Interest rates have risen, and market shifts are apparent, but this doesn’t necessarily have to be bad, especially for savvy buyers who understand the math and know how to use this opportunity to their advantage. Here are 3 ways to take advantage of the shift and make rising interest rates work for you! 

1. Less Competition

Rising interest rates have slowed buyers down or completely removed them from the market.  We are noticing a trend where fewer buyers are in the market, resulting in less competitive multiple-offer situations. The days of 10-20 competing offers and buyers giving up all their leverage, exposing them to great risk is nearly gone. Buyers now have a bit more time and control over their offer resulting in lower purchase prices and leaving all the safety nets in the deal. When rates were in the 3’s and 4’s what difference did it make when you had to offer $10k, $50K or even $100K over the asking price to win the deal.  

2. Niche Loan Products

There are tons of niche programs out there that work for all types of scenarios, and good lenders will take the time to understand your goals and help you pick a product that will work best for your real estate goals. One example is the 2-1 Buydown which is financing that reduces the interest rates for the first two years of a mortgage. The interest rate is typically reduced by 2% in the first year and 1% in the second year. After the second year, the interest rate goes back to the original rate. Another example is a 7/1 or 5/1 arm where the rate is reduced for the first 7 to 5 years adjusting at the end of the term. Economists believe that rates will eventually decrease later this year and/or in 2024, giving buyers the opportunity to refinance.  Date the rate and marry the home!

3. Get a deal!

As a result of higher interest rates and less buyers we are seeing more price reductions, builder incentives and stale listings. Price reductions are an attempt from the seller to revamp interest when a home that has been sitting on the market for a few weeks doesn’t go into contract. Buyers can find a good amount of price reductions starting to happen. Builders are now offering rate and closing cost incentives to attract buyers.  In some cases buyers aren’t having to come out of pocket other than their down payment to purchase a new home.  And we’re seeing more non-realty items included such as refrigerators, washer/dryers, blinds, sprinkler systems, etc…  Stale listings could result in a negotiated price lower than the asking price as sellers become more motivated to sell.  

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