The real estate market can be scary for buyers, but education can help – like saying we don’t want another global collapse even if the last one did lower mortgage rates.
NEW YORK – Homebuyers are taking a wait-and-see approach as mortgage rates continue to rise and the stock market remains volatile. However, The Medford Team CEO Carl Medford offers some tips on how to motivate buyers in today’s market.
When buyers say they’re waiting for lower mortgage rates, real estate professionals need to educate them about the way recently record-low rates reached ultra-lows: “Although understandable that buyers want continued low-interest rates, we all hope that the primary conditions that produced those rates – a total global economic collapse and subsequent global pandemic – will not be returning any time soon. With a more normalized economy, rates will head upward and most likely return to historic averages over the next few years,” he says.
When potential buyers say they’re waiting for home prices to fall, agents should remind them that even a bigger inventory won’t be enough to offset projected interest rate increases: “At the end of the day, the most important number is not the purchase price of any home, but the amount of the monthly mortgage payment,” he explains.
Homes also help Americans earn long-term wealth, have tax advantages that renting doesn’t, and is one of the safest long-term investments Americans can make.
When buyers want to start offering “low-ball offers,” Medford says they’ll knock themselves out of the competition quickly and alienate sellers and buyer’s agents.
Those who want to remain renters, on the other hand, should learn to understand that landlords will have to raise rents to cover higher mortgage rates and increased maintenance and labor costs.
For those who want the perfect home but can’t afford it out of the gate, Medford advises agents to ensure homebuyers have realistic expectations for the market and are able to make prudent financial decisions.
Potential buyers who say they cannot afford to buy in the local market can be encouraged to buy in a different market. They can “think of it as an investment,” particularly if they can afford to buy outside of the U.S.
Source: Inman (05/18/22) Medford, Carl
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