(WXYZ) — The housing market has cooled somewhat, making home buying slightly more affordable in the first quarter of this year.
ATTOM, a leading curator of real estate data, pointed to a year of rising interest rates, inflation and stock market dips, as worker wages rose 6% nationwide.
Sara and Edric Miller are looking for a larger place after outgrowing their condo in Commerce Township. They got married in 2019, but now have two kids and need a larger space.
“What's been the most challenging part of house hunting this go around?” I asked.
“I would say just the initial thought of the interest rates," Edric said.
They decided that spring of 2023 was the right time to look for a bigger home, but they're noticing a big difference in the market compared to what they saw four years ago.
"The inventory is literally a fraction of what it was in 2019. What we were looking at, we had so many more opportunities in 2019 as far as locations, as far as homes, as far as condos go. And now it's very limited," Edric said.
“Now we're realizing we've really got to move quick because when something's available, we're not the only people that are looking," Sara said.
Sadie Callegari, a realtor for The Perna Team in Novi, said the market is starting to get busy. More homes are going to be hitting the market, and more buyers are going to be looking.
"As it gets warmer, it’s just what happens," Callegari said.
ADVICE FOR BUYERS
She recommends buyers get into the market soon as mortgage rates have dropped in the wake of recent bank failures.
“What are some creative strategies buyers can do to make their offer really stand out?" I asked.
“One of them is called an escalation clause. So, rather than saying, ‘Hey, Mr. Seller, we want to offer above what you're listing, but here's our offer,’ you can actually just say, ‘Hey, we're going to beat out any other offer by a certain amount up to a certain limit,'" Callegari explained.
Another tip is to write the family a letter, and make sure you hit certain points in the body of that letter.
“Well, we want to think about the things that you love about the home. So, you want to tell the sellers exactly why you love it, why are you writing such a great offer, and what are you planning to do in the home," said Callegari.
Also, consider offering a post-closing possession agreement, which essentially allows the seller to rent the home from the new purchaser to give the seller time to move.
If you're concerned about affording a home, talk with your lender about 2/1 buydown program. That's a mortgage loan available with interest rate reductions during the first two years that will return to the full interest rate by the third year. It helps borrowers get lower monthly payments. There are higher costs up front, but sometimes the owner will pay the fees. Consult your mortgage lender to see what works best for you.
ADVICE FOR SELLERS
For sellers, Callegari says to list your home as soon as possible.
“Some sellers may be thinking to themselves, 'Gosh, I have so many things I need to fix about this house. I want to renovate, I want to do more landscaping.' What would you say to them?" I asked.
“Well, I would say to get really creative with some of those options," Callegari said.
She also said to look into a seller concession or a credit that you can give the buyer at closing, so they can do the updates the way they want and you don't miss the market waiting for a contractor.
Also, consider a coming soon listing, where the property is not officially on the market but will be listed within 30 days. It'll pop up on the MLS and Zillow, which could get the attention of eager buyers.
With that, there is a risk of dual agency, where the agent represents both the seller and the buyer. So, talk with your realtor about that option.
Some sellers are asking for an appraisal guarantee clause, and some buyers are even putting that in their purchase offers. It's a clause stating the buyer will make up the difference if the appraisal is lower than the accepted offer.
Sara and Edric just hope they find their dream home soon.
