The period between Thanksgiving and New Year’s is typically the slowest time of year for home sales and this year looks to be the same. While most consumers are looking to the great deals at stores, for those that are also looking to buy a houses, they don’t see that this is also the best time of year to get a good buy on a home too!

This time of year, most sellers have been on the market for several months (or much longer!) and are growing weary from showings (or lack of them) and are frustrated with the slower tempo of the market.  This time of year weekly Pending Sales are about half of what they are in March, April and May.  As a buyer, this gives you a great opportunity to be a hero to a seller by bringing them an offer that would end their struggle to sell their home before the New Year.  The reward for your heroism is likely to be a lower sales price than you would have received earlier this year or what you may receive next year.

While not all sellers are motivated enough to significantly drop their price, there are good bargains in this market as many of the houses for sale are already priced well.  Very recently I was in a negotiation with a buyer on his first home.  We looked at everything in his price range and this home was far superior to the rest.  We made an offer about $10,000 under its $220,000 asking price but ended up settling on the seller’s counter of $3500 under asking.  We both looked at each other and said “you know, this house is priced right and in excellent condition… it’s worth every penny of $220,000.”  Had the house been greatly overpriced, more aggressive negotiations would have been needed.  My buyer is thrilled with the outcome and closes in January.

If you’ve been sitting on the fence about buying or been thinking that you’ll wait to January to get serious, you may be missing out on the best values in the market!

As we are nearing the end of 2006, we find housing inventory at record levels and interest rates holding steady just above 6%, down nearly 1/2 percent from its highs this summer.  This has placed buyers in an excellent position to find  the perfect home and cash in on what are still historically low interest rates.

Cheryl Stuntebeck, Edina Realty Mortgage, had this to say about the mortgage market:
“While interest rates are .75% higher than they were at their lows in 2005, the current 6.1875% rate on a 30 year  fixed mortgage is still about 1% lower than the 10 year average.  Many industry analysts speculate that rates will slowly climb higher in 2007, making it prudent to lock in a purchase now.”

She also posed the following comparison:
“If a buyer purchases an average-priced home today, $285,000, with 20% down payment their total monthly payment would be around $1700.  If that same buyer buys the same home when rates are .5% higher, their monthly payment would be  around $1800, an increase of $100 per month.  To put it another way, if rates were to climb .5% that buyer would have approximately $16,000 less buying power at the same monthly payment.”

Earlier this year many sellers were not willing to accept that the marketplace dynamics had changed and that it had become a buyer’s market.  Fast forward a few months and many of those sellers still have their homes for sale today.   Most of them have had to reduce their price one, two or even three times.

Today most sellers understand that we’re in a buyer’s market and are pricing their homes more appropriately; understanding that they need to be willing to make some concessions to the buyer to get their home sold.  This can be  simply taking an offer under asking price or paying the buyer’s closing costs, or can get more creative with the seller paying down the interest rate on their mortgage, prepaying townhome/condo association dues, escrowing money for  new carpet, etc.

So Buyers: by taking advantage of the market today, you can save both on the purchase price and the interest rate while also taking advantage of the largest selection of homes ever available.

Over the last several weeks the rates I’ve seen quoted from my loan officers have dropped from 6.75% to 6.375%.  On a loan of $200,000 that can save about $60 per month, or give you approximately $8000 more buying power for the same monthly payment.

While this rate drop is a pleasant surprise, buyers should not expect it to continue to drop or to stay this low for very long.  Most professionals in the industry expect rates to resume their slowly upward climb and reach 7% near the end of the year.  Think of this as a great reason to get out and buy a house this week!

Many buyers start off their home search alone by finding homes on the Internet and then visiting the home at an Open House. When you do go to an Open House, the real estate agent you meet at the house will be kind, courteous and answer all your questions. What you may or may not understand is that this agent is there representing the seller’s best interests, not yours. Anything you say to that agent may be relayed to the seller, so be careful what you reveal if you are seriously interested in the home.

State of Minnesota statute requires agents to disclose Agency at first substantive contact, like when discussing your price, terms and motivation, but it can be difficult for many agents to explain Agency before you discuss personal items. See here for the Minnesota Agency Relationships in Real Estate Disclosure Form.

Walking through an Open House without an agent has another potential pitfall. If you decide that you want to purchase the home you see at the Open House and have a different agent write the offer for you, that agent may have trouble collecting their commission from the listing agent, due to a term called Procuring Cause.

Members of the National Association of Realtors participate in a local Multiple Listing Service affiliation, known generally as the MLS. In the MLS there is a published commission offered to Realtors who bring forward a buyer to purchase the listing. So when a buyer’s agent shows a home listed on the MLS to their client, they are assured of receiving a commission if the transaction closes successfully.

Where the problem of Procuring Cause comes in is when a buyer is first introduced to the property without their agent present, as in when a buyer walks through an Open House or calls the listing agent directly to schedule a private appointment. In that situation the listing agent may argue that they were responsible for the buyer making an offer on the home and that the agent that wrote the offer for the buyer had no direct influence on the resulting sale. In these cases, a buyer’s agent may receive only part of the commission normally offered, or may receive no commission at all.

The third reason to be represented by an agent when visiting homes is that an agent working in your best interests will likely point out positives and negatives of each property that you may not have noticed yourself, and can provide valuable insight into specific things to consider when evaluating each home. That consultation may help prevent you from purchasing a home that you may later regret or give you further assurance that the home you picked was the right one for you.