REAL ESTATE
by Jim Coleman, REALTOR®
BUYERS ACT NOW FOR GOOD DEAL
For some time now, we have been watching the inventory swell and prices adjusting, leveling and dropping. Interest rates have danced a little but generally remained very favorably low for qualified buyers. But the one thing that seems a little mystifying about the buyer behavior is the stand off or reluctance that is presently being shown.
When prices were rising, there was still strong consumer activity. Probably this was reflective of the flipping and investor mentality. But now is the time that we should be seeing not only the well qualified buyer taking advantage of wonderful home deals, but also the well healed investor should be making calculated moves to capture properties that have been on the market for some time and now bear prices that have dropped. It is quite common to see five, ten, even twenty percent discount offers.
Do a little calculating. Forget about the various price adjustments that listings have seen. Take it where it is right now. Assume a $300 000 listed price. Assume buyer makes an offer of $270,000, that is accepted; that's a ten percent discount and a savings of $30,000 cash difference. Now assume this is a financed purchase. In other words, with an 80 percent loan to value or a loan of $216,000 on the $270,000 purchase, there is a $6,000 savings on the principal amount of loan (compared to what it would be on the $240,000 loan on $300,000 price).
The payment difference, based on a 6.25 percent, 30 year fixed mortgage, between the loan of $216,000 versus the $240,000 (80 percent on the $300,000 price), is $147.77 per month on the principal and interest. Add to these savings the lesser amount that would be charged for insurance and taxes. In addition to the financial opportunity for buyers, now is as fine a time as we have seen for inventory selection for buyers.
While this scenario may seem harsh or cruel to sellers, sellers must recognize that it is a matter of getting the best price possible, and in today's market, it is typically a discount. Or, it is no sale. Like the old country song, "you got to know when to hold them and when to fold them."
So if this is a "buyer's market," as is being touted today. Then buyers, get in the game. Take advantage of the market opportunities.
St. George REALTOR® Jim Coleman is Associate Broker and Partner/Owner of ERA Brokers Consolidated. He works with Buyers and Sellers and Specializes in Residential, Investment and Commercial Real Estate, including Resort and Second Home properties. He holds National Designations of Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS) and Seniors Real Estate Specialist (SRES). You can contact him by e-mail at Jim@RealtorJimC.com. Call: (435) 674-0600; or write: Jim Coleman, 201 East St. George Boulevard, St. George, Utah 84770. This and other columns are available at www.RealtorJimC.com/articles.