A 90 day-old prepproval letter from a lender for the purchase of a new home seems reasonable in normal conditions, but current interest rate jumps are indicating otherwise. I've noticed that buyers have been out shopping with stale dreams of sub 4% interest rates and many are shocked to find they now are now qualified for 90% of what they once did. I would never allow my seller to accept an offer without re-verifying a buyer under these conditions. This shift has created confusion for sellers as the solid offers they may have expected only weeks ago could now be deals that fall out of contract when a buyer can't secure financing factoring a lower interest rate. We're all experiencing this bump in business as usual but is is a shift to a softeninging or merely a adjustment?
"This has been quite a re-education period, not unlike whiplash;" says one of our JTT first-time homebuyers.
"Buyers still intend to buy and perhaps sooner rather than later as rates are in a continued upward trajectory", according to Jennifer Daly of RoundPoint Mortgage. "Rather than backing out of the home search altogether they simply adjust the purchase price down to match the mortgage payment they feel most comfortable with and continue the home search."
Sellers will want to be mindful that all offers should include the most up-to-date pre-approval letters or proof of funds for the additional down payment before going into acceptance. Buyers, be in touch with your lenders to make sure that you are living in reality as rates shift, especially if you are at the top of your budget. I have reason to believe the high price points may see the soonest impact of softening as buyers can afford less, coupled with the fact that the hyper-lux homes on the Island tend to be slower to sell in general.
Additional selling tips from The Joe Tirone Team:
1) Resist the temptation to overprice your home! In this market, and especially now, it is important to get as many buyers in. Competition will be your best friend, and a strategically priced home will yield the highest price.
2) Stage your home, which could be as little as de-cluttering and cleaning, to bringing in a professional stager.
3) The commission that you pay your broker is shared with other brokers, often through the MLS system. Be mindful of what your broker is offering to outside buyer agents! Properly incentivizing buyer agents will make a positive difference.
Additional buying tips from Jennifer: Consider making "your offer stronger by submitting them into underwriting for a mortgage commitment contingent upon finding a home. This strengthens the pre-approval and makes realtors and sellers more confident in accepting an offer with a lesser down payment."
From what I sense, hesitancy is diminishing and movement has returned as buyers are remaining more mindful throughout their process. Sellers need to stay nimble and up-to-date with current strategies to maximize their return.