What aspects of buying can homebuyers actually control these days?

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Published Date 5/17/2024

This market. Call it what you will, because today’s homebuyers no doubt have all sorts of colorful names for it.

Realtor.com’s Margaret Heidenry puts it this way: “The housing market has been a hardscrabble landscape for many homebuyers for years now. First, buyers looking for homes at the height of the COVID-19 pandemic enjoyed low mortgage rates, yet faced massive competition that helped drive median home prices to all-time highs.”

She goes on to say that as the pandemic receded, mortgage rates began to skyrocket, have stayed there, and today’s buyers also face inventory shortages, with active listings down 35.9% this April compared with typical 2017 to 2019 levels.

While this real estate market might make the average buyer feel like the housing market’s ups and downs are out of their control, the reality is that many aspects of the buying process are firmly controllable. Realtor.com’s chief economist Danielle Hale says buyers should focus on what they can control and plan for what they can’t. For instance they can set a budget and use one of the many handy mortgage calculators to test out what higher or lower mortgage rates mean for their monthly budget and price target. Then they can plan in advance so they’ll know how to adjust.

Just because the average home is priced at $430K (as of April 2024) doesn’t mean that is the amount you have to fork over to land a home. You can adjust your price range and criteria to adjust for interest rate fluctuations to find properties where you are more comfortable with the payment — kind of like what happens when you walk into a car dealership and they talk to you about the payment, and not necessarily about the price of the car.

Unlike a car that loses value the moment it is driven off the lot, however, finding the payment that works for you will allow you to get in and begin building equity. “Having equity in your home equals less debt now and more resources to take out a home equity loan in the future,” says Heidenry.

The good news is that home price reductions were up 15.5% this April compared with 12.3% for the same month last year. “You can look for price-reduced homes in your property search, or you can simply offer less on a home than the list price,” she adds. “Or buyers can ask for financial breaks in other areas of the home buying process.”

Because sellers are keen to the problem today’s interest rates pose (they too, might want to buy again after they sell their home), buyers can ask them for concessions — including an interest rate buy down and/or paying a buyer’s closing costs. Many Realtors admit that their clients get excited and decide not to negotiate, noting that emotionally driven parties often end up with a less-than-the-best result.

Perhaps it goes without saying that you can control the kind of home you buy. It’s just that many buyers don’t realize that a slew of new homes coming to market can help alleviate housing shortages. “Better yet, sellers often hold the cards when it comes to newer homes, with builders often offering incentives to get buyers into a home,” says Heidenry.

One Florida agent Heidenry consulted said he and his team are working with a couple of buyers who are relocating to their area. “They are likely to get a better deal on new construction for their price range versus going with a resale that is a few years old because they won’t have to replace things like the AC, roof, water heaters, etc.” And homebuyers are often in a stronger place to negotiate with a large building company rather than an individual seller.

For some, waiting to buy might be the best move. For others, waiting could mean missing out. Even if they bite the bullet today, at some point, interest rates will come down and buyers who buy today can refinance, reducing their payments to $300, $400, $500 a month or more.

And lastly? You can definitely control which real estate agent you work with. Buyers, whether they know it or not, control nearly every aspect of the buying process and should begin by being active partners with their real estate agent. “I often see buyers who just blindly follow their agents from house to house, even though those houses meet none of their criteria,” says one California-based agent. “Buyers should not be afraid to tell their agents they aren’t interested in seeing a particular property. If you aren’t happy with your agent, walk away when your contract is up.”

Realtor,TBWS

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