February 10, 2023 • 15 mins
It’s the end search is over. Stop even looking for a house. You’ll never be able to afford it, not with those interest rates.
Is that what you've been hearing or thinking? Is it even worth looking at homes anymore? Is your dream crushed? The reality is that, no, you aren't out of the running. It's just a different market now.
Today I've got Sarah back on the podcast, and one of the reasons I really wanted her back here is because she's been doing this for 20 years, and guess what, she's seen interest rates hit double digits. So she's gonna help us talk about what kinds of things we can do to buy a home in a high interest rate market.
Sarah's Contact Info:
Sarah Krasner: (702) 466-6430
NMLS #1272407
We cover five options:
1 - Buy down your rate, you may be surprised how much lower you can actually get.
2 - Work with a lender who will refinance you in the next year or two at no cost.
3 - Try different options from a financing standpoint. One of those can be a 2-1 buydown, an ARM loan, or other programs your lender might be offering.
4 - Start by looking at homes that have been on the market for over 30 days. If they haven't had any price reductions, you may be able to offer below ask and still get your offer accepted.
5 - Similar to the homes on the market over 30 days, but have your real estate agent look at homes that are offering seller concessions. These can be used to help pay for closing costs including rate buy downs.
We look at each of these in more detail, to give you an idea of how this can impact the purchase of a home.
Find all our episodes, articles, newsletter, and resources on our main site: https://FTHBPros.com
Looking for a local real estate agent outside of California? We’ve partnered with Home & Money, simply go to https://homeandmoney.com/FTHB/ and we’ll help connect you with a local, vetted agent.
Contact Information:
Philip Mastroianni – Loan Officer & Real Estate Agent
(949) 357-5029
Phil@HomeLoansPM.com
NMLS# 2141541
DRE# 02141890
Monica Mastroianni – Real Estate Agent
(951) 395-1848
Monica@HomesMM.com
DRE# 02099257
Legacy Homes Realty
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Phil (00:00):
Welcome to the First Time Home Buyers podcast.
It's the end search is over.
Stop even looking for a house.
You'll never be ableto afford it, not with
those interest rates.
Is that what you've beenhearing or thinking?
Is it even worth lookingat homes anymore?
Is your dream crushed?
The reality is that, no, youaren't out of the running.
It's just a different market nowToday I've got Sarah back on the
(00:30):
podcast, and one of the reasonsI really wanted her back here
is because she's been doing thisfor 20 years, and guess what?
She's seen interest rateshit double digits before.
So she's gonna help us talkabout what kinds of things
we can do to buy a home ina high interest rate market.
So welcome back to the show..
Sarah (00:50):
Thank you so much, Phil.
I think that we can givesome great ideas from
a lender's perspective.
Phil (00:55):
And I'm also a licensed real estate agent, so I'm
gonna give some perspectivestoo that I've helped with
some of my buyers and sellerson some of the things that
we've been doing as well.
So right now we're inthe first half of 2023.
After about.
Two years of unprecedentedlow interest rates and
unfortunately, soaring homeprices, those prices have
(01:18):
pushed a lot of people outof their budgets and they've
stopped their home searches.
Does this sound like you?
Listen on, we've got somegreat tactics and options.
I wanna still help you finda home that you can afford.
So let's talk aboutwhat options you've got.
During the high interestrate season, and Sarah,
maybe just give us an idea,what are the interest rates
(01:39):
looking like right now?
Sarah (01:40):
We're seeing ranges anywhere from the fives to
7%, and we don't know wherethe rates are going to go.
They could continue to rise.
, they are trending down,but we're not a economist
and we don't have a crystalball to see into the future.
Interest ratesalways fluctuating.
(02:03):
They rise and fall.
You've probably heard . Ihate this saying the date
the rate, marry the home,and in this case, you can
look at the price that youpaid for the home as the one
thing that's going to staystable, not the interest rate.
Phil (02:21):
So let's talk about how this is affecting
buyers out there.
And my buyers and sellers aredefinitely having a tougher
time finding homes simplybecause their pre-approval was
for a lower interest rate, sothe dollar amount was higher.
And as these interest rateshave gone up, , they've
had to adjust those downand they're updated to that
(02:43):
lower amount, so they justdon't have the buying power.
So there's fewer homesin their price range from
a seller's perspective.
There's less buyers out theresince many have actually stopped
shopping, hoping that interestrates are gonna drop, or these
home prices are gonna drop.
We're also seeing that withinterest rates changing so
quickly, Sellers are muchmore concerned about how
(03:06):
qualified the buyers are.
Is that pre-approval fromtwo months ago when the
interest rate was a lot lower.
We've also seen that thenumber of buyers that
aren't able to complete theloan process has actually
increased because of this.
Let's go ahead and lookat some of the options you
have as a buyer to stillpurchase a home while if
(03:26):
interest rates are higher.
And then let's gointo more details.
So I've got these fivepoints I wanted to go over.
first one is buyingdown your rate.
You could be surprised how muchlower you can actually get.
Second one is working with alender who will refinance you in
the next year or two at no cost.
The third is tryingdifferent options from
a financing standpoint.
(03:47):
One of those can be a two,one, buy down an arm loan
or other programs that yourlender might be offering.
The fourth one is lookingat homes that have been on
the market for over 30 days.
if they haven't had any pricereductions, you may be able
to offer below, ask and stillget your offer accepted.
And the last one here issimilar to the homes on
the market over 30 days.
(04:09):
But really make sure youhave your real estate agent.
Look at homes that areoffering seller concessions.
These can be used to helppay for closing costs,
including rate by downs.
And we'll get into whatrate by Downs are here next.
So Sarah, maybe you couldhelp explain what this is
buying down your rate andhow you can actually get that
to a better interest rate.
Sarah (04:30):
Sure.
Buying down your rate meansthat you're asking the
bank to give you a lowerinterest rate on your loan.
You can do this by payingsome of the money for
the home upfront inwhat are called points.
When you buy down yourrate, you're agreeing
to pay more money.
Now, in order to have a lowermonthly payment for the life
(04:53):
of the loan So it's importantto think about how long you
plan on living in the home andhow much money you would save
overall before deciding whetheror not to buy down the rate.
And if it's for you.
Phil (05:06):
I think that's a really great point.
It is important To look atthis on the long term approach.
What is typical ofbuying down your rate?
Sarah (05:15):
Generally speaking, let's say you're trying to
get your interest rate downto 5% and you were quoted
five and a half percent,you might need up to two
points to get the rate to go.
lower So interest, yournew interest rate would
be 5% instead of the 5.5%.
(05:37):
This is going to fluctuatebetween lenders, between
banks, and between programs.
All of this is very generalized.
Phil (05:46):
This is where you want to sit down with your loan
officer and go through a lotof different scenarios and
say, well, I have X amount ofdollars that I'm willing to put
towards buying down my rate.
If you're buying a home andyou're spending something
like $400,000 and you'reputting three and a half
percent down, you're paying$14,000 in your down payment.
If you have extra money thatyou want to put towards the
(06:09):
house to buy those pointsdown, maybe five to $10,000
more might get you froma six and a half percent
interest rate down to 6%.
That difference is gonna be overa hundred dollars a month in
savings, but you also have thatinterest rate for the long run.
And so that's one way for youto get a lower interest rate
is by actually paying to lowerthat interest rate as opposed
(06:32):
to a higher down payment.
Oftentimes, you'll see thatthat lower interest rate is
more beneficial, so definitelywork with your loan officer to
see what scenarios work bestfor you in your situation.
Now the next one is workingwith a lender who's gonna
refinance you in the next yearor two when hopefully interest
(06:54):
rates have dropped at no cost.
If you're willing to wait,you're already qualified
at that rate and you'replanning on staying in your
home for more than a fewyears, it might make sense
And Sarah, are youable to do this often?
Sarah (07:07):
If it makes sense to refinance, we offer that
to all of our past clients.
but let's get intowhat refinancing is.
Refinancing is the processof taking out a new loan
with lower interest rate toreplace your current mortgage.
You might do this if interestrates have dropped since you
first got your mortgage tolower your overall payments.
(07:28):
or if the value of your homehas gone up, you may also be
able to refinance and get cashout of your home's Equity.
This can be helpful ifyou have a large project
like home renovations orif you want to consolidate
debt or a combination.
Phil (07:45):
One of the things to consider is in these higher
interest rates and highercost homes, you may be able to
find a home that maybe needsa little bit of cosmetic work.
Maybe it's got an older kitchenor bathroom Through and a lot of
people have been passing it up.
This may be that opportunityto get that home, knowing that
in the next year or two youmight be able to do a cash
(08:05):
out refinance and use thattowards some renovations.
There's even options todo renovation type loans,
but that's a whole nothertopic that we can get into.
Sarah (08:14):
Refinancing could save you money every month and
over the life of the loan asyou'll be paying less interest.
Overall.
Nobody knows what interestrates are going to do in
the future, and as long asyou're comfortable at your
current rate, you can waituntil interest rates have
dropped to the point whereit makes sense to refinance.
As a lender, I will talkwith you about doing
(08:36):
no cost refinances.
When the time makes sense,I'm going to have my
ears peeled to the floor.
And to, all of my rate sheetsto see when the optimal time
for you to refinance will beand I'll reach out at that time.
Phil (08:53):
one of the things to also remember is if maybe you had a
little bit of a higher interestrate because your credit
wasn't as great as it could be.
One of the best ways to increaseyour credit score is making
consistent payments on yourmortgage over the long term.
I want to talk about thistrying different options
from a financing standpoint.
(09:13):
There's a few differentprograms I want to talk
about two in particular.
One is called atwo one buy down.
and the other iscalled an arm loan.
There might be other programsthat your lenders might offer,
but to give you an idea, witha two, one buy down, you pay
2%, which is two points upfrontof the loan to lower your
(09:33):
interest rate by 2% in the firstyear and 1% the second year.
So for example, if your interestrate is six and a half, In that
first year, it's gonna be fourand a half percent, the second
year, five and a half percent.
And then after that, from yearsthree through 30, it's gonna
be six and a half percent.
This gives you a year ofrelatively low payments.
(09:56):
The next year is stillfairly low, and then it's
that fixed rate for theremainder of the loan.
If the interest rates dodrop, what's great is you
can refinance without reallyany penalties, typically.
Is a caveat to this.
Only sellers or the agentscan pay for this, and so
it's something that you doneed to make sure that you
work with your real estateagent to put into the offer..
(10:20):
Now the next one is an armor adjustable rate mortgage.
Sarah, can you talk alittle bit about this?
Sarah (10:26):
Sure.
An arm Or an adjustable ratemortgage is another option for
some people to choose insteadof buying down their rate.
And with an arm or adjustablerate mortgage, your interest
rate is lower for a fixed periodof time, usually five years.
And then after that, it willadjust on a set timeframe based
(10:47):
on the current market rates.
Many people choose this optionbecause they feel comfortable
with the monthly payments forthe first five years, and then
after that, they'll eitherhave the option to refinance
or sell their home beforethe higher rate kicks in.
And if you don't have a planon staying in the home for
say more than five years, thiscould be a great option for you.
(11:09):
definitely talk to yourlender about all the different
options available to you andsee what makes sense and the
most sense for your situation.
There is no one size fitsall answer when it comes
to financing a home.
Make sure to exploreall of your options.
make sure to ask your lenderabout all of the programs
(11:29):
that they have availablethat would fit your criteria.
Phil (11:32):
We talked in another episode about non-standard
loans, and sometimes thatmight be the best way to go.
Look at the different kindsof programs that are out there
and what you can take advantageof and what you qualify for.
Now the fourth option is tolook at homes that have been
on the market over 30 days.
If they haven't had anyprice reductions, you may
(11:54):
be able to offer below.
Ask and still getyour offer accepted.
This is usually when you'rebuying powers decreased because
your original pre-approvalwas for a lower interest
rate, or you're just startingout and your budget isn't
quite what it could have beenwith lower interest rates.
Really start looking at homesthat have been on the market
for an extended period of time.
, anything over 30 to 45 daysis a great starting point,
(12:16):
especially if there haven'tbeen any price reductions.
Don't worry aboutoffending the seller.
It's about making a competitiveoffer on the home that's still
within your budget and approval.
I was looking at numbers.
Just comparing Augustversus, April, in Southern
California in April of2022, homes were selling for
104.6% above asking price.
(12:39):
In August of 2022,it is at 98.9%.
That means on average,homes are selling for less
than they're listed for.
Go ahead, put an offerunder the list price.
You might just be surprised atwhat a seller will accept and
what's important is to workwith a real estate agent, where
you guys have talked aboutthis and make sure you have a
(13:00):
real estate agent that reallyunderstands this strategy.
Sarah (13:05):
in a lot of different markets, we are seeing
under asking, contractsget accepted by buyers.
So right now you definitelyhave more leverage than you
would in previous months.
Phil (13:18):
and it's great to hear that from the lending side.
Now, I wanted to talk aboutanother angle that you can
take with your real estateagent, similar to the homes
on the market over 30 daysand offering under Ask.
You can also have your realestate agent look at homes
that may be offering sellerconcessions or make sure that
you're working with an agentwho's going to go in and
(13:42):
ask for seller concessions.
And what are seller concessions?
Seller concessions.
Is any money that theseller is willing to
give you as the buyer.
As part of your closingcosts or down payments.
And this can be thingslike using for your rate
buy down so that you couldlower your interest rate.
This could help offset closingcosts or your down payment.
(14:04):
This is a great option ifyou're still not sure about
the interest rates, butyou could leverage seller
concessions, giving you alower interest rate without you
having to pay directly for it.
It's a great way to save moneyon your closing costs as well.
So let's kind ofbreak this down.
If you're looking at the homeat the top of your price range,
interest rates have gone up inthat home is now out of reach.
(14:25):
Because of that, if the seller'swilling to pay what it would
cost to get that interestrate where you were before.
. It doesn't cost youanything different.
You could have that betterinterest rate and you
could afford this home.
work with your real estateagent to come up with options
where you can use sellerconcessions to get you
back to that interest rate.
That makes sense.
(14:47):
To summarize, there are waysyou can get lower rates, find
homes under asking price orhave the sellers help pay for
that interest rate to go lower.
Work with your real estateagent and your lender as a team.
Find out what option'sgonna work best for you.
Sarah, I really want to thankyou for coming on this episode.
(15:07):
Can we give out your contactinfo so that people can
reach out to you directly?
Sarah (15:12):
Absolutely.
, you can call or textme at (702) 466-6430.
Phil (15:20):
Perfect.
And when you reach out,please let her know that
you heard her on our podcasthere at the first time.
Home Buyers.
Also head over to FTHBPros.com.
We've got all of our otherepisodes available, articles,
resources along with accessto our Facebook group where
we have lenders and agents,including Sarah that can
help answer your questions.
Thank you for your supportand happy home buying.
Welcome to the First Time Home Buyers podcast.
It's the end search is over.
Stop even looking for a house.
You'll never be ableto afford it, not with
those interest rates.
Is that what you've beenhearing or thinking?
Is it even worth lookingat homes anymore?
Is your dream crushed?
The reality is that, no, youaren't out of the running.
It's just a different market nowToday I've got Sarah back on the
(00:30):
podcast, and one of the reasonsI really wanted her back here
is because she's been doing thisfor 20 years, and guess what?
She's seen interest rateshit double digits before.
So she's gonna help us talkabout what kinds of things
we can do to buy a home ina high interest rate market.
So welcome back to the show..
Sarah (00:50):
Thank you so much, Phil.
I think that we can givesome great ideas from
a lender's perspective.
Phil (00:55):
And I'm also a licensed real estate agent, so I'm
gonna give some perspectivestoo that I've helped with
some of my buyers and sellerson some of the things that
we've been doing as well.
So right now we're inthe first half of 2023.
After about.
Two years of unprecedentedlow interest rates and
unfortunately, soaring homeprices, those prices have
(01:18):
pushed a lot of people outof their budgets and they've
stopped their home searches.
Does this sound like you?
Listen on, we've got somegreat tactics and options.
I wanna still help you finda home that you can afford.
So let's talk aboutwhat options you've got.
During the high interestrate season, and Sarah,
maybe just give us an idea,what are the interest rates
(01:39):
looking like right now?
Sarah (01:40):
We're seeing ranges anywhere from the fives to
7%, and we don't know wherethe rates are going to go.
They could continue to rise.
, they are trending down,but we're not a economist
and we don't have a crystalball to see into the future.
Interest ratesalways fluctuating.
(02:03):
They rise and fall.
You've probably heard . Ihate this saying the date
the rate, marry the home,and in this case, you can
look at the price that youpaid for the home as the one
thing that's going to staystable, not the interest rate.
Phil (02:21):
So let's talk about how this is affecting
buyers out there.
And my buyers and sellers aredefinitely having a tougher
time finding homes simplybecause their pre-approval was
for a lower interest rate, sothe dollar amount was higher.
And as these interest rateshave gone up, , they've
had to adjust those downand they're updated to that
(02:43):
lower amount, so they justdon't have the buying power.
So there's fewer homesin their price range from
a seller's perspective.
There's less buyers out theresince many have actually stopped
shopping, hoping that interestrates are gonna drop, or these
home prices are gonna drop.
We're also seeing that withinterest rates changing so
quickly, Sellers are muchmore concerned about how
(03:06):
qualified the buyers are.
Is that pre-approval fromtwo months ago when the
interest rate was a lot lower.
We've also seen that thenumber of buyers that
aren't able to complete theloan process has actually
increased because of this.
Let's go ahead and lookat some of the options you
have as a buyer to stillpurchase a home while if
(03:26):
interest rates are higher.
And then let's gointo more details.
So I've got these fivepoints I wanted to go over.
first one is buyingdown your rate.
You could be surprised how muchlower you can actually get.
Second one is working with alender who will refinance you in
the next year or two at no cost.
The third is tryingdifferent options from
a financing standpoint.
(03:47):
One of those can be a two,one, buy down an arm loan
or other programs that yourlender might be offering.
The fourth one is lookingat homes that have been on
the market for over 30 days.
if they haven't had any pricereductions, you may be able
to offer below, ask and stillget your offer accepted.
And the last one here issimilar to the homes on
the market over 30 days.
(04:09):
But really make sure youhave your real estate agent.
Look at homes that areoffering seller concessions.
These can be used to helppay for closing costs,
including rate by downs.
And we'll get into whatrate by Downs are here next.
So Sarah, maybe you couldhelp explain what this is
buying down your rate andhow you can actually get that
to a better interest rate.
Sarah (04:30):
Sure.
Buying down your rate meansthat you're asking the
bank to give you a lowerinterest rate on your loan.
You can do this by payingsome of the money for
the home upfront inwhat are called points.
When you buy down yourrate, you're agreeing
to pay more money.
Now, in order to have a lowermonthly payment for the life
(04:53):
of the loan So it's importantto think about how long you
plan on living in the home andhow much money you would save
overall before deciding whetheror not to buy down the rate.
And if it's for you.
Phil (05:06):
I think that's a really great point.
It is important To look atthis on the long term approach.
What is typical ofbuying down your rate?
Sarah (05:15):
Generally speaking, let's say you're trying to
get your interest rate downto 5% and you were quoted
five and a half percent,you might need up to two
points to get the rate to go.
lower So interest, yournew interest rate would
be 5% instead of the 5.5%.
(05:37):
This is going to fluctuatebetween lenders, between
banks, and between programs.
All of this is very generalized.
Phil (05:46):
This is where you want to sit down with your loan
officer and go through a lotof different scenarios and
say, well, I have X amount ofdollars that I'm willing to put
towards buying down my rate.
If you're buying a home andyou're spending something
like $400,000 and you'reputting three and a half
percent down, you're paying$14,000 in your down payment.
If you have extra money thatyou want to put towards the
(06:09):
house to buy those pointsdown, maybe five to $10,000
more might get you froma six and a half percent
interest rate down to 6%.
That difference is gonna be overa hundred dollars a month in
savings, but you also have thatinterest rate for the long run.
And so that's one way for youto get a lower interest rate
is by actually paying to lowerthat interest rate as opposed
(06:32):
to a higher down payment.
Oftentimes, you'll see thatthat lower interest rate is
more beneficial, so definitelywork with your loan officer to
see what scenarios work bestfor you in your situation.
Now the next one is workingwith a lender who's gonna
refinance you in the next yearor two when hopefully interest
(06:54):
rates have dropped at no cost.
If you're willing to wait,you're already qualified
at that rate and you'replanning on staying in your
home for more than a fewyears, it might make sense
And Sarah, are youable to do this often?
Sarah (07:07):
If it makes sense to refinance, we offer that
to all of our past clients.
but let's get intowhat refinancing is.
Refinancing is the processof taking out a new loan
with lower interest rate toreplace your current mortgage.
You might do this if interestrates have dropped since you
first got your mortgage tolower your overall payments.
(07:28):
or if the value of your homehas gone up, you may also be
able to refinance and get cashout of your home's Equity.
This can be helpful ifyou have a large project
like home renovations orif you want to consolidate
debt or a combination.
Phil (07:45):
One of the things to consider is in these higher
interest rates and highercost homes, you may be able to
find a home that maybe needsa little bit of cosmetic work.
Maybe it's got an older kitchenor bathroom Through and a lot of
people have been passing it up.
This may be that opportunityto get that home, knowing that
in the next year or two youmight be able to do a cash
(08:05):
out refinance and use thattowards some renovations.
There's even options todo renovation type loans,
but that's a whole nothertopic that we can get into.
Sarah (08:14):
Refinancing could save you money every month and
over the life of the loan asyou'll be paying less interest.
Overall.
Nobody knows what interestrates are going to do in
the future, and as long asyou're comfortable at your
current rate, you can waituntil interest rates have
dropped to the point whereit makes sense to refinance.
As a lender, I will talkwith you about doing
(08:36):
no cost refinances.
When the time makes sense,I'm going to have my
ears peeled to the floor.
And to, all of my rate sheetsto see when the optimal time
for you to refinance will beand I'll reach out at that time.
Phil (08:53):
one of the things to also remember is if maybe you had a
little bit of a higher interestrate because your credit
wasn't as great as it could be.
One of the best ways to increaseyour credit score is making
consistent payments on yourmortgage over the long term.
I want to talk about thistrying different options
from a financing standpoint.
(09:13):
There's a few differentprograms I want to talk
about two in particular.
One is called atwo one buy down.
and the other iscalled an arm loan.
There might be other programsthat your lenders might offer,
but to give you an idea, witha two, one buy down, you pay
2%, which is two points upfrontof the loan to lower your
(09:33):
interest rate by 2% in the firstyear and 1% the second year.
So for example, if your interestrate is six and a half, In that
first year, it's gonna be fourand a half percent, the second
year, five and a half percent.
And then after that, from yearsthree through 30, it's gonna
be six and a half percent.
This gives you a year ofrelatively low payments.
(09:56):
The next year is stillfairly low, and then it's
that fixed rate for theremainder of the loan.
If the interest rates dodrop, what's great is you
can refinance without reallyany penalties, typically.
Is a caveat to this.
Only sellers or the agentscan pay for this, and so
it's something that you doneed to make sure that you
work with your real estateagent to put into the offer..
(10:20):
Now the next one is an armor adjustable rate mortgage.
Sarah, can you talk alittle bit about this?
Sarah (10:26):
Sure.
An arm Or an adjustable ratemortgage is another option for
some people to choose insteadof buying down their rate.
And with an arm or adjustablerate mortgage, your interest
rate is lower for a fixed periodof time, usually five years.
And then after that, it willadjust on a set timeframe based
(10:47):
on the current market rates.
Many people choose this optionbecause they feel comfortable
with the monthly payments forthe first five years, and then
after that, they'll eitherhave the option to refinance
or sell their home beforethe higher rate kicks in.
And if you don't have a planon staying in the home for
say more than five years, thiscould be a great option for you.
(11:09):
definitely talk to yourlender about all the different
options available to you andsee what makes sense and the
most sense for your situation.
There is no one size fitsall answer when it comes
to financing a home.
Make sure to exploreall of your options.
make sure to ask your lenderabout all of the programs
(11:29):
that they have availablethat would fit your criteria.
Phil (11:32):
We talked in another episode about non-standard
loans, and sometimes thatmight be the best way to go.
Look at the different kindsof programs that are out there
and what you can take advantageof and what you qualify for.
Now the fourth option is tolook at homes that have been
on the market over 30 days.
If they haven't had anyprice reductions, you may
(11:54):
be able to offer below.
Ask and still getyour offer accepted.
This is usually when you'rebuying powers decreased because
your original pre-approvalwas for a lower interest
rate, or you're just startingout and your budget isn't
quite what it could have beenwith lower interest rates.
Really start looking at homesthat have been on the market
for an extended period of time.
, anything over 30 to 45 daysis a great starting point,
(12:16):
especially if there haven'tbeen any price reductions.
Don't worry aboutoffending the seller.
It's about making a competitiveoffer on the home that's still
within your budget and approval.
I was looking at numbers.
Just comparing Augustversus, April, in Southern
California in April of2022, homes were selling for
104.6% above asking price.
(12:39):
In August of 2022,it is at 98.9%.
That means on average,homes are selling for less
than they're listed for.
Go ahead, put an offerunder the list price.
You might just be surprised atwhat a seller will accept and
what's important is to workwith a real estate agent, where
you guys have talked aboutthis and make sure you have a
(13:00):
real estate agent that reallyunderstands this strategy.
Sarah (13:05):
in a lot of different markets, we are seeing
under asking, contractsget accepted by buyers.
So right now you definitelyhave more leverage than you
would in previous months.
Phil (13:18):
and it's great to hear that from the lending side.
Now, I wanted to talk aboutanother angle that you can
take with your real estateagent, similar to the homes
on the market over 30 daysand offering under Ask.
You can also have your realestate agent look at homes
that may be offering sellerconcessions or make sure that
you're working with an agentwho's going to go in and
(13:42):
ask for seller concessions.
And what are seller concessions?
Seller concessions.
Is any money that theseller is willing to
give you as the buyer.
As part of your closingcosts or down payments.
And this can be thingslike using for your rate
buy down so that you couldlower your interest rate.
This could help offset closingcosts or your down payment.
(14:04):
This is a great option ifyou're still not sure about
the interest rates, butyou could leverage seller
concessions, giving you alower interest rate without you
having to pay directly for it.
It's a great way to save moneyon your closing costs as well.
So let's kind ofbreak this down.
If you're looking at the homeat the top of your price range,
interest rates have gone up inthat home is now out of reach.
(14:25):
Because of that, if the seller'swilling to pay what it would
cost to get that interestrate where you were before.
. It doesn't cost youanything different.
You could have that betterinterest rate and you
could afford this home.
work with your real estateagent to come up with options
where you can use sellerconcessions to get you
back to that interest rate.
That makes sense.
(14:47):
To summarize, there are waysyou can get lower rates, find
homes under asking price orhave the sellers help pay for
that interest rate to go lower.
Work with your real estateagent and your lender as a team.
Find out what option'sgonna work best for you.
Sarah, I really want to thankyou for coming on this episode.
(15:07):
Can we give out your contactinfo so that people can
reach out to you directly?
Sarah (15:12):
Absolutely.
, you can call or textme at (702) 466-6430.
Phil (15:20):
Perfect.
And when you reach out,please let her know that
you heard her on our podcasthere at the first time.
Home Buyers.
Also head over to FTHBPros.com.
We've got all of our otherepisodes available, articles,
resources along with accessto our Facebook group where
we have lenders and agents,including Sarah that can
help answer your questions.
Thank you for your supportand happy home buying.
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