The housing market has been a hardscrabble landscape for many homebuyers for years now. First, buyers looking for homes at the height of the COVID-19 pandemic enjoyed low mortgage rates, yet faced massive competition that helped drive median home prices to all-time highs.
As the pandemic receded, mortgage rates shot up to the mid-6% to 7%-plus range, where they continue to linger. Today’s buyers also face inventory shortages, with active listings down 35.9% this April compared with typical 2017 to 2019 levels.
All this real estate market turbulence might make the average buyer feel like the housing market’s ups and downs are out of their control, and they are along for the wild ride, hanging on as best they can.
Yet, the reality is that many aspects of the buying process are firmly in a home shopper’s control.
“If it is the right time for a buyer or seller to make a move, here’s how I would prepare,” says Realtor.com Chief Economist Danielle Hale. “I would focus on what you can control and plan for what you can’t. Buyers can control how they set a budget. Buyers can’t control what will happen with mortgage rates, but they can use a mortgage calculator to test out what higher or lower mortgage rates mean for their monthly budget and price target and plan in advance so they’ll know how to adjust.”
What else can buyers control? A lot. Read on to find out.
1. You can control your price range
The average home might cost $430,000 as of April 2024—but that doesn’t mean that’s how much cash you have to fork over to land a home.
“Buyers are more in control of their situation than they think,” says Cara Ameer,a real estate agent with Coldwell Banker in Los Angeles and Florida. “They can adjust their price range and criteria to adjust for interest rate fluctuations to find properties where they are more comfortable with the payment. This will allow them to get in and build some equity.”
Having equity in your home equals less debt now and more resources to take out a home equity loan in the future.
2. You can control how much you pay
Good news, homebuyers: Home price reductions were up 15.5% this April compared with 12.3% for the same month last year.
You can look for price-reduced homes in your property search, or you can simply offer less on a home than the list price. Or buyers can ask for financial breaks in other areas of the homebuying process.
“Due to the higher rates, buyers can control the negotiation a bit more, as in many areas, the shift in the balance is turning more toward a buyer’s market,” says Ameer. “They can ask the seller for concessions to offset the higher interest rate they will be paying. Concessions from the seller can include an interest rate buydownor paying a buyer’s closing costs.”
Real estate professional and attorney Bruce Ailion, of Re/Max Town & Country in Atlanta, agrees.
“Too often, my clients get excited and decide not to negotiate,” says Ailion. “Emotionally driven parties end up with a less-than-the-best result.”
3. You can control what kind of home you buy
Many buyers don’t realize that a slew of new homes coming to market can help alleviate housing shortages. Better yet, sellers often hold the cards when it comes to newer homes, with builders often offering incentives to get buyers into a home.
“Right now, for example, my team and I are working with a couple of buyers who are relocating to Florida,” says Ameer. “They are likely to get a better deal on new construction for their price range versus going with a resale that is a few years old because they won’t have to replace things like the AC, roof, water heaters, etc.”
Another plus? Homebuyers are often in a stronger place to negotiate with a large building company rather than an individual seller.
4. You can control whether to buy anything at all
“One of the most significant things buyers control is the decision to buy or wait,” says Ailion.
Ailion explains that many buyers experience “sticker shock” once they find their dream home and realize mortgage interest rates are north of 7%.
“It is easy to say, ‘Let’s wait and pay our landlord’s rent a little longer,'” he says.
For some, waiting to buy might be the best move. For others, waiting could mean missing out.
“At some point, interest rates will come down and buyers who buy today can refinance, reducing their payments to $300, $400, $500 a month or more,” says Ailion. “The advantage of purchasing today is less competition and more selection than one or two years ago.”
5. You can control which real estate agent you work with
“Buyers, whether they know it or not, control nearly every aspect of the buying process,” says Tyler Drew, a real estate developer in California.
For Drew, buyers should start by being active partners with their real estate agent.
“I often see buyers who just blindly follow their agents from house to house, even though those houses meet none of their criteria,” says Drew. “Buyers should not be afraid to tell their agents they aren’t interested in seeing a particular property. If you aren’t happy with your agent, walk away when your contract is up.”
The bottom line when it comes to homebuying? “Both buyers and sellers need to be flexible, adaptable, and creative to move through a challenging market,” says Ameer.
