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Is a Sellers’ Market Emerging? It appears so. The current real estate market is active; we have record low interest rates and those who can get loans are taking advantage of the opportunities. This is keeping home inventory in short supply. When a listing is well priced, it will most likely receive multiple offers; therefore it is important to be prepared with all of your financials and be prepared to make a strong offer.

When you identify the home you really want, keep in mind you will most likely be competing with other buyers. It is very common for buyers to say “I can’t pay full price” or “we can always come in under and let them counter.” This may work in some scenarios however is it worth missing out on the home you want over $39 to $73 per month?

I recently ran some numbers based on an asking price of $400,000 with 20% down, a 4% interest rate, 30 year loan with property taxes of 1.25% included. Based on this scenario, the monthly mortgage payment is $1944/ month. Next I considered the same scenario but coming in $8,000 under asking price at $392,000. This brought the monthly mortgage down to $1905/ month; a $39/ month savings. Finally, I considered the same scenario but offering $385,000; $15,000 less than asking price. This lowered the monthly mortgage payment to $1871/month; a $73/ month difference from the cost of carrying the mortgage of the asking price scenario.

The purpose of looking at these scenarios is to help buyers understand the actual monthly impact they will experience on a 30 year loan. Buyers lose purchase opportunities all the time because they get stuck on a certain purchase price number. In reality, we can see that over the course of a 30 year mortgage, a several thousand dollar difference on the purchase price is not worth losing a great house once you’ve found it! It’s always great to get a deal; however, many people lose sight of the big picture in the heat of the transaction.

Prior to making a purchase offer, use our mortgage calculator to better understand your monthly mortgage payments under different purchase price scenarios. In our current market buyers must convey to sellers their interest in purchasing their property by coming in with strong purchase offers.