this point everyone knows not to fall for the email from a Nigerian prince promising to share his fortune with you if you just send him your banking information. After all, that scam has been around almost as long as the Internet has existed, and most people have seen it at least once!

But people don’t buy or sell a house all that often, so real estate scams and shams can be easy to miss to the untrained eye.

So let’s take a look at 5 things you should be leery of as a homebuyer or seller that may be an outright scam, or just something that’s not quite as promising as it may appear to be, so you know what to look for and can avoid them.

1) Asking you to wire escrow or closing cost money
When you buy or sell a house, there’s a good chance that a title company or attorney will be handling the closing. So it wouldn’t be all that weird to get an email from them asking you to wire money for closing costs, the down payment, etc.

However, there’s a scam where someone hacks into the system of those types of companies and gets the details and email address of the client. Then they create a fake email address that looks like it’s coming from the title company, and instruct you to wire money to their own account.

The good news is that this will only be something you need to be concerned about when you’re in the middle of a real estate transaction, and will have real estate professionals in the mix at that time. And real estate pros are very aware of this, so they’ll most likely advise you not to send money without verifying that they sent you the email and instructions, and double checking that you have the correct info. But just in case they don’t, make sure you reach out to verify before sending money.

2) “We’ll buy your house for cash…”
This isn’t so much a scam as it is a potential sham. To be fair, there are people and companies out there who are interested in buying houses as investors, and will pay you cash for your house. They may even pay you a fair price. But probably not…

Whether you’re sent a “handwritten” letter that looks super personal and specific, or just see one of their signs on a telephone post, be leery of the offer to buy your house for cash. There’s always a catch.

The solution to avoid being taken by someone making this offer is simple: Enlist a local real estate agent for their advice and expertise. A pro can help you determine how much your house is worth, review the details of their offer, and help you determine whether it’s legitimate and worth taking.

3) Fake Craigslist listings
Almost every buyer and renter uses the Internet to look for places to buy or rent nowadays, and there are tons of websites where you can find listings. But Craigslist is one you need to be careful with, because scammers have been known to create fake listings.

They don’t look fake, because they usually find a current listing on one of the many legitimate listing sites, and then duplicate the listing. But the catch is when you reach out to the poster with interest, they hype up how much other interest they have, and then ask you to send a deposit in order to secure an appointment to even see the place.

That’s a huge red flag, and it’s easy to avoid if you know this happens. But they’re preying on the unaware and the emotions of someone desperate for an opportunity. Even if it looks like the house of your dreams, or deal of the century, don’t send anyone money to set up an appointment to see it. If you do, the chances are they’ll disappear the minute your money clears, and you’ll be knocking on the door of someone who probably had no clue their house was even used in an online scam.

4) Estimating the value of your home online
This is by no means a scam, but it’s certainly not as reliable or accurate as you might think it is.

It’s so appealing and easy to type your address into the search bar of a website and get the value of your house in an instant. It’s even more appealing when that value is higher than you imagined it would be!

But the truth is, any site that offers a free online valuation of your home is probably not accurate. They probably even have a disclaimer that tells you it’s not accurate, instead giving you a range of how far off it could be—and it can be wayyyy off.

These sites use algorithms that take some broad information and spit out an estimate without knowing the details of your home, area, or current market. They’re fine to use for entertainment and a general idea about the value of your house, but rather than have a misleading sense of your home’s value, you’re better off asking a local agent to do a market analysis for you.

Real estate professionals know the current local market and can come and see your house in person, which helps determine a more accurate value than a website can compute from data alone. Most agents are more than happy to do one for you for free.

5) Help for distressed homeowners
If you’re running behind on your mortgage payments, there’s a good chance you’ll start receiving letters and phone calls from people and companies who want to help you avoid foreclosure.

They may offer to help you negotiate with your bank, or help you do a short sale. Or perhaps they’ll try to convince you to sell your house to them at a discount, and they’ll let you stay there while you rent it back from them until you can afford to buy it again. It could come in all sorts of forms, but whatever help is offered is likely a scam.

It’s a stressful time when you’re behind and facing the loss of your home. And it can be embarrassing. So when someone reaches out who seems to understand and wants to help, it can be an appealing option. But you’re better off being the one who reaches out to someone you’ve researched and vetted—like an attorney or real estate agent you trust—and ask them to help you figure out your options.

Now that you know those real estate scams and shams, you should easily be able to avoid them. But there may be others or new ones you come across! So the best advice is to always consult with a trusted agent, attorney, or other industry professional before you make any real estate decisions… but especially when something sounds a little too good to be true, or even the slightest bit weird to you.

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Buyers • Local Real Estate Market • Sellers • Uncategorized • February 11, 2023

2023 Home Renovation Tips From HGTV Experts

by Barry Shaw

If there’s anyone who knows about home renovation, it’s the home renovation experts on HGTV.

So, what do those experts have to say about renovating your home in 2023?

A recent video from realtor.com outlined key advice for homeowners that are planning a home renovation in 2023—straight from some of HGTV top stars!—including:

Get big items done, then worry about the small stuff. There’s a lot to get done when you’re renovating your home. And while working out the small details can be fun (for example, choosing paint and textile colors or cabinet finishes), it’s important to tackle the big parts of the project—like choosing a contractor and settling on a layout for your new room.

Working with a budget? Don’t underestimate the power of paint. You don’t need a huge budget to breathe new life into your space. A can of paint can go a long way! For example, you can paint an accent wall in your living room, paint countertops in your kitchen, or paint tile in your bathroom to make the spaces feel new and fresh.

Know it’s going to be a rollercoaster ride. It doesn’t matter how much you prepare or how amazing your contractor is, when you renovate your home, issues are going to come up. But those issues are no reason to panic! Just expect that not everything is going to go smoothly—and if and when you hit a bump in the ride, just work with your contractor to get things back on track.

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Buyers • Local Real Estate Market • Sellers • Uncategorized • February 5, 2023

Are Mortgage Rates Back to “Normal”?

by Barry Shaw

If you think mortgage rates are at an all-time high, you wouldn’t be alone. According to a recent NerdWallet article, 61% of Americans think they’re “unprecedented.” And you’re also not alone if you’re still planning on buying a home this year, despite that sentiment, considering 28 million people plan to do so according to their survey!

The thing is, mortgage rates aren’t actually the highest they’ve ever been; not by a long shot. Those low rates buyers were getting over the past few years were historically unusual, and now they’re not just back to “normal”—even below normal—considering data from Freddie Mac shows that 30-year mortgage rates have averaged 7.75% over the last 50 years.

When rates were unusually low, it almost didn’t matter if you weren’t careful about the type of loan or terms you agreed to with a lender. But now that rates have crept up, you want to make sure you not only get the lowest rate you can, but also the best type of loan and terms possible.

So let’s take a look at 5 things you should do to make sure you get the best loan possible in this market, or any other market for that matter:

1. Get Pre-approved Ahead of Time
You should always get pre-approved before you actually start looking at homes you want to buy, but many people don’t. On the most basic level, doing so helps you know that you can actually get a loan, and how much you can afford to spend. That helps you to avoid the wasted time and heartache of finding a house you love, only to find out you can’t actually afford to buy it.

But beyond that, getting pre-approved ahead of time is a good chance to speak to a few mortgage professionals and get a feel for them, which leads to…

2. Find a Mortgage Professional You Trust
As with any profession, not all mortgage professionals are going to provide you with the best advice and service. Some will woo you with what sounds like the best rate, while glossing over other costly terms, or switching the rate on you at the last minute.

Look for one you not only trust is being transparent and honest about the rates and terms they can offer you, but who also takes the time to explain all of your options—even if their rate doesn’t sound as low as others.

3. Choose the Type of Loan That Is Best for You
The historical rates mentioned above are based upon 30-year, fixed rate loans. Those are probably the “safest” and most predictable loans. But there are other options, like 7 or 15-year adjustable rate loans, which will usually have a lower rate, but may actually cost you more per month due to the shorter term of the loan, and the rate can go up after a number of years at a fixed rate. It could be a great way to save on interest and make more payments toward principal, if you know you’re going to sell or refinance before the rate changes. And who knows, the rates could be lower by then anyway.

Adjustable rate mortgages are just one example of the many different options you may have. If you choose a great mortgage professional to work with, he or she can help you analyze all of the different types of loans available to you, and help you figure out which one makes the most sense for your situation.

4. Don’t Stretch Yourself Financially
Just because you’re pre-approved for a certain amount doesn’t mean you have to (or should) spend every penny you can.

It’s not uncommon to be pre-approved for more than you may actually be comfortable spending per month on a mortgage. While a lender’s calculations should indicate that you can handle the payments on an ongoing basis, only you truly know your lifestyle and spending habits.

Ask your mortgage professional to give you an accurate estimate of how much per month it will cost you, if you were to spend as much as you’re approved for. (And remember to factor in property taxes and insurance, which will vary from one house to another.) Then think about paying that amount every month. Is it something you’ll be able to comfortably swing? Will it impact the things you like to spend money on weekly, monthly, and yearly?

You can also ask the mortgage rep to figure out about how much of a loan you should take on based upon a monthly payment you’re comfortable with, and use that as the top amount of your budget, even if it’s lower than what you’re actually approved to spend. And you can even try and spend less than that amount, if you want to really play it safe!

5. Shop and Negotiate for the Best Rate
While the rate isn’t the only or most important thing to consider, you should still shop around to make sure you’re getting the best rate possible. As mentioned above, when speaking with lenders, size up whether they’re being entirely honest and transparent about the rate and terms they’re offering.

If you get a better rate from one lender, see if the lender you trust the most can match it, or even beat it. But even if they can’t, keep in mind that it may be worth taking a slightly higher rate if you trust one lender above others who offer you a better rate.

Many people feel like mortgage rates are higher than they’ve ever been, but they’re actually not. In fact, they’re currently lower than the average rate over the past 50 years.
While being careful about the lender and loan you chose to go with didn’t matter as much when rates were unusually low over the past few years, now it pays to go back to basics and make sure you:
Get pre-approved ahead of time
Work with a mortgage professional you trust
Choose the best type of loan for your needs, situation, and qualifications
Avoid stretching yourself financially
Shop and negotiate for the best rate you can get

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Buyers • Local Real Estate Market • Sellers • Uncategorized • January 28, 2023

What Are “Comps,” and What Do You Need to Know About Them in the Current Real Estate Market?

by Barry Shaw

Every industry has jargon an outsider wouldn’t understand, and probably doesn’t need to know. But real estate is a field where almost every “outsider” needs a bit of insider knowledge in order to successfully buy, sell, or rent a place to live a few times in their lives.

For instance, you could go your entire life without hearing the term “comp” once, but the minute you decide to buy or sell a house you’ll hear agents say it like it’s a word you probably already know. It’s not nuclear physics, so you can probably figure out what they’re talking about, especially in the context they’re bringing it up. But just in case you’ve never heard the term before, “comp” is short for “comparable.”

Okay, but what exactly is a comparable?

Comparables are houses that are currently on the market, under contract, or (most importantly) recently sold. They’re used to compare against a house you’re planning to buy or sell, in order to establish approximately how much it should sell for in the current market. This helps you price it accurately as a seller, and know how much to offer as a buyer.

What makes a good comparable?
Comparables should be chosen in as objective a manner as possible, not to simply justify what you want to hear or think. Just because you want your house to be worth more than the data shows, doesn’t mean you can point to a house that sold for more and say it’s a true comp. Nor can you use a lower priced home as a comp to justify a low-ball offer, if it isn’t truly a good comparable for a house you’re trying to buy.

At times it can be pretty difficult for an agent or an appraiser to find many (or even enough) homes that are truly similar to the house you’re selling or buying, within a recent time frame. But ideally they are looking for houses that have:

Similar square footage.
Similar lot size.
Similar number of beds, baths, and other rooms.
Similar condition. (Like how updated or clean it is.)
Proximity to the subject property. (Ideally it should be fairly close by.)
Similar neighborhood or area.
Sold and closed recently. (Within three months is ideal.)

In a perfect world, they’d be able to find three similar homes that are currently on the market, three that are currently under contract, and three that have closed within the past three months, and use all of them in combination to determine how much you should list a house for as a seller, or offer for a house as a buyer.

The problem with comps in the current “shifting” market.
Almost everyone in the industry, government, and media seems to agree that the market is “shifting” right now. But it’s difficult to pinpoint what that means exactly, and opinions vary from one person to the next. Considering prices were skyrocketing and at all-time highs in the past few years, you’d think that meant prices are now coming down. What else could shifting mean?!

Well, it doesn’t necessarily mean that prices are going down in your area or price range. It also doesn’t seem to be translating into a buyers’ market everywhere either.

Data and news reports indicate that there are fewer houses selling, and it’s taking longer for them to sell in some areas than it has been in the past few years. But in many areas prices don’t seem to be plummeting, or even falling. In some areas prices are stable or even increasing.

The shift is affecting the market differently from one area to another, and one price range to another, so you can’t go by nationally based data and reports. You need to rely on good local comps to determine the value of a house you’re selling or buying.

But here are a few problems with comps in the current market that you need to be aware of:

There often aren’t enough of them. Inventory has been low, and continues to be low, so it can be tough to find 3 houses in each category of a proper analysis. Beyond that, it’s tough to find enough that are similar enough to a subject property.

Might need to look back further than 3 months. It’s never ideal to look back beyond three months, but due to the low number of listings and sales, it’s often necessary to do so. Unfortunately, a house that closed within the past three months is often just a sign of what the market was like as much as 5 or 6 months ago, because houses take a month or two to close after being listed even if they go under contract right away. So that data is more proof of what the market was like before or early on in the shift.

Won’t see “proof” of values shifting for months. To truly know if prices are going down, it may take a few months of purchases to tell the true tale.

So right now, sellers are often hanging onto “proof” that their house is worth a certain amount based upon sales prices that occurred when prices were at all-time highs. On the other hand, buyers often feel like prices should be coming down, based upon news of the market shifting, and the fact that interest rates going up have affected their buying power, but they don’t necessarily have “proof” to justify lower offers.

In the meantime, while the data catches up with the shift, your best bet is to rely on your agent’s experience and observations in the current market. What have they been seeing happen in your local area and price range? There may not be hard data to pull up yet, but a local agent is a good barometer for what buyers have been offering, how much sellers have been accepting, and how supply and demand has affected those two things in your area.

While comps are useful in determining values and how much to offer or accept for a house, when the market’s shifting you need to rely on your agent’s ability to gauge where the market is currently going before the proof actually appears in the form of comps.

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Buyers • Local Real Estate Market • Sellers • Uncategorized • January 23, 2023

Some Habits of Successful Homebuyers in 2023

by Barry Shaw

Buying a home in today’s market can be a challenging process. And if you want to succeed, there are certain habits you’ll want to cultivate—habits that will increase your chances of finding your dream home and having your offer accepted.

But what, exactly, are those habits?

A recent article from realtor.com outlined some of the key habits potential buyers need in order to successfully find and purchase a home in today’s market, including:

They’re persistent. While the market overall has cooled in recent months, there are definitely still areas where inventory is low and competition for properties is high. And in those markets, persistence is key.

They’re not afraid to ask questions. For most people, buying a home is the biggest investment they’ll ever make. And in today’s market (or really any market), successful buyers know that asking questions—about the property, about the homebuying process, about their mortgage—is a must to ensure that they’re making a good choice, and buying a solid investment.

They have a clear distinction between “wants” and “needs.” When it comes to buying a home, there is a difference between “must have” and “nice-to-have.” And the most successful buyers in today’s market have a clear distinction between what they want in a property, and what they need in a property—and are willing to be flexible for features that fall under the “wants” umbrella.

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Buyers • Local Real Estate Market • Uncategorized • January 16, 2023

With Consumer Confidence and Seller Concessions Both on the Rise, Now’s a Better Time to Buy a House

by Barry Shaw

People were flocking to buy a house when it was possibly one of the most difficult times in history to do so. Sure, interest rates were super low, but that’s about the only thing buyers had in their favor.

Competition was fierce, since there were so many buyers and not enough houses to satisfy demand, making it almost impossible to get your offer accepted. Prices were going higher and higher. And if you even wanted your offer to get a second glance, you pretty much had to give up your rights to typical inspections. Forget about asking for any concessions from a seller! Yet buyers were still lining up (literally) to buy houses.

Then mortgage rates went up, and many buyers felt like it was an awful time to buy a house. Consumer confidence plummeted to a low of 16% back in October and November of 2022. But, consumer confidence is rising and is now up to 21%.

A five percent bump might not seem all that great, but if you’ve been thinking about buying, that could be the sign you’ve been waiting to see in the market.

Not only are lower prices a good reason to buy now, according to this Real Deal article, sellers gave buyers concessions in 41.9 percent of home purchases in the fourth quarter. Just months ago, buyers were regularly waiving their rights to even get an inspection done on the house, let alone hoping to have a seller take care of any repairs. Now, many buyers are getting money toward repairs, closing costs, and even mortgage-rate buy-downs.

Let’s break it down with some bullet points to paint a clear picture of all the combined advantages to buying a house right now:

Prices have came down slightly in some areas. Prices aren’t necessarily dropping as far down as some buyers might like to see—or in every area—but there is data showing that prices have came down slightly.

There’s less competition. While consumer confidence is up, many buyers are still either priced out of the market by higher rates, or just don’t feel like it’s a good time to buy a house.

Houses are taking longer to sell. You have more time to look at houses and choose one. Mere months ago you almost had to write an offer sight unseen, within hours of a house being listed. It’s less hectic and stressful now.

Sellers are more likely to negotiate. Combining what sellers are seeing in the news about the market shifting, and then seeing fewer buyers than they may have anticipated coming to see their house, along with it not selling as quickly as they thought it would, sellers are more likely to negotiate.

Sellers are willing to negotiate on more than just price. As noted above, sellers are not just negotiating on price, they’re also willing to give concessions to buyers in the form of repairs, closing costs, and mortgage-rate buy-downs.

As consumer confidence rises, so will competition. This is a sweet spot of sorts right now. There are indications that consumer confidence is on the rise, but it’s still low, so there isn’t a significant increase in competition. But as the confidence spreads, more buyers will re-enter the buying pool, increasing your competition. More buyers re-entering the market could also impact how much sellers are willing to (or even need to) bend on price, terms, or concessions.

If you’ve been thinking about buying a house, paused your home search, or given up altogether because of the rise in mortgage rates, you might want to consider buying sooner than later.
While rates are certainly higher than the all-time lows they were at just a year ago, many other factors are more favorable for buyers now than they have been in quite some time. There’s less competition from other buyers, sellers are willing to negotiate on price, you don’t have to waive inspections as often, and you stand a good chance at having a seller offer you money for repairs, closing costs, and/or a mortgage-rate buy-down.

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Feel free to reach out anytime with any questions!

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