Market Conditions: Adjusting Property Valuation

The housing market is adjusting. High interest rates, more inventory, and shifting power dynamics are giving buyers room to negotiate.

• Mortgage rates are steep. The average 30-year rate hovers around 6.7%–6.78%. Four years ago, the same loan cost nearly half as much in monthly payments. That’s why affordability has fallen to 40-year lows.

• Buyers have options. Inventory is up 28% from last year. Homes now sit on the market an average of 28 days, compared to 21 last year. You have more time to think before making an offer.

• Sellers are locked in. Almost 80% of homeowners hold mortgages under 5%. Many will not sell because swapping to today’s rates doesn’t make financial sense. That means fewer listings, but the listings that exist move slower.

What this tells you: the market is harder, but not impossible. It rewards preparation.

If higher rates reduce your buying power, you need strategies to stretch your budget.

• Increase your down payment. A larger down payment lowers your monthly bill and may help secure better terms.

• Automate savings. Direct part of your paycheck into a home fund. Cutting non-essential spending adds up faster than you think.

• Check government programs. FHA loans, VA loans, and first-time buyer grants can lower barriers.

If you are self-employed, get your paperwork ready early. Lenders want two years of tax returns or consistent income records before they approve you.

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Find your dream home

Finding a home under these conditions means adjusting expectations.

• Differentiate needs vs. wants. Focus on must-haves like location or school access. Be flexible about extras like a bigger yard or guest room.

• Broaden your search. Nearby neighborhoods often offer similar homes at lower prices. Competing market areas are worth exploring.

• Look at light fixer-uppers. Homes needing cosmetic work often list lower. Avoid major repairs, but paint, flooring, or kitchen refreshes can be managed later.

This flexibility helps you spot opportunities others overlook.

Do not accept the first mortgage offer you get.

• Compare multiple lenders, including online options.

• Consider FHA, VA, or USDA loans if you qualify.

• If you have more than 20% for a down payment, run the numbers. Putting less down may keep more cash in your account for emergencies, even if it means a higher payment.

The goal is to balance monthly costs with cash on hand.

Buyers today have more leverage than during the pandemic frenzy. Use it.

• Use comps. Look at recent sales in the same area. If a seller lists far above market, point to the data.

• Request credits. Instead of asking for repairs, ask for a credit toward closing costs. It’s simpler for both sides.

• Offer flexibility. A faster closing date or fewer contingencies can make your offer stronger without increasing price.

• Seller concessions. If the seller agrees to cover part of closing costs (say 2.5% of the price), decide whether to apply it to a rate buy-down or direct expenses.

Negotiation is not about winning. It’s about reaching terms that fit your budget.

Appraisals matter. They set the maximum loan amount your lender will approve.

• Low appraisal gap. If the home appraises below your offer, you need to make up the difference or renegotiate.

• Renegotiate price. Sellers often agree to match appraisal because future buyers will face the same issue.

• Challenge the appraisal. Your agent can request a review with stronger comparable sales.

• FHA buyers have leverage. FHA appraisals stay with the property for 120 days. Sellers know the next FHA buyer will face the same valuation.

Knowing how appraisals work keeps you from overpaying.

Appraisers don’t pull numbers out of thin air. They look at:

• Comparable sales. Similar homes sold in the last 90 days are the gold standard.

• Condition and size. Age, quality, and updates influence value.

• Location. Same subdivision first, then nearby neighborhoods.

• Pending and expired listings. Pending sales show where prices are trending. Withdrawn listings show where buyers stopped paying.

This is how lenders make sure they are not lending more than the home is worth.

High rates and low affordability sound discouraging. But slower sales and more inventory shift power back to buyers. If you are prepared with savings, flexible expectations, and strong negotiation tactics, you stand a better chance of securing a fair deal.

With reAlpha, you can keep a portion of your buyer agent’s commission back while unlocking AI-powered insights on affordability, timing, and market forecasts

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