Navigating Higher Mortgage Rates and Inflation: A Home Seller’s Guide

Contact Ken Tritle at DreamWell Homes Realty – Call or Text 760-798-9024. Thank you!

Selling a home in today’s market presents a complex set of challenges for sellers due to the interplay of rising mortgage rates, increasing inflation, and the threat of a recession (if not already underway).

The combination of these factors can make it more difficult for buyers to qualify for financing, leading to reduced demand and longer selling times.

Additionally, uncertainty surrounding a slowing economy can cause hesitation among buyers and sellers alike.

These headwinds can make it a more challenging environment for home sellers to achieve their goals.

However, with a thorough understanding of the current local market conditions and a well-crafted strategy, it is still possible for sellers to overcome these obstacles and successfully sell their homes.

Stay focused on your goals

Besides relocating for a job, moving up to a better home/community and life events such as divorce or death; many real estate moves are motivated by financial reasons such as:

  • cash in on home equity to payoff debts, fund retirement, etc.
  • lower overall housing expenses
  • reduce monthly upkeep costs on a large property including utility costs

While financial factors are an important part of a real estate move, certain non-financial objectives, cannot be easily quantified. Some of these goals might be:

  • better health and safety or avoiding home-related risks (such as potential fall accidents on stairs)
  • being closer to family; loved ones
  • residing in a location with more natural surroundings
  • or a relocating to a new community with amenities and social opportunities
  • having more peace of mind when the moves makes sense on many levels

Price it Right

Pricing your home competitively can help it sell quickly and attract more potential buyers. When you price it too high in the beginning and lower the price later after it has been on the market, buyers start to question what’s wrong with the house, why it is lingering longer on the market than competing homes, and may not want to see it. Pricing it just right and preparing it to sell can still encourage buyer competition even in a challenging market.

3 Ps of Selling a Home Video from Ken Tritle, Realtor® at DreamWell Homes Realty
Realtors® Jean and Ken Tritle at DreamWell Homes Realty

Contact Jean and Ken Tritle, a husband and wife real estate broker/agent team at DreamWell Homes Realty.

Call or Text: 760-798-9024

Email: jeanken@dreamwellhomes.com

Understand Appraisal

If your buyer needs financing, you will need to understand how the appraisal process works and how it impacts your home sale.

Find out what can you do to increase the appraisal value of your home.

You also need to have the right expectations on what happens should the appraisal value come in lower than the purchase price. Be sure to document any recent upgrades to your home.

Discuss options with your agent: What happens when the buyer wants to walk out of the deal if the house doesn’t appraise at value? Are you willing to lower the price, split the difference between the contract price and the appraised value and, or, be open to negotiations?

Offer Incentives to the buyer

Consider offering incentives such as:

  • closing costs assistance to the buyer
  • paying for a home warranty for buyer’s peace of mind
  • offer a credit at close of escrow to the buyer to buy down the rate to lower their monthly mortgage payments

Below are other ideas on how to give incentives to the buyer if the real estate market starts slowing down. They may not always work so find out which ones really appeal to the buyer (and get help from your real estate agent)

  • Furnishings: Including furnishings, appliances, or other personal property can make the home more appealing.
  • Flexible Closing Date: Being flexible with the closing date to accommodate the buyer’s timeline can be an attractive incentive.
  • Repairs and Upgrades: Offering to make repairs or upgrades to the home before closing can make it more appealing.
  • Decorative Allowance: Offering a decorative allowance or credit to help the buyer personalize the home to their liking.
  • Home Automation: Including home automation devices or smart home technology can make the home more appealing to tech-savvy buyers.
  • Rent-to-Own Option: Offering a rent-to-own option can make the home more appealing to buyers who are not yet ready to buy but want the option to do so in the future.

Improve Curb Appeal

Make the exterior of the home as attractive as possible, to draw in potential buyers.

Staged and Clean

Stage the interior of the home and keep it clean and clutter-free, to appeal to a wide range of potential buyers. Read more on how to execute this by reading our blog article in the link provided below.

21 Tips for Home Selling Success

Work with a Realtor

Partner with a real estate professional who has experience selling homes in the current market and can advise on the best strategies to get your home sold.

Help evaluating the right offer

Experience agents can guide you on how to make the best decision in evaluating which offer is the best.

Utilize Technology

Find an agent with a clearly defined marketing plan that utilize technologies such as virtual tours and high-quality photos to showcase the property to potential buyers.

Highlight Home’s Unique Features

Emphasize the unique and attractive aspects of the property to help it stand out.

Put yourself in a buyer’s shoes

If you are also buying at the same time as selling, whether to right-size or move to a cheaper housing market, you will need to think both as a buyer and seller. As a buyer, factor in any offsetting potential savings if the market is also soft where you are buying.

Understand the impact of interest rate changes on monthly payments

Below you will find a table of monthly mortgage payments on principal and interest based on various interest rates on a 30 year mortgage from 3% to 12%. Let’s face it, although interest rates were around 3% in the past couple of years, currently around 6%, many can still remember when interest rates were above 12%. So today’s rates are still pretty low.

Table: Monthly Mortgage Payments Calculation Using Various Interest Rates and Loan Amount Scenarios

30 Year Mortgage Interest RateMonthly Principal & Interest Payment Per $10,000 Loan AmountMonthly Principal & Interest Payment Per $100,000 Loan AmountMonthly Principal & Interest Payment Per $500,000 Loan AmountMonthly Principal & Interest Payment Per $800,000 Loan Amount
12%$103$1,029$5,143$8,229
11%$95$952$4,762$7,619
10%$88 $878$4,338$7,021
9%$80$805$4,023$6,437
8%$73$734$3,669$5,870
7%$67$665$3,327$5,322
6%$60$600$2,998$4,796
5%$54$537$2,684$4,295
4%$48$477$2,387$3,819
3%$42$422$2,108$3,373
2%$37$370$1,848$2,957

Here are several strategies for home buyers in a rising interest rate market:

  1. Act quickly: With interest rates on the rise, it is important to act quickly and secure a low rate before they increase further.
  2. Get pre-approved: Getting pre-approved for a mortgage can help you understand how much you can afford and help you secure a lower interest rate.
  3. Consider adjustable-rate mortgages: Adjustable-rate mortgages may offer lower initial interest rates that can adjust over time, allowing you to lock in a lower rate and potentially save money in the short-term.
  4. Shop around for the best rates: Comparing rates from multiple lenders can help you find the best deal and secure the lowest interest rate possible.
  5. Realize that few borrowers keep a 30-year mortgage until it is satisfied. Most borrowers refinance to lower their monthly obligations when market conditions become more favorable.
  6. Consider a shorter loan term: Opting for a 15-year mortgage instead of a 30-year mortgage can result in a lower interest rate and lower monthly payments, but with higher monthly payments.
  7. Make a larger down payment: Making a larger down payment can lower your loan amount, resulting in a lower interest rate and lower monthly payments.
  8. Have a good credit score: Maintaining a good credit score can help you secure a lower interest rate and potentially save you thousands of dollars over the life of the loan.

Contact Ken Tritle at DreamWell Homes Realty – Call or Text 760-798-9024. Thank you!

About dreamwellhomes 300 Articles
DreamWell Homes Realty is a locally owned San Diego husband and wife real estate team. They specialize in San Diego 55+ communities, single story homes and condos, retirement-style beach properties such as ocean view homes and waterfront real estate. For more information, please call or text Jean and Ken Tritle at 760-798-9024. Thank you. DreamWell Homes Realty CA DRE# 01777754, Mailing address: 1902 Wright Place, 2nd Floor, Carlsbad CA 92008