A Wall Street Journal report on the 17th noted that with mortgage rates hovering near 7% for the fifth consecutive year, the advice real estate agents offer homeowners has shifted significantly compared to five years ago. Sellers can no longer expect quick sales, as buyers frequently walk away from overpriced homes or properties in poor condition. Agents urge sellers to avoid overpricing, consider making reasonable concessions to buyers, undertake minor repairs, or even look into renting out their properties.
The report highlights that high interest rates are deterring prospective homebuyers and cooling the market; sales of existing homes dropped to their lowest level in over a year last month. While most sellers cannot anticipate a rapid sale, market dynamics vary by location and price point; the luxury market remains competitive, driven by a higher number of cash buyers. In contrast, the mid-range market and first-time homebuyers are far more sensitive to interest rates.
Vanessa Leimback, a Redfin real estate agent in Lake Stevens, Washington, says: “The biggest mistake sellers make these days is thinking their home is worth more than the market rate.”
She notes that five years ago, when buyers were scrambling for a limited supply of homes, sellers could be bolder with their asking prices; today, however, even owning the best house on the block doesn’t guarantee that buyers will be willing to pay the full asking price.
Bill Kowalczuk, a real estate agent with Christie’s International Real Estate in New York, advises the sellers he works with not to automatically reject offers simply because they include requests for concessions.
Kowalczuk cites an example where he represented a buyer interested in a home in Jersey City, New Jersey, listed at $379,000. The buyer initially planned to offer $370,000, but Kowalczuk suggested offering $385,000 with a 20% down payment, while requesting a $12,320 seller contribution to buy down the mortgage rate (which was otherwise 7%); the deal ultimately closed successfully. Using a seller contribution to lower the interest rate can save a buyer approximately $123 on their monthly mortgage payment.
Chris Wands, a Miami-based agent with Douglas Elliman, notes that as mortgage rates rise, buyers are left with very limited cash reserves after closing. He explains that in South Florida, costs such as insurance, taxes, flood risk, homeowners association (HOA) fees, and special assessments can overwhelm buyers; furthermore, if a buyer has to cover certain repairs identified during the inspection process, it could derail their budget plans.