Now Is The Best Time To Sell And/Or Buy?
Every now and then and seems more like now…I’m asked the question…how can you tell the buyer in the afternoon that this is a great time to buy a home and in the evening tell the homeowner that they have to lower their price in order to sell their home. Wait a minute. How can it be a great time to buy if prices are falling? Am I just saying this to make a sale? Actually, in both circumstances I am 100% correct. Perhaps for the first time in American real estate history, you must buy now and you must sell now. How can this be? Because what is important to the buyer is different than what is important to the seller. Let me explain.
The most important thing to the seller: PRICE
Just about every seller is most concerned with trying to get the best price possible for their home. In order to do that, they must sell now. Banks repossessed the highest number of foreclosed homes in history last month. These houses will come to market at dramatically discounted prices. This is the main reason analysts are calling for another dip in prices over the next eighteen months. The best advice a seller can receive is to sell their home now before these foreclosures come to market.
The most important thing to the buyer: COST
Price plays a part in the buyer’s decision. However, the most important thing to most buyers is the cost – the mortgage payment they must pay every month. That payment is determined by the price of the home AND THE INTEREST RATE ON THE MORTGAGE. Rates are artificially low because of government intervention. That will not last forever.
The National Association of Realtors (NAR) has projected that rates will rise over the next seven quarters. What will that do to the cost? Here are NAR’s projections and what impact it will have on a $100,000 mortgage:
As we can see, the interest rate has a major impact on the COST of the home. Even if prices continue to fall, the cost may not go down if interest rates increase.
Bottom Line
I’m trying to give the best advice I can to every family and/or individual I work with – even if that advice seems to be counter intuitive.
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