A Story of Two Buyers: How to Haggle $12,000 On A Newly Built Property
by: Jeff Quintin, on October 15, 2010 - Uncategorized
Inventory in certain Southern Jersey markets is starting to decline – most specifically in the area of new construction. Demand is going up because buyers are factoring in the low cost of interest to finance the ‘buyer and seller gap,’ and are less fixated on the final purchase price
I had two buyers competing on a home.
The first buyer wanted a better price just for the sake of getting a ‘steal’, while my second buyer realized the long term savings using the low mortgage rates the Federal Reserve has blessed us with.
For both buyers, there was a $12,000 difference between their offer, and the seller’s asking price. Buyer one didn’t get the property, because he was fixated on saving $12,000 upfront on the initial purchase price.
Buyer two, matched the seller’s asking price and ‘ate’ the $12,000 difference. Why?
My second bidder got the home because he factored in his TRUE price, which includes the cost of mortgaging the property. Right now, rates are between 4.25 and 4.5 for a 30 year fixed mortgage – an unprecedented rate in recent history.
For every $10,000 you borrow to finance a home, you pay about $50 of interest. For buyer one to give up a BRAND NEW, BEAUTIFUL PROPERTY in a limited market with demand going up while interest rates are so low is – in my opinion – an uninformed decision.
That’s why I’m writing you this blog post today.
If you’re on the fence about purchasing a property, factor in the cost of financing the difference between what the seller is asking, and what you’re willing to offer.
In certain markets (the most desirable ones) demand is going up because interest rates are so low, and buyers are no longer sitting on the fence to own the right home in the perfect location.
So, take a second look at the property you want in South Jersey and factor in the cost of financing, and difference between your offer and the seller’s asking price. Is owning the home of your dreams worth the marginal interest? Call me and I’ll help you determine your true purchase cost.