West Clay Realty on Navigating an Ongoing Challenging Market
It doesn’t take an economist or real estate specialist to understand that mortgage rates hitting over 5% on a 30-year fixed-rate mortgage for the first time since 2011 is going to have an impact on the real estate market nationwide.
For buyers, the increase in mortgage rates means that they will have to adjust their expectations and begin looking for homes in lower price ranges. The rising mortgage rates may force some buyers out of the market completely and may discourage some sellers from selling with demand and supply both decreasing. And according to local real estate experts, the market isn’t likely to flip to a buyer’s market anytime soon. If you’re looking to buy or sell in the near future, your best strategy is to work with a real estate agent rather than navigate these brutal waters without an experienced guide and without the proper tools.
The Buyers Are at the Mercy of the Sellers
Joe Kempler and Scot and Dawn Pollard with West Clay Realty spoke with us about the current market climate and shared some of their expertise on how to navigate this market as a buyer or a seller as both roles are being presented with their respective challenges.
With regard to real estate inventory, Kempler said, “MIBOR is saying that there’s going to be more inventory coming on the market between now and the end of August, so that would be a better thing for buyers, though I don’t see prices letting up.”
Kempler explained that it’s still a seller’s market and gave a recent example of a home in Geist that was listed at $775,000 and a buyer’s agent made an offer for $100,000 over the list price.
“The agent told me that the seller was probably going to take it [the offer],” Kempler said. “I said, ‘Well, I would too.’ I’ve been in situations, recently, where the offers are all way over list, they’re bringing money to the [closing] table for appraisal gaps, not waiving inspections necessarily but are not asking for any repairs under $1,500 per item. So, it’s all still in the seller’s hands, and sellers are more encouraged to get their properties on the market before the rates tick up even more.”
Scot Pollard added, “It’s not a panic situation, but there is some pressure to sell while the rates are not as high as they could be. And for buyers that say they’re going to wait for there to be more inventory—the prices may soften but with the rates going up, your monthly payments are going to be higher. We have clients that are planning to sell now, and they’re going to downsize and rent. Which would be ideal for anyone who wants to sell in this market but not leave the area. It’s really the only option to make money in this market and come out ahead. You’re not going to be able to buy a similar house for the same price or even close to it.”
Pollard continued, “If you have options to rent for a while and you don’t mind downsizing from a five-bedroom to a three-bedroom, you should probably sell now and buy back when the interest rates come back down.”
Rely on the Market Experts
When asked why people should consider working with real estate agents, especially now, Dawn Pollard replied, “As a seller, you make an average of 8% more working with a real estate agent than you do in a For Sale By Owner scenario.”
Scot Pollard added, “There’s technical parts of real estate contracts like escalation clauses and other things that you can put into a contract as a real estate broker/agent that make [the contract] look more attractive. Things like an escalation clause could help the deal, and if you have the ability to bring more cash to the table, waive an inspection, appraisal gap coverage—these are technical things and tools that agents can use on your behalf and help you navigate this difficult [real estate] market.”
Another point that Kempler and the Pollards made was that working with real estate brokers who collaborate with other local brokers can be a huge benefit to both a buyer and a seller.
Kempler added, “There can be some real advantages working with a broker who knows there’s inventory coming on the market and can beat the crowd, so to speak. It’s not always guaranteed, but a buyer would never know that a property is coming onto the market if they’re not working with a broker or agent.”
Scot Pollard added, “Working with a broker or agent is more important now than ever before because of these crazy times and all of the different scenarios that can be presented in different offers. I don’t know why anybody would want to try to navigate this [market] alone and try to get a decent offer in without having an agent guide you and give you some advice. It’s a daunting prospect in and of itself and in these times, and that’s why we—brokers and agents—are here to help you throughout the process of buying or selling a home.”
Contact West Clay Realty before you buy or list your home. Visit housesincarmel.com to connect with Joe Kempler or Scot and Dawn Pollard.