5 Ways to Succeed in a Shifting Boston Real Estate Market
After years of urgency, the Boston real estate market is shifting back to normalcy quickly.
Several months ago, buyers in the City of Firsts were still contending with rising prices, bidding wars, and low inventory. However, now that buyer competition has subsided amid rising mortgage rates, there is a chance for aspiring homebuyers to find deals again in Boston.
Buyers who paused their search at the height of the bidding wars may want to re-engage to leverage the current trends to secure a deal. That is why the team from Prevu Real Estate compiled five ways buyers can succeed in a shifting Boston real estate market.
Don’t be afraid to negotiate
As more buyers bow out of the market due to increased borrowing costs, this means less competition and potential for an increasing inventory of home listings for sale.
Sellers no longer have scores of buyers battling to overpay for their property, creating chances for buyers to negotiate a purchase price – sometimes under listing price again. If you see a home you like in Newton at an open house, float an initial offer to jumpstart negotiations.
Since rising mortgage rates pushed some buyers out of the market, the normal seasonal patterns are returning to the Boston real estate market. As the fall weather and holiday lull approach, buyers willing to scour the markets may find deals in the year’s final quarter. Home sales are typically slower in the holiday season, but the reduced competition provides hope to negotiate a sale on lingering inventory.
Buyers use commission rebates to get money back at closing
Buying a home is one of the most expensive purchases a person makes in their life.
But tech-savvy Boston buyers who use the right brokerage stand to get cash back when they get the keys to their new home. Working with a buyer’s broker who offers a commission rebate can make that a reality.
Prevu Real Estate is a digital brokerage offering Boston’s largest commission rebate. Buyers who work with a Prevu agent can receive up to two-thirds of their broker’s commission through a rebate check.
The process is simple—Prevu provides buyers with a portion of the commission they receive for representing buyers.
Suppose you buy a $1,500,000 condo in Back Bay with Prevu. You stand to receive a rebate check of up to 2% of your purchase price, or, in this example, $30,000.
Buyers can use that money to relieve the stress of high closing costs, invest in furnishings for their new home, or feel more confident to make a more substantial offer knowing that they will be able to replenish their savings.
Update your pre-approval
Bidding wars over the past year were so intense that sellers would not take buyers seriously unless they were already pre-approved.
Even having a pre-approval was not enough sometimes for buyers facing competition from all-cash buyers who did not require a mortgage financing contingency. But now, as competition subsides and some financed buyers re-engage, they must update their pre-approval from their lender.
Generally, a pre-approval from a lender or bank is valid for about 90 days. Given the rapid rise in mortgage rates, you may want to check in with your potential lender more frequently. If your pre-approval letter is approaching expiration, you will need a new one to reflect current mortgage rates, which may change your home budget.
Explore what mortgages are best for you
Now that the cost of borrowing is rising, buyers will want to explore more mortgage products based on their budget, interest rates available, and homeownership goals.
A 30-year fixed rate mortgage is a standard product for people buying a forever home. But if you plan to move within a few years, you may be paying a higher mortgage rate than you need for the amount of time you will own the home.
An adjustable-rate mortgage (ARM) might be a better option for people planning to stay in a home or condo for a shorter period of time. Buyers can secure a lower fixed interest rate for the first few years, typically 5 years or 7 years, but then the interest rate floats based on a defined calculation after that initial period.
That is why ARMs are sometimes attractive for buyers who plan to upgrade to a larger home after a few years.
Search for developers offer concessions
New developments routinely pop up around Boston. From new construction condos in Seaport to large multi-family buildings in South Boston, there are plenty of chances to own a turnkey property in Boston.
Beyond all new appliances, there are other benefits to buying from a developer. First, there is no emotional skin in the game; it is all business. Developers want to unload their properties, and, as buyer competition slows, they might be willing to offer extra perks to seal the deal.
For instance, you may be able to upgrade appliances, insert your own design ideas into the space like custom closets, or even secure some concessions. You might even be able to negotiate the price, depending on how many units a developer is trying to offload.
This is a paid partnership between Prevu and Boston Magazine's City/Studio