July Real Estate Roundup: 3 Top Tips for the Current Market

Wow - we’re halfway through 2024! As we look at the rest of the year, I’ve got a few tips on how to help your buyers navigate the current market conditions as they prepare to purchase.   

1. Paying Discount Points Can Help the Right Buyers 

With average interest rates hovering around 7%, combined with higher home prices, more buyers are choosing to pay a partial or full point to buy down their interest rate in exchange for a lower monthly payment.  

It used to be that the general rule of thumb was for every discount point your buyer paid, their rate would decrease by .25%.  However, in the current market environment, we’re seeing that paying a full point can save from .25% - .50% in rate, or even paying a partial point can save .25% on the rate. 

Every borrower is different, so I’ll be sure to educate your buyers on the pros and cons of buying down the rates and consider how long they plan to stay in the house or when they may refinance in the future. The main takeaway here is that in this current seller’s market, buyers who are looking for the best rate and lowest payment may benefit from buying points. But this will impact their closing costs. Speaking of… 

2. Closing Costs Have Risen 

We discuss this often, but it bears repeating: the old 3% for closing cost in many markets no longer holds true. 

As mentioned above, buyers may pay discount points. Additionally, inflation and the cost of compliance play a role as well. Appraisal fees have increased, attorneys have raised their closing fees, and lender fees for verifying employment, Social Security numbers, running fraud checks, and so on have increased too. Of course, if the property is in a flood zone, requires a well or septic inspection, a foundation certification or a condo questionnaire, this will add to the overall cost. In addition, if your client elects to obtain a survey or is paying a realtor admin fee, this will also impact the total settlement expenses. 

Because many of these fees are fixed costs, for sales prices under $350,000, the percentage of sales price increases. We are seeing closing costs run closer to 4%, but they can be higher or lower depending on many factors. It’s important, once your client has identified a potential property, to call or e-mail me to get a closing cost worksheet, so all parties know the total cash required for the transaction.

3. “Pre-approved" Means More Than “Pre-qualified” 

Pre-approvals are always better than pre-qualifications, and there is a big difference. 

At Atlantic Bay, we upfront underwrite every loan. This means I work with them at the very beginning to get their documents and credit information to verify their financial picture, so your clients can be pre-approved for the exact amount they can afford.   

• This saves you time because you only visit homes within your buyer’s budget. 

• Your seller will have confidence your client’s financing is solid.  

• Closing is smoother and faster for everyone.  

“Pre-qualified” simply means your buyer and I have a general conversation about what they can afford based on what they tell me about assets, income, etc. No credit is pulled, and no documents are required or reviewed. 

Finally, remember that your client doesn’t have to have a property to get pre-approved. Our Fast Track Buyer Advantage pre-approval option will help you start shopping without an address or signed purchase contract.

Call me with any questions you have, and don’t forget about that closing cost worksheet!