Have you been wanting to buy a home but the vicious sellers' market turned you away? Well, there is good news for you. Although the market is still in favor of the seller, the terms of other buyers' offers are becoming less aggressive, providing an antidote to the ruthless bidding wars.
The past two years have turned the housing market upside down. From the record lows of housing inventory to the record highs of interest rates, buyers began to compromise crucial elements of the homebuying process in order to win in such a tight market. One way we saw this was in the removal of "standard" contingencies-- appraisals and inspections.
An appraisal determines the value of a home by evaluating and comparing it to similar properties recently sold. Appraisals take into consideration the location, condition, type of sale, amenities, etc. Having an appraisal done can be a significant negotiating tool when working with a seller. In addition to this, most lenders require an appraisal at or above the value of the contracted purchase price before a new mortgage is approved.
Home inspections reveal any issues at hand or that could arise for the homebuyer. A home inspector visually examines a property’s physical condition, structure, and various systems, from the foundation to the roof. Inspections are another crucial element of the due diligence period and should rarely be waived.
Another way we see buyers' regaining power in today's market is through the seller's willingness to help cover closing costs. Before the pandemic, it was not uncommon for sellers to help cover some or all of the closing costs to sweeten the deal. During the pandemic, when there was a lack of supply and a surplus of demand, sellers had no motivation to help cover closing costs because they had a line of buyers ready to make a better offer than the next. Recently, however, we have seen a shift in this, and sellers are opening back up to the idea of helping out with closing costs. Note the fact that closing cost credits are set by your lender and can vary by state and type, so contact your loan advisor to understand how much a seller can actually contribute to closing costs.
If you are a buyer in today's market, look up; there is hope on the horizon. Negotiations are coming back onto the table and can be a handy element for you as you enter the housing market. There is less of a need to waive appraisals and inspections during your due diligence period, and you may find some luck when it comes to closing time. If you have been waiting on the sidelines, now might be the time to get in the housing game. Contact one of our Roberts & Co agents today and let us help you find your dream home.