When deciding on the best time to enter the market as a buyer, there are two main factors most people consider: interest rates and prices. The caveat is that these two factors almost always have an inverse relationship. A couple of years ago, interest rates were at an all-time low while prices soared and almost every sale involved multiple offers and ended up settling at asking price or far above. Now, we are seeing prices fall from those record highs but interest rates are climbing!

If only interest rates AND prices fell at the same time! We hate to burst your bubble but that scenario is highly unlikely. Here’s why: when interest rates fall, more buyers flood the market. More buyers create more demand. More demand drives prices up, just like it did in 2020-2021.

So what is the best way to navigate the market? It always depends on the buyer’s financial situation, but here is some insight to consider: You can always refinance your mortgage rate, but you can NEVER change the price you bought your home for. 

We recently worked with a buyer who wanted to offer $260,000 on a $277,000 home, something that was unheard of in 2020 & 2021. With a conventional loan, her monthly payment was estimated to be $1,635.75. After HOA fees, her payment was a little higher than she wanted. So, we got creative.

We suggested offering $268,000 with an $8,000 credit back at closing that she could use to buy down her interest rate. It is important to note that both offers leave the seller netting the same amount. But, at this higher sale price with a credit, her monthly payment was actually less! The $8,000 credit would buy her interest rate down from 6.75% to 5.625% making her monthly payment only $1,496.48!

For most buyers who will use a mortgage to buy a home, now is the time to buy. They say “date the rate, marry the house” meaning that you can lock in the home you love, for a lower sales price and without the competition of a low-interest rate market now, then refinance down the road. In the buyer from the scenario above refinanced to say 4%,  her monthly payment would drop to $1,346.78.

In any market, but especially a shifting one, it is important to have a creative agent who will negotiate the best deal for you. Many other agents would have just written up an offer for this buyer for $260,000 like she wanted, without going the extra mile to make her more comfortable with her monthly payment. With a little negotiating, we ended up getting this buyer under contract for the same unit for $255,000 with a $5,000 credit at closing. Who you hire matters, and we would love the opportunity to represent you, or your friends and family, when it comes time to make a move.

For more information on the state of the SWFL Housing Market, check out our latest Market Update!