Buyers
often get frustrated in a hot real estate market. Before they can even schedule a showing a
house might go under contract. They put
in a full price offer only to find out they were outbid by another buyer for
more than the asking price. All of this
adds up to motivate buyers and works out in creating a great seller’s
market. So, should you buy in a seller’s
market?
This
is a great time to purchase a new home no matter if you are a first-time home
buyer or this is your third or fourth home.
Also, a perfect time to purchase that summer house or camp on the lake
that you have been dreaming about. While
home prices are slightly up over the last couple years, the interest rates on
mortgages are at all-time lows.
I
just had a buyer close on a house and he locked in his mortgage at 2.75 percent
for a 30-year fixed and only put 3.5 percent down. Obviously, this keeps his monthly payment
down and that is very important to all buyers.
The other thing that a low interest rate does is increase a person’s
buying power. How does that work you
ask? Here is a simple example to explain
it.
A
buyer wants to have his payment around $1,200 per month not including property
taxes and insurance. If they base their
search on a 4 percent interest rate, they will be looking around the $250,000
range. If they can lower their rate to 3
percent it would give them about a $35,000 increase in their price range and
still keep their payment at $1,200. So
now they can purchase a home for $285,000.
With
interest rates this low I often encourage buyers to push their comfort level
with what they think they want for a monthly payment. I don’t want them to over extend themselves,
but I do want them to consider where they are at with their careers. Do they have a raise coming, perhaps a
promotion, or maybe they are about to have their vehicle or boat paid off?
My
thought is that most people get a yearly raise and our income goes up. This will mean that the monthly payment won’t
seem quite as much in a year or two once you pay off that car or perhaps when a
child turns 18 and graduates, the child support stops and you can afford a
little more of a payment. So, take time
to look at the overall big picture when deciding what your price range is for
purchasing your new home.
Sellers
I have one important piece of advice for when trying to sell in this very hot
seller’s market. Price your home
correctly. It is the most important
thing you can do. Buyer’s are very much aware
of what home values are in this day an age.
A correctly priced home will have several buyers looking at it and will
generally wind up with more than one offer.
If your home isn’t selling in this market, then there is something
drastically wrong or it is overpriced.
This
article written by Matthew Trudel, Owner Five Star Realty, Windham 207-939-6971.
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